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n October 2005, in an auditorium filled to capacity, Wal-
"Y%RICA,0LAMBECK Mart President and CEO Lee Scott made the company’s
Erica Plambeck(plambeck_erica@gsb. first speech to be broadcast to 1.6 million employees in all
stanford.edu) is Associate Professor of 6,000-plus stores worldwide—and shared with its 60,000-
Operations, Information and Technology plus suppliers. Scott announced that Wal-Mart was launch-
in the Graduate School of Business and ing a sweeping business sustainability strategy to dramatically
Senior Fellow in the Woods Institute for reduce the company’s impact on the global environment and
Environment at Stanford University. thus become “the most competitive and innovative company in the
world.” He argued that “being a good steward of the environment and
being profitable are not mutually exclusive. They are one and the same.”
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the company had launched a campaign to convince its suppliers ITSSUPPLYCHAIN to provide environmentally safe products in recyclable or biodegradable packaging.”1 COMPANYTOTHREEAMBITIOUS To meet those goals. OFINNOVATIVEPRACTICESTHAT7AL rather than cooperatively. proactively. in response to letters from customers about environmental con- -ARTISIMPLEMENTINGTOhGREENv cerns. Gwen Rutta. Wal-Mart would seek to transform its sup- GOALS4OBESUPPLIEDPERCENT ply chain. and as profit opportunities.” she ANDTHEENVIRONMENT4HISISTHE said. in cooperation with suppliers and environmental nonprofit BYRENEWABLEENERGYTOCREATE organizations. Director of Corporate Partnerships at Environmental Defense. TOWARDTHOSEGOALSANDTHEARRAY In the past. In Z 1989.7AL -ART Scott also committed Wal-Mart to three aspirational goals: “To be sup- #%/.EE3COTTCOMMITTEDTHE plied 100 percent by renewable energy.com . Wal-Mart had dealt with environmental issues defensively. was excited about working with Wal-Mart: ZEROWASTEANDTOSELLPRODUCTS “We’ve come to believe through experience that you really can create THATSUSTAIN7AL -ARTSRESOURCES environmental progress by leveraging corporate purchasing power.scmr.3  Supply Chain Management Review · July/August 2007 www. to create zero waste. The large-scale effort met with some skepticism from com- mentators who believed that it was intended to generate benefits for Wal-Mart at its suppliers’ expense. and to sell products that sustain our resources and the environment. “And who’s got more purchasing power than Wal-Mart?”2 Indeed. Lee Scott’s cooperative business sustainability strategy STORYOF7AL -ARTSPROGRESS would go much farther than the retail giant’s earlier green initiatives.

Elm put it this way: “We recognized early on that the improvements themselves). Ruben hired Blu company’s list of strategic priorities. to those early campaigns.com Supply Chain Management Review · J u l y / A u g u s t 2 0 0 7  .Stuart Briers Nevertheless. respectively. vice of Wal-Mart’s products and processes that had the greatest www. and Wal-Mart and the supplier were heavily criti- cized. the company did earn some “goodwill president and senior director of corporate strategy and busi- among environmentalists [as] the first major retailer to ness sustainability.”4 When ven. and environmental issues seemed to slip off the In 2005. But not all the just our own operations. their new sustainability strategy dors claimed they had made environmental improvements would need to be deeply embedded in Wal-Mart’s operations to products.scmr.5 By the early 1990s. along with Andrew Ruben and Tyler Elm. At one point. the green tag program disappeared Looking Outside the “Bentonville Bubble” altogether. with that recognition in mind. If we had focused on sold as many as 300 products with green tags. Wal-Mart began promoting the products with and supply chain management to meet the ambitious goals green-colored shelf tags (without measuring or monitoring set in 2005. recognized that in contrast speak out in favor of the environment in 1989.”6 towels. we would have limited ourselves to headlines were positive. One large supplier was exposed for 10 percent of our effect on the environment and eliminated stretching its claim to offer environmentally friendly paper 90 percent of the opportunity that’s out there. the company we had to look at the entire value chain. Skye Sustainability Consulting to help identify the categories Lee Scott.

