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Unit 8: Supply Chain Management

that Wal-Mart’s green initiative is simply unsustainable. As with many companies Notes
attempting to make their business strategy more “green”, upfront costs become unavoidable
and are simply not worth the investment. Wal-Mart will need to spend in upwards of $500
million per year in order to achieve the goals mentioned earlier in the study. 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. However, it is important to
note that Lee Scott stated in 2007, “Tangible profits generated by Wal-Mart’s sustainability
strategy in the first year of implementation were roughly equivalent to the profits from
several Wal-Mart SuperCenters.” Intangible benefits, such as public goodwill and improved
assurance of supply, are worth much more to the retailer than the profits generated the
first year of implementation.

As Wal-Mart attempts to scale up networks and improve upon “green” initiatives, the
company faces three possible obstacles:
1. Increased Costs

2. A Sub-Optimal Product Assortment
3. Criticism of Factory Labor Conditions.
Wal-Mart must take these challenges seriously because public reputation is on the line as
it makes more and more promises to the public. With increased dependence on a limited
number of selected suppliers, Wal-Mart also may face rising prices from the narrow
supply base, especially in times of limited resources. Also, with fewer suppliers Wal-Mart
may miss opportunities to create innovative products that customers may want but are
not necessarily environmentally friendly. Wal-Mart must continue to innovate while
managing incremental “green” changes to their supply chain management. Each of the
nonprofit partners will continue to push Wal-Mart in choosing product assortment lines.
Conclusion
According to the 2009 Wal-Mart Sustainability Report, Lee Scott was quoted as saying,
“The facet is sustainability at Wal-Mart isn’t a stand-alone issue that’s separate from or
unrelated to our business. It’s not an abstract or philanthropic program. We don’t even see
it as corporate social responsibility. Sustainability is built into our business. It’s completely
aligned with our model, our mission and our culture.” In this case study we have outlined
the requirements needed to become a sustainable business, the reason why this initiative
is different than others previously attempted by Wal-Mart, goals presented by management,
the new value networks, and risks Wal-Mart needs to address. They have already taken
major steps including a “green” website where they give tips on how customers can go
green and what they can do to reduce their environmental impact. Wal-Mart critics argue
that the steady dose of these initiatives is an effort to deflect attention from its workplace
policies and its financial performance. They need to continue to invest in its environmental
policies as well as address the issues facing their workforce in order to prove these initiatives
are not just a public relations stunt. However, if Wal-Mart proves that it is serious about
reducing environmental impact and devoted to investing in green initiatives, critics will
have to unclench their fists for a round of applause. At least for a moment.

8.5 Learning Curves

A learning curve is a line displaying the relationship between unit production time and
cumulative number of units produced. The theory of learning curves is based on three assumptions:

 The time taken to complete a given task or activity will go down, each time the task or
activity is undertaken,

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