Sustainable IITD Blog

Making Difference: One Step At A Time

How do you green the largest supply chain of the world?

Walmart is the world’s largest retailer with over 11800 stores worldwide. Once, not so long ago, the name was synonymous with environmental infringements and harsh labour policies. But over the years, Walmart has worked steadily to improve its sustainability reputation. Especially so in the retail business, where eco-conscious customers can decide the profit and loss balance sheets of a retailer.

Walmart-15Qs

Wal-Mart began its sustainability strategy from 2005 onwards, and has been pushing it forward since. The main goals on its agenda right now are to become 100% reliant on renewable energy sources, producing zero waste and selling products that are eco-friendly. To do this, it began working with its major suppliers in order to save up on packaging costs and plastics usage. This reduces the water-footprint and carbon-footprint of its products significantly.

Such reductions cannot be made without effective coordination between supplier and retailer. For example, Walmart partnered with Unilever plc to produce small sachets of detergent in concentrated form – thus giving more in a smaller package. This allowed it to save 80 million pounds of plastic resin, 430 million pounds of water and 125 million pounds of cardboard. More importantly, it forced competitors to follow similar processes to switch to concentrated detergent and became the industry standard. Walmart’s zero waste initiative has also propelled forward – it has been able to reduce waste by nearly 60% by improving inventory management, increasing donations and recycling initiatives, coupled with well-coordinated logistics.

Now it is taking it a notch further. It is prompting suppliers to rate products on a sustainability scale based on energy and GHG emissions, waste and ethical production. It is also gathering huge amounts of data on product life cycles, which help it to create a sustainability index that will increase transparency for the customer. It is also collaborating with academics and NGOs to build a global database of product information. It hopes that this rating system will become the basis for standards, ratings and other product-level evaluations that it can use in its stores. Walmart-15Qs

It is proposed that Walmart will keep its sustainability index open to all, to become a universal green standard of sorts and become a tool for sustainable consumption. But in the process of developing this system itself, Walmart has effectively gained in efficient production, less waste and lower emissions – all of which have resulted in significant cost savings.

This article was adapted from a case study by Samuel Fromartz for the Sloan Management Review of MIT.

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This entry was posted on November 15, 2014 by in Uncategorized.

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