and described in greater detail below. Design Construction & Maintenance Global Logistics mental performance of suppliers’ products and processes.” even from critics.” To help make that lean model viable and because Wal- (typically a senior vice president) took charge of building a Mart lacked internal expertise in environmental sustainability. Ark. Academic governmental organizations (NGOs) such as Environmental Thought Leader Defense stationed employees in the company’s Bentonville. International NGO and others that seek to work in coalition with student and Thought Leader labor campaigners. 7AL -ARTS3USTAINABLE6ALUE. Seeking the opportunity to drive positive envi. 3. For each focal area. Club 6ALUE Government Organization many such organizations decided that the advantages of .ETWORK Thought Leader being able to help influence Wal-Mart’s environmental per- formance outweighed any negative repercussions from the Wal-Mart Supplier association. Thought Leader ronmental change on a massive scale. Design goals and metrics for monitoring the environ- Energy. China. electronics. an executive sponsor (primarily in addition to your job. Wal-Mart 2ENEWABLE%NERGY Global Greenhouse Gas Strategy is engaging its array of network partners to: Alternative Fuels 1. Food & Agriculture Wal-Mart also is implementing the following cooperative Forest & Paper supply chain management practices to motivate suppliers to Chemical Intensive Products reduce the environmental impacts of their products and pro- Jewelry Seafood cesses: China %8()")4 Source: Wal-Mart 7AL -ARTS3USTAINABLE6ALUE.scmr. tiplied sales data with environmental impact factors from Wal-Mart strategically decided not to hire associates—employ- the Union of Concerned Scientists. and other stakeholders. seafood.ETWORKS with examples drawn from the company’s global logistics.Wal-Mart environmental impact. Network captains were typically senior man. and sustainable products. The goal was To capitalize on the incoming ferment of creative ideas.ETWORK3TRUCTURE Environmental groups joined the networks with some Supplier Thought Leader trepidation. academia. The new supply chain management practices associated with this initiative %8()")4 are summarized here. such as the Sierra Club. Whereas Wal-Mart relationships with a relatively small number of suppliers. Certify suppliers and oversee the chain of custody for Packaging eco-labeled products. to embed sustainability in their daily work. and identify breakthrough product and process technologies. zero waste. the company hired one or more external advisors from Blu resentatives from government. to reduce environmental impacts and derive profit from that many of the 14 networks implemented new supply chain positive change. nonprofits and non.7 and identified 14 focal ees—to work on sustainability on a full-time basis. Source: Wal-Mart  Supply Chain Management Review · July/August 2007 www. management practices. bundled into three broad categories: renewable ener. The Wal-Mart/Blu Skye team mul. engaging with the biggest villain on the Sam’s 3USTAINABLE block presents risks of losing support and funds. (See Exhibits 1 approach: “Business sustainability isn’t something you’re doing and 2).”9 However. but instead areas. It is a new way of approaching your at the executive vice president level) and a network captain job. the leaders agers from Sam’s Club or Wal-Mart who were considered to intensified the company’s efforts to move toward stronger be among the company’s top performers. As a Financial Times article put it.8 tal sustainability of products and processes. suppliers. Elm explained the gy. headquarters to work within the networks. Across all 14 networks. assistance from its network partners—the environmental non- tionally focused. the network captains were charged to look profits and consultants—Wal-Mart set a goal of motivating outside “the Bentonville Bubble” for strategic input and asked suppliers to “race to the top” in improving the environmen- to start “pulling ideas from everywhere. environmental Skye or Rocky Mountain Institute (RMI) for each network. Assist suppliers with process innovation — especially 3USTAINABLE0RODUCTS Textiles the lower-tier suppliers that were previously less visible to Electronics Wal-Mart. and textiles networks. :ERO7ASTE Operations & Internal Procurement 2. With had previously been notorious for being internally and opera. sustainable value network of Wal-Mart employees and rep. However. nonprofits.com . “For member- ship-based environmental groups.

