Page 173 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Production and Operations Management

Notes external stakeholders to try and develop areas of maximum environmental impact and
identify key networks which would help achieve these goals. In return for participating in
these value-added networks, participants would receive information about as well as a
say in Wal-Mart’s operations. Tyler Elm, Wal-Mart’s senior director of corporate strategy,
and Andrew Ruben, Wal-Mart’s vice president of corporate strategy and business
sustainability, directed Wal-Mart’s network leaders to, “derive economic benefits from
improved environmental and social outcomes” (Elm, 2007). “It’s not philanthropy,” he
adds. According to a Stanford Social Innovation Review, “By the end of the sustainability
strategy’s first year, the network teams had generated savings that were roughly equal to
the profits generated by several Wal-Mart Supercenters” (Denend, 2008). Below is a list of
Wal-Mart’s sustainable value networks and how the company plans to accomplish each of
the main three goals:

At the center of the business sustainability strategy pursued by Wal-Mart is a shift from
generating additional value through price-based interactions, relationships with non-
profits, suppliers, and other stakeholders. Through the above networks, Wal-Mart is
gaining a system perspective which helps retailers find ways to address environmental
issues. In exchange for these suppliers addressing the issues, nonprofit network members
gain huge leaps towards their overall missions because of the scale of the operations at
Wal-Mart. Suppliers also enjoy not only the stability that more intimate relationships
with Wal-Mart brings, but also the guidance and support from Wal-Mart’s nonprofit
partners.
The Wal-Mart sustainability strategy no doubt looks to be off to a promising start; they
must not become complacent and must press-on carefully in order to make these networks
sustainable and able to expand without interruption. The first thing they need to do is
manage these partnerships carefully in order to keep costs down. They also need to be
able to manage the balance between offering “green” and conventional “non-green”
products in its stores.

Finally, because of the very high number of non-profits in the network, Wal-Mart must
manage the loss of these partnerships. Individual groups may be unable to get credit for
a large reduction on environmental impact. Over time, these groups’ inability to be able
to demonstrate their impact may cause some problems with their fund-raising because
donors will demand more and more data on their performance. These problems could
eventually cause the nonprofit groups to withdrawal from the networks.
Counter-Arguments to Wal-Mart Going Green

While some stakeholders and management become increasingly confident about the new
sustainability initiatives, history dictates that there is reason to worry. Many critics argue

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