Page 302 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes
The Next Level
Wal-Mart has attempted green initiatives before, but Scott’s plan is different and has the
potential for success based on many reasons. In the past, Wal-Mart dealt with environmental
issues defensively rather than cooperatively, proactively, and as opportunities for profit.
In 1989, in response to letters from customers about environmental concerns, the company
launched a campaign to convince its suppliers to provide environmentally safe products
in recyclable or biodegradable packaging. However, this large-scale effort was met with
some skepticism from commentators who believed that it was intended to generate benefits
for Wal-Mart at the expense of its suppliers. Nevertheless, the company did earn some
goodwill among environmentalists as the first major retailer to speak out in favor of the
environment. When vendors claimed they had made environmental improvements to
products, Wal-Mart began promoting the products with green-colored shelf tags. It should
be noted that although Wal-Mart promoted these products, the company did not actually
measure or monitor the improvements. Regardless, the company sold as many as 300
products with green tags at one point. By the early 1990s, the green tag program disappeared
altogether, and environmental issues slipped off of the Wal-Mart’s list of strategic priorities.

The new sustainability strategy needs to be deeply embedded in Wal-Mart’s operations
and supply chain management to meet the ambitious goals set in 2005. In the words of Lee
Scott, “We recognized early on that we had to look at the entire value chain. If we had
focused on just our own operations, we would have limited ourselves to 10 percent of our
effect on the environment and eliminated 90 percent of the opportunity that’s out there”
(Plamback, 2007).
Wal-Mart’s leadership must therefore evaluate the entire value chain as a means of
implementing sustainability through distribution systems. Creating metrics for analysis
is paramount to Wal-Mart’s ability to monitor corporate operations and global suppliers
to be able to support their real efforts for improvement with substantial data.
Ambitious Goals
In late 2005, Wal-Mart President and CEO Lee Scott gave his first presentation broadcast to
over 1.5 million employees in over 6,000 stores and each of its suppliers. He laid out a
detailed summary regarding Wal-Mart’s new sustainability initiative to make a positive
impact and greatly reduce the impact of Wal-Mart on the environment in order to become
the “most competitive and innovative company in the world” (Plambeck, 2007). In his
speech, Lee Scott laid out three very ambitious goals in which he vowed Wal-Mart would:
1. Be supplied 100 percent by renewable energy in the very near future
2. Create zero waste
3. Sell products that sustain Wal-Mart’s resources and the environment

Clearly, Wal-Mart is trying to differentiate itself in an area where it was once considered
a laggard. Even some of the harshest Wal-Mart critics have started to agree that the company
has begun to make good on its promises. Obviously, these goals can seem overly ambitious
to most, but they should not seem inconceivable considering Wal-Mart’s past success with
seemingly unreachable goals.
The three goals were just an introduction to Mr. Scott’s speech. He also discussed the
following goals:

1. Increase fuel efficiency in Wal-Mart’s truck fleet by 25 percent over three years and
doubling it within 10 years
Contd...

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