improving the efficiency of Wal-Mart’s trucking fleet by a few The Marine Stewardship Council (MSC).000 tons of CO2 per year that did not enter the atmosphere.4 billion in savings. and other stakeholders. Beginning in 2008. based on the United Nations’ Code of Conduct for product’s packaging against nine sustainability metrics. from “boat to ing network. “If we add 250 stores a year. Eliminate intermediaries and brokers in the supply other suppliers.”12 An MSC eco-label on the finished product signals Protection Agency. including cube utilization. Commit to buy a specified quantity of an innovative use less packaging. and use of materi.” With guidance from RMI. imagine how the possible grew. Metrics. Wal-Mart to achieve its public goal of reducing the packaging 6. Redesign the buying organization to give one person dors have logged onto the packaging scorecard site and 117 responsibility for nurturing the relationship with each direct products have been entered into the system. In its textiles network.certifies third parties to audit and certify fishery and proces- oped with input from the 200-plus members of the packag. erate $3. all spe- cies of wild seafood are greatly depleted and predicted to col- Each of these numbered points is illustrated below with lapse within 50 years.com Supply Chain Management Review · J u l y / A u g u s t 2 0 0 7  . and recovery value. But now they plan to double its by Unilever and the World Wildlife Fund (WWF) in 1997.13 ronmental standards.268 ven- 7.”10 The scorecard is an important enabler for chain.” Redmond believes that continu- like Rocky Mountain Institute in our logistics program had ity of supply is the greatest challenge for Wal-Mart’s seafood a tremendous impact on how much and how quickly Wal. and sees the Marine Stewardship Council’s certi- Mart recognized it could drive change. recycled content. ronment. Environmental plate. CO2 per ton of government. By raising consumer awareness.sustainability on a full-time basis. Wal-Mart’s more than in a sustainable manner. the U. Z For its part.” said Peter Redmond.sor compliance throughout the supply chain. nonprofits. Wal-Mart has defined standards for certification as a sustainable fish- started to procure hybrid diesel-electric trucks and refrigerated trucks that featured a small power unit for cooling so the engine could be turned off when the truck was stopped. www. aging. but instead to ciency.S. Kim Brandner. retailers. envi. network. Wal-Mart ronmental nonprofits to select standards for organic cotton formally planned to use the system to “measure and recognize farming and manufacturing processes and relying on those its entire supply chain based upon each company’s ability to partners to oversee the chain of custody. supplier and for handling negotiations with that supplier on pricing. quality. the packaging network imple- mented a Web-based scorecard that would evaluate each ery. packaging to consumers that the fish has been harvested and processed suppliers. In the first month. In the 7AL -ARTSTRATEGICALLYDECIDEDNOT first year of the program following Lee Scott’s announcement. 4. used by all of its suppliers by 5 percent between 2008 and pliers and develop longer-term strategic relationships with 2013. If achieved.11 Within this ominous business envi- examples from the various networks. The scorecard was devel. Certifying Environmentally Sustainable Products 8. Consolidate business with a select group of direct sup. According to an international study released in 2006. meaning almost $75 million in annual savings and 400. utilize more effective materials in pack- product. Wal-Mart’s direct suppliers. 2. Encourage licensing of environmental innovations. “I am already Speaking to the task of identifying efficient new technologies having a hard time getting supply. this five-year program is expected to gen- each of those suppliers. [For example. energy efficiencies. Identifying Goals. Wal-Mart sourced approximately $750 million in seafood in 2006. and the company’s volume of seafood busi- 1. the logistics fication program for wild-caught fish as the best means for network was going after incremental gains—for example. addressing this challenge. Responsible Fishing and on input from fishermen. established percent over several years. and source these materials more efficiently relative to 5. and other stakeholders. Wal-Mart is partnering with envi- als rated relative to their peers.000 suppliers were asked to use the scorecard throughout MSC hopes to drive demand and thus motivate the industry calendar 2007 to see how their packaging innovations. embed sustainability in their daily work.to shift to more sustainable fishing practices. sustainability director Elm said: “The value president for seafood and deli. and environmental innovation. efficiency in 10 years. Initially. The MSC production. and captain of the Wal-Mart of the network approach is that the goals grew as the spirit of seafood network. and New Technologies ness is growing at roughly 25 percent a year. the logistics network achieved TOHIRE associates— employees—to work on roughly a 25 percent improvement in fuel effi. 2. the 60. vice and goal-setting. including nonprofits.scmr.] the involvement of groups hard it will be in five years.

