Walmart, Sustainability, and Troubles in Mexico
Walmart is important to the supply chain for a number of reasons. First, Walmart is clearly perceived as one of the icons of supply chain excellence, and in fact would almost certainly be named the top supply chain in the world if we could somehow put it to a vote. (Actually, US consumer goods manufacturers do hold a vote each year in the annual Kantar Retail study, and Walmart always wins by a massive margin - see Top Retail Supply Chains for 2011).
That said, most can’t really articulate why Walmart’s supply chain is great, other than to recite the overused example of it knowing to bulk up on pop tarts when hurricanes are approaching. More on this question some day.
"No question Walmart is no longer the bad guy many had seen it as before, even as there have been little change in many of the areas that used to draw the complaints."
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Second, because of its massive sales numbers, Walmart has far more total vendors than anyone else in retail, and represents a substantial portion of sales for thousands of these vendors. Even for large consumer packaged goods companies, Walmart can represent 30% of total US sales, and 15-20% of the total is very common. For specialty vendors (say fishing lures) the percentage can be much higher. That gives Walmart incredible clout and influence over the consumer goods sector, and no question at the heart of that control is logistics (I am not quite ready to say supply chain yet).
So that brief introduction to some commentary on Walmart’s just released Sustainability report for 2012. Former CEO Lee Scott pushed Walmart aggressively into the Sustainability game in the middle of the last decade. I am convinced based on interviews I have seen and read with Scott on the topic that this really was mostly from the heart - Scott believed this was the right thing to do. But it didn’t hurt that at the time, Walmart was a generally despised company in many quarters. The criticisms included low wages, being non-union, destroying Mom and Pop retailers, destroying American jobs as the world’s largest importer, discriminating against women in terms of promotions, who knows what else. The unions ran television ads and built webs sites specifically against Walmart.
Many of those criticisms are still out there, but there is no question they have been muted in recent years - and a good part of that is Walmart’s aggressive stance on Sustainability in all its dimensions. Many mostly on the left that might normally be anti-Walmart found the company was on their side on the environment and more. I don’t want to get political here, but no question Walmart is no longer the bad guy many had seen it as before, even as there has been little change in many of the areas that used to draw the complaints. It has been an incredible smart PR move. Walmart is now often seen arm and arm with those who might have been critics in the past. It had First Lady Michelle Obama on the podium with its executives last year announcing programs around healthy food, for example.
The 2012 Sustainability report is simply staggering. It comes in at 121 pages. Do you think Sustainability for Walmart is mostly related to the environment, energy and CO2 emissions? That’s a big part of it, but there is a lot more, from locally sourced produce to economic development for woman to providing general job skill, training to youth in Brazil, selling healthier foods and much, much more.
Now, Walmart is far from being the only retailer on this course. The UK’s Sainsbury’s grocery chain is following on a similar path, for example, but can’t match Walmart’s scale in terms of number of initiatives and certainly global reach.
The report lists dozens of programs. In truth, reading this document feels like you might be reviewing some mammoth tome from the United Nations or some major governmental agency - except they would be largely touting plans and unrealistic goals, while Walmart is actually getting it done. Amazing really.
Much but certainly not all in the report does connect to the supply chain, and many of the initiatives there are quite interesting. Here are some of my favorites:
•Continued Reduction in Waste going to Landfills: Walmart says that last year, 80.9% of its physical waste in the US was recycled, and that this was worth some $231 million to its bottom line from recycling revenues and other cost avoidance. It says that its ASDA stores in the UK sent zero waste to landfills.