Page 170 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 8: Supply Chain Management

approach to supply chain management that has long emphasized visibility through the Notes
sharing of information with their suppliers. Although there are hundreds of logistical
functions which allow Wal-Mart to be the price and logistics leader, the focus will be
primarily on the company’s newly adopted strategy of making logistical processes “green”
and more environmentally conscious. According to the Supply Chain Management Review,
Wal-Mart CEO Lee Scott committed the company to three ambitious goals: to be supplied
100 percent by renewable energy; to create zero waste; and to sell products that sustain
Wal-Mart’s resources and the environment. Wal-Mart’s 14 Sustainable Value Networks,
the Network’s structure, new “green” logistics technologies, and additional future
initiatives will be considered along with counter arguments which suggest that Wal-
Mart’s green initiative is simply unsustainable. The main sticking point seems to be the
same one that has long held back the adoption of better light bulbs, home solar panels, or
hybrid cars. Upfront costs are unavoidable; and the promise of potential savings down the
road does not resonate with consumers, or smaller Wal-Mart suppliers, the same way it
does with big corporations. So that’s the big question: How much will Wal-Mart invest in
green technologies now to clean up its act down the road?

Introduction
Wal-Mart has undergone many growth stages since Sam Walton first decided to be the
best retailer in the world. His initial strategy was to target low-income families in rural
areas by offering significantly lower costs. When David Glass took over in 1988, Walton’s
mission was truly realized through the use of technology in distribution and supply chain
logistics, which allowed Wal-Mart the opportunity to cut costs and lower prices for end
users. Lee Scott took the reins in 2000 to steer Wal-Mart toward sustainability. Scott’s
business model to strengthen supply chain management processes by “going green” was
a strategic decision that positively impacted Wal-Mart’s growth, distribution techniques,
and corporate identity. His knowledge of distribution systems and push for sustainability
has transformed the company into an eco-friendly powerhouse that continues to cut costs
and remain at the frontier of distribution systems technology.
Background
Wal-Mart leadership has done well to put the right people in the right seats on the bus to
drive the company forward. Founder and original Wal-Mart CEO Sam Walton strategically
chose his successor David Glass to lead the company in 1988. Art Turock claims that “the
most impactful decision Sam Walton made during his reign was to select and develop
successors equipped to lead Wal-Mart to the next level of complexity” (Turock, 2004).
From 1988 to 1999, CEO David Glass transformed the company from just a retailer into a
retail distributor, using technology to develop Walton’s original goal while staying in
line with his core values. While Sam Walton built his strategy on low prices to the masses,
CEO David Glass enhanced his growth strategy through the use of technology.
Sophisticated technology boosted supply operations such that Wal-Mart’s efficient retail
stores became the manifestation of a fast and flawless distribution business. When Glass
succeeded Walton, he believed that “technology would ultimately drive this business to
be the size that it is” which was the fundamental difference that set his approach apart
from that of Walton’s (Turock, 2004). The late 80s and 90s began a technology boom, with
the computer industry making rapid advancements. Glass identified this as a strategic
opportunity to enhance business and distribution at an early stage in development.
Emphasizing visibility through the sharing of information with suppliers, Glass reframed
the company strategy in terms of how to be the low-cost operator and low-cost leader by
focusing on logistics and distribution. A more advanced distribution system would move
product faster and more efficiently, allowing Wal-Mart to maximize use of their suppliers
Contd...

LOVELY PROFESSIONAL UNIVERSITY 165