edge and process assistance through its strong relationships For instance. Suppliers have a strong incentive to innovate at each step in the process and finally reviewed by Consumer in order to keep Wal-Mart’s business. For Similarly. able to suppliers and makes doing business with Wal-Mart panies. Committing to Larger Volumes of Environmentally tion are largely absorbed by Wal-Mart’s suppliers. For processing. supply chain as the cotton moves from farm to factory. “There Wal-Mart employees now interact directly with organic cot- are about 150 certification agencies. Testing Laboratories (CTL) in conjunction with final product testing. that paperwork. For exam. the growth of cotton. about the spinner. or the dyer. with the support of nonprofits such as OE. which is why we picked the toughest certification com. regardless of where than ever before. the retailer learned that. in its textiles network. Certification paperwork is completed more attractive. Wal-Mart gives Wal-Mart is able to provide suppliers with valuable knowl.Wal-Mart senior brand manager of sustainable textiles for Wal-Mart. but we recognize only the ton farmers to understand their needs as OE helps them to seven that we think are the most strict… Since we’re not doing improve farming practices.along with the cost of certification. as well as the need to diver- )NITSTEXTILESNETWORK. Department Wal-Mart is engaging more deeply in its textile supply chain of Agriculture (USDA) standards. Currently. Providing Network Partner Assistance to Suppliers product certified as environmentally friendly. the ginner.g. “It used to be that if Wal-Mart was buying the cotton is grown around the world. or the farmer. we have chosen the U. Under the new strategy. the farmers have to Champion t-shirts. upholding the most stringent guidelines and standards. and reducing envi- We’ve worked with the Organic Trade Association and ronmental impacts before they will qualify for certification by the Organic Exchange (OE) to make sure that we are the MSC).” said Brandner.” said Diana Rothschild.S. tion process by doing a preliminary evaluation and identifying described Wal-Mart’s approach: specific problems that need to be fixed (e. with the environmental nonprofits in its networks. they wouldn’t look past Sara Lee [which follow USDA guidelines for organic growth. farmers faced a near-term reduction in yields with organic cotton farming.its suppliers an incentive to develop and produce that product. held the license for Champion products]. rebuilding stocks. strengthening management practices. our reputation is resting on who is certifying Assistance from Wal-Mart’s network partners is invalu- for us. Sustainable Products By making a commitment to buy a specified quantity of each 3. the cost and labor requirements of certifica-4. They didn’t think we’re following the Global Organic Textile Standard. former Wal-Mart employee and Blu Skye Third-party organizations certify practices at each link in the consultant to the textiles network. So.

WWF helps In 2006. Wal-Mart immediately took action.14 “Those alternate crops often cannot be sold as organic and are not as lucrative ple.scmr. which helped it formulate a more its supply of organic cotton.” said Lucy Cindric. “Organic farmers can’t grow PARTNERINGWITHENVIRONMENTALNONPROFITS cotton in the same field for an extend- ed time because it depletes the soil of to select standards for organic cotton farming and nutrients. cover crops to rejuvenate the soil. we did not the textile network.” said Rothschild. to help reduce uncertainty in have any of our production capacity cut with this vendor. This creates the temptation for farmers to a number of textile dye houses. “[We] put the dye house in touch with one of the to the harvest of any organic crop. vegetables.” she explained. a farm needed to remain free of non-organic 2008 Olympics. in order to reduce pollution in Beijing ahead of the organic standards. captain of by the shutdown of their Chinese dye suppliers. Wal-Mart made a five-year ver- environmentally friendly process that reduced its toxic output bal commitment to buy organic cotton from farmers. This forced manufacturing processes and relying on those partners farmers to alternate the planting of cot- Z ton with legumes. In addition. Wal-Mart (which became the world’s largest pur- In the seafood network.” the market. including one of Wal-Mart’s turn to non-organic farming. Brandner pesticides or similar materials for a period of three years prior explains. in the MSC certification program. However. Wal-Mart is relying on the WWF chaser of organic cotton in 2006) also agreed to purchase the to increase the number of fisheries and processing plants organic cotton farmers’ alternate crops.com . to meet suppliers. Specifically.tious seafood goal to carry 100 percent MSC-certified wild-  Supply Chain Management Review · July/August 2007 www. when the Chinese government threatened to shut down as organic cotton. Wal-Mart also publicly announced a highly ambi- boat operators and processors prepare to enter the certifica.7AL -ARTIS sify crops.15 To increase and secure NGOs in our network. “It gives very quickly. or other to oversee the chain of custody. Although other retailers were negatively affected them confidence and stability.

