Wal-Mart is the world’s largest retailer, with 4300 stores and annual sales of nearly $250 billion. Founded in 1962 by retailing legend Sam Walton, the company has won numerous awards for business innovation (Schneider, 2004). Wal-Mart’s success is largely due to its supply chain management practices. The company is currently committed to social responsibility practices and the latest technology for tracking shipments and inventory controls.
In October 2005, Wal-Mart CEO Lee Scott committed the company to three ambitious goals: To be supplied 100 % by renewable energy; to create zero waste; and to sell products that sustain Wal-Mart's resources and the environment. These are some of innovative practices that Wal-Mart is implementing to "green" its supply chain (Plambeck, 2007).
In 2005, Wal-Mart hired Skye Sustainability Consulting to help identify the categories of Wal-Mart's products and processes that bad the greatest environmental impact (Plambeck, 2007). Recent environment concerns about greenhouse gases and global warming have prompted movements for companies to reduce wastes and pollutants. Wal-Mart has been a world leader in the effort to take social responsibility for environmental effects of the company and its products.
At the end of 2006, Wal-Mart found that the tangible profits generated by its new sustainability strategy in the first year of implementation were roughly equivalent to the profits from several Wal-Mart Super-Centers (Plambeck, 2007). These cost savings also helped convince their supply chain partners and customers to implement their eco-friendly strategies as well. Wal-Mart implemented the following strategies:
1. Design goals and metrics for monitoring the environmental performance of suppliers' products and processes, and identify breakthrough product and process technologies.
2. Certify suppliers and oversee the chain of custody for eco-labeled products,
3. Assist suppliers with process innovation — especially the lower-tier suppliers that were previously less visible to Wal-Mart.
4. Commit to buy a specified quantity of an innovative product.
5. Eliminate Intermediaries and brokers in the supply chain.
6. Consolidate business with a select "group of direct suppliers and develop longer-term strategic relationships with each of those suppliers.
7. Redesign the buying organization to give one person responsibility for nurturing the relationship with each direct supplier and for handling negotiations with that supplier on pricing, quality, and environmental innovation.
8. Encourage licensing of environmental innovations.
(Plambeck, 2007).
Wal-Mart’s supply chain is recognizing the benefits of being socially responsible to the public and realizing cost saving through their efforts. Long-term results look positive as the public moves toward demand socially responsible products and services.
My view is that Wal-Mart must meet the demands of the majority of its stakeholders and climate change is one of the hottest issues and demand for action on the planet today. Wal-Mart can increase it’s shareholder value by addressing environmental concerns, thereby pleasing the public by being socially responsible, saving money for end consumers by eliminating waste and middle-men, and at the same time decrease the company’s carbon footprint. I like “Green” corporations!
References:
Plambeck, Erica L. (2007).The GREENING of Wal-Mart's Supply Chain. Supply Chain Management Review: Retrieved on August 18, 2007 from the EBSCOhost database.
Schneider, Gary. (2004). Electronic Commerce: The Second Wave: Retrieved on August 18, 2007.
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