to Wal-Mart sees excessive risk in eliminating coffee brokers mitment to buy from all fisheries that become MSC-certified. con- cally avoids long-term purchasing commitments and main. As the supply Wal-Mart is unlikely to completely eliminate its intermediar- of MSC-certified fish is currently far from adequate to meet Wal. his company could not uncertainty of demand and significant risks of inventory obsolescence. to acquire personal computers that were !TTHEENDOF.ies.that if a well-known company. His concern is In its sourcing of consumer electronics. However. this public announcement is effectively a com. Wal-Mart typi.tracted directly with a farmer. and then the spot price for tains low inventory levels because of the industry’s high coffee went above the contract price. For example. the former CEO of a major coffee supplier Mart’s demand.caught fish in its stores within three to five years. and contracting directly with coffee farmers. such as the one he led.

reduced paperwork and transaction Mart and co-captain of the electronics network.S. president and divi- frequency of seafood stock-outs. We know that for traceability. fourth-. and reduced the costs and environmental impacts of the-top concept means that suppliers would be motivated to transportation. ship it to China for spinning and knit.000 pounds the company may easily switch from one supplier to another. and hence the opportunity to eliminate intermediar. The race-for- costs. Wal-Mart reduced the race for the top. Z “We’ll take that risk.com Supply Chain Management Review · J u l y / A u g u s t 2 0 0 7  . we started to see when fish was being handled four such as environmental compliance because the retailer’s rel- or five times. Contracts are important for providing incentives for tion in the textile network—was full visibility of the chain of investment and securing a supply of coffee. “We want to be the first one in the U. Wal-Mart’s top supplier of frozen fish fillets in the Now.S. And it’s certainly not good a lot of people’s business. by looking more deeply at the supply chain. Wal-Mart has had many diverse relation- coming to us third-. cotton from Turkey. Therefore. If it did.” said Alex Cook.price.scmr. In contrast. especially president Ruben: “Right now we account for two percent of through freezing and refreezing]. particularly when custody.” said www. that was going out to a market saying. Despite the benefits demonstrated in the examples above. then NGOs Wal-Mart. we’re find. Consolidating Direct Suppliers One of the problems we had was how much of our fish was Over the short term. Company. Said network captain Redmond: 6. Cutting out the Middleman his company would have to pay. Says sustainability vice [since texture and flavor fish degrades over time.” its reputation would suffer. improved the quality of sional merchandise manager of entertainment/wireless for Wal- the fish it was receiving.” supplier base. to sell would criticize the company for harming poor farmers and RoHS-compliant PCs. anonymous cof- An immediate but unanticipated benefit of MSC certifica. its more typical four-week commitment. or even fifth-hand. It brought us a lot more awareness about our needs to be a lot larger—maybe 50 or 60 percent. Manish Kumar. was working with the WWF to draw more ing opportunities to do things like eliminate the shipment to fisheries and processors into the MSC certification program China and have all processing done in Guatemala. especially overseas. Wal-Mart implementation were roughly equivalent to the made a commitment to Toshiba to buy 12 weeks’ worth of inventory as opposed to profits from several Wal-Mart SuperCenters.U. For example. contracts with coffee farmers could effectively only place a floor on the price that 5. ies.fee brokers could hold farmers accountable to the contracted tion in the seafood network—and of organic cotton certifica. and we knew it couldn’t be good for the fish evance to those suppliers has been low.its sustainability strategy in the first year of mentally friendly electronics. of salmon no matter where it comes from. often working with a supplier one our supplier turned out to be nothing more than a packer purchase order at a time or one season at a time.’ Through the chain The result: it has been tough to obtain improvements on issues of custody. since 2005. CEO of the Fishin’ ting. and then ship it again to Guatemala to be cut and sewn.7AL -ARTFOUND compliant with the EU Restrictions on THATTHETANGIBLEPROFITS generated by Hazardous Substances (RoHS) Directive as part of its efforts to carry more environ. Year to year. “I had no idea what the MSC was in January [2006]. So Wal-Mart is now starting to consolidate its business with select groups of direct suppliers. “We’re trying to stimulate a By simplifying its supply chain. Brandner noted: “We used to buy expand the amount of business they received from Wal-Mart. direct to Guatemala saved time and money for Wal-Mart. innovate in environmental performance in order to maintain or In the textiles network.prices are low but likely to rise sharply in the near future. and effort to the job without increasing near-term profits. ‘I need 50.” Going even though this added significantly more complexity. Sometimes ships with many factories. time.” explained Laura Phillips. electronics buyer for hold the farmer to the contract price. so now things come to us a lot more directly.

would lead to improved environmental performance across ning. worth much more to the retailer. ing manager of electronics for Sam’s Club and co-captain of • Product Development—Focused on product design the electronics network put it: “If someone comes up with and trend execution—marrying what the buyer says the cus.” Kumar felt that his efforts ity strategy because in Wal-Mart’s traditional business model. pricing and quality. if (as buyers did in other product categories). In particular. a better. it’s got an advantage. and explain to the businesses we work with how suppliers needed to drive ongoing environmental innovation. he believed. • Merchandising (buyer)—Focused on the customer and not just from a performance management perspective.” In Wal-Mart’s electronics network. Said Blu Skye’s Scot Case. Each was given the chance In collaboration with its suppliers and with environmental to become a specialist and to take a more strategic approach nonprofits. In the new model. ordering and inventory management. vice president and divisional merchandis- best meet the customer’s needs. “They’re willing to let us talk on their behalf. is leading her team goodwill and improved assurance of supply. and determining the best sourcing strat. I spend half my day. Sourcing spe. because we have the muscle of their business behind us. such as public the company’s focus on the environment. Intangible benefits.” Some suppliers fear that this type of information poten- TOSOURCEINNOVATIVE products that tially could be used by Wal-Mart in price negotiations. defend and maintain the future-looking. “With anything that can be easily necessarily environmentally friendly. are likely to be to “become smarter merchants. Licensing Environmental Innovations persuade them to become certified. ating the technical specifications for each product.Wal-Mart Kumar. The textiles net. For example. were helping to secure and expand his business with Wal. who worked with To better manage relationships with suppliers. Z tested.” work divided this function into four different job categories: This hesitancy to disclose is challenging to Wal-Mart. handling a wide variety of responsibilities how end up in the hands of their competitors. we can go to a plant or a fishery and 8.” she says. would Wal-Mart truly be able to develop said. and store layout. sourcing specialists were meant to mental impacts of a portion of its products and production develop and nurture the longer-term relationships with suppli. Restructuring the Buyer Role performance. ers that were necessary to support activities such as the organic Ruben and Elm found that the tangible profits generated by cotton project and other sustainability initiatives. the industry and more widespread benefits for Wal-Mart. customers might want but which are not On the other hand. If it shares that information. aging suppliers to license their environmental innovations. textiles buyers had tant to supply information to Wal-Mart because it might some- been generalists. the competition might gain a much better understanding 7AL -ARTMAYMISSOPPORTUNITIES of its production costs and therefore its profit margins. and they are commit-  Supply Chain Management Review · July/August 2007 www. the buyers rotated positions every 12 to 18 months. “Information about how much energy a product consumes is not particularly sensitive. Ruben and Elm envision a Sustainability leader Elm saw this type of change as huge array of untapped opportunities. and understanding what the product assortment should be to As Seong Ohm. the textiles the electronics network: “There are all sorts of concerns about network implemented a major organizational change: It rede. processes while increasing its own profits. “It’s definitely brought us closer. trust-based relationships with their points. At the end of 2006. suppliers’ sensitivity about intellectual property is a barrier to improving environmental 7. the electronics network was encour- • Technical Services and Sourcing—Focused on cre. mentation were roughly equivalent to the profits from several According to Brandner. I increasing the longevity and depth of personal relationships in think there’s a lot more trust now in our relationship.” he sourcing. Only by Mart in the long-term. this organizational change. to invest in innovation. And.” explained Case. every day. important this effort is. more sustainable way to do something. working on essential to the long-term viability of Wal-Mart’s sustainabil- something related to the MSC. the impact. one factory is significantly more energy-efficient than others. confidential business information and suppliers being reluc- signed the role of its buyers. while licensing the innovation also • Planning and Execution—Focused on financial plan. Wal-Mart’s sustainability strategy in the first year of imple- cialists were encouraged to hold the position for many years.com . backed by Wal-Mart SuperCenters. Wal-Mart is dramatically reducing the environ- to their role. representatives from each of these four “centers of excellence” were co-located as members of a Three Traps to Avoid tightly integrated product team. most suppliers are more comfortable providing.scmr. deciding The opportunity to derive additional revenue from an envi- how to package it. we want to tomer wants with what the trends are in the marketplace in encourage them to share that with other suppliers to increase order to drive development of the product. In the past. ronmental innovation would increase the suppliers’ incentives egy. including supplier negotiations. “Today.” As a result.

ditions in its suppliers’ factories. 2007). February 13. Craig Smith and Robert J. Crawford. the environmental value created by promoting green products.com. 6.com/articles/may/may05_1. Wal-Mart’s sustainability strategy • Making a five-year verbal commitment to buy only organically must be profitable if it is to be sustainable in the long run and grown cotton from farmers. Last year.” for the purposes of maximizing the company’s own profits. p. Apparel Magazine. Fei Qin.com/articles/4564. environmentally-friendly products. “Does Monitoring Improve labor-related problems that tend to occur when buyers Labor Standards?” MIT Sloan Research Paper No. 1991.ifas. Wal-Mart may miss oppor- 9 Jonathan Birchall. 1. Global Supply Chain. Jim J. cit. assortments. Wiatrak. Bloom. March 18. (2) a sub-optimal product assortment.” University of Florida.” MIT Sloan Management Review.” MIT Sloan Management Review. of factory labor conditions. p.18 Separation of fac. 2005 speech. Fall 2004. Locke and Monica Romis. and (3) criticism review. com. 2007).com Supply Chain Management Review · J u l y / A u g u s t 2 0 0 7  . “The Green Machine. “Wal-Mart Picks a Shade of Green. nization. increases its profits.ufl. 13 Ibid. Although Wal-Mart might in the future be reward. the retailer may face price rises from that narrower Environmental Choices: Practical Advice from the Union of Concerned supply base. 2006.shtml Wal-Mart has also long been criticized for poor labor con. Buoy Advocates. and might end up with a product assortment that is suboptimal 14 Jordan K. 4 Richard Halverson. 2006). but it might exacerbate the worst 18 Richard M. 2007).edu/news/2006/ its heavy and successful promotions of “green” light bulbs.” Nation’s Restaurant News.”17 This will avert potential conflicts of interest that 16 N. resources like MSC-certified seafood. A Consumer’s Guide to Effective suppliers. 317. 2006. 2006).” Discount Store News. November 1. Wal-Mart’s environmental nonprofit network partners will con. Lee Scott said: “We are committed to increas. instance—it is unlikely that the company can recapture all of 12 Erica Duecy. “Organic Apparel: It’s Not Just for Treehuggers Anymore.16 In response.walmartfacts. particularly in times of scarcity and for limited Scientists. Toshiba.000 tons of CO2 pollution in one year alone. and under-forecast and then demand overtime production—as Richard M. http://edis.” Stanford ed with offset credits for reducing CO2 emissions—through Report. and to buy alternate crops those achieve Lee Scott’s aspirational environmental goals. the depletion of ocean life from overfishing.mit. in his October 15 Tawainga W. Locke. www. 2006.apparelmag.” FT. http://www. with fewer suppliers and a focus on sourcing cnn. Wright. the 3OURCES company became the world’s largest buyer of organic cotton. 4612-06.com/Files/21st%20Century%20Leadership.edu/smr/issue/2004/fall/12/ (January 31. David L. p. “Big Three Take High Road on Environmental Front. http://money. http://www. November 2.” Journal of Business Ethics Education (2006): 143-164. http://www. to sell only MSC-certified wild-caught fish within three OIT-71) and associated teaching note by Erica Plambeck and Lyn Denend. 2006. arise when buyers can obtain less expensive products from 17 Scott. July 2006.html (December 14. 2006). 2006).aspx tinue to push for environmental attributes in choosing product (December 5. (Three Rivers Press: New York. “Making the Transition from Conventional to Organic Farming ing our engagement concerning supplier factory conditions… Using Conservation Tillage in Florida. 10 “Wal-Mart Unveils ‘Packaging Scorecard’ to Suppliers. to five years. Indeed. Wal-Mart Ride Seafood Sustainability Wave. July 16. 1999. for november8/ocean-110806.” Corporate Reputation Review. http://sloan- costs. “Darden. tory certification from the buying organization may cause a Some of Wal-Mart’s loss of information and coordination. Speer. “Improving Working Conditions in a was discovered in Nike’s supply chain. It won’t all be plain sailing. 1 Lee Scott. Feb. 8.htm (November 28.edu/AG246 (January 31. 2007). want but which are not necessarily environmentally friendly. “Choosing the Right Green obstacles as it scales up its network approach: (1) increased Marketing Strategy. Katsvairo. Wal-Mart’s public reputation is 6 Much of the material for this article. which runs counter to Wal-Mart’s strategy of embedding responsibility for reducing “Greening” Decisions environmental impacts within the buying organization.” Fortune. tunities to source innovative products that customers might 2006. Alberto Brause. • Buying diesel-electric and refrigerated trucks with a power Going forward. • Promising by 2011 to only carry seafood certified wild by the walmartstores. mi_m3092/is_n6_v30/ai_10516083 (January 11. 8 Marc Gunther. IFAS We are separating factory certification from the buying orga. “The Wal-Mart Supply Chain Controversy. these three possible pitfalls and continue to manage its sup- saving nearly $75 million in fuel costs and eliminating an ply chain in a manner that reduces environmental impacts and estimated 400.scmr. Marois and Pawel P. 1999). Becoming more dependent on fewer selected 7 Michael Brower and Warren Leon. “Twentieth Century Leadership.” October 24.stanford. a group dedicated to preventing 2 “Environmental Group Moves in Near Wal-Mart. Extension. 2005. 2004. (December 19. ple. Wal-Mart faces three possible 5 Jill Meredith Ginsberg and Paul N. • Buying (and selling) 12 weeks’ worth of Restrictions on 3 “Tough Talk and Soothing Speech: Managing Reputations for Being Tough Hazardous Substances (RoHS)-compliant computers from and for Being Good. op.pdf (January 29. http://news-service. Additionally. JJJ farmers need to grow between cotton harvests. D4. Winter 2007.com/p/articles/ ting to scale up Wal-Mart’s efforts to green its supply chain. as well as all quotations (unless oth- erwise cited) are drawn from the Stanford University Graduate School of on the line as it makes ambitious public promises—for exam- Business case study entitled “Wal-Mart’s Sustainability Strategy” (GSB No.” Wal-MartFacts. 11 “Science Study Predicts Collapse of All Seafood Fisheries by 2050. p. July 31.com/magazines/fortune/fortune_archive/2006/08/07/8382593/index. http://findarticles. Wal-Mart must be vigilant if it is to avoid unit that could keep cargo cold without the engine running. Marine Stewardship Council. noncompliant factories.” The Commercial Appeal.