A Green and Sustainable Wal-Mart?? [POV]

Today, Wal-Mart made a groundbreaking announcement. They decided to involve over 100,000 of their suppliers in an initiative over an extended period of time and actually reduce their global carbon footprint. This will involve suppliers all over the world and this is as groundbreaking as sustainability gets – especially after what Wal-Mart did last month. The more important question to ask at this stage is if this move will spur companies to take up initiatives of the same order and scale. Of late, there has been a lot of talk about corporate social responsibility and how to tie it into the way companies do business every day. This gave rise to the term sustainability.   The EPA has been especially vocal in publicizing the various benefits of having sustainability on the radar. And, with Copenhagen and the number of delegates we saw there, most businesses in America knew at the back of their mind that it was not long before they were forced to report their level of sustainability.

 

So, what has Wal-Mart actually promised in today's announcement? Let us take a look at the key takeaways from today's meeting.

 

• Reduce 20 Million Metric tons of Greenhouse Gas Emissions from their Global Supply Chain.
• Taking a transparent, efficient, measurable and accountable approach involving their suppliers.
• Its going to involve a larger group – 100,000 suppliers all over the world
• Its going to start a race amongst the suppliers to be greener and more efficient
• Efficiency is the key term here
• They want to show the world that they can decouple business growth from carbon growth

 

One interesting fact that I noticed at today's event, was that Wal-Mart openly talked about how much waste they have reduced and will continue to reduce from packaging material. It seemed interesting to know how 20th Century Fox's supply chain reduced packaging material in their DVDs and were able to save significant amounts of money in doing so. They even showed us a live example. What was even more interesting to note was that they had partnered with TreeHugger for this event. This only goes to show how much Bentonville wanted this to be a great success. The event took off with a lot of sweet talking directed to the suppliers. Given Wal-Mart's troubled past, it looks like they've now come to realize that they need suppliers' co-operation to make this initiative worth mentioning in the future.

 

POV – [THE GOOD]: The goal Wal-Mart has set is lofty. By looking to reduce greenhouse gas emissions in the next five years to the rate of 1 1/2 times their projected emissions growth until 2015, Wal-Mart is showing unprecedented initiative. They seem to have gathered a strong pack to support them - including the Environmental Defense Fund, Price Waterhouse Coopers, the Carbon Disclosure Project and many more. Personally, I feel this step signifies a new direction for Wal-Mart. Simply by being the first to take up such a massive initiative, they are going to set the rules of the game. It  never ceases to surprise me how Wal-Mart keeps finding ways on increasing their profitability.

 

[THE BAD]: One pitfall they need to avoid going ahead is “public perception”. We have all seen the damage these protests can do to their image. Its all good that Wal-Mart is taking control of the situation for the greater good of society (which is how they’re marketing it. I am yet to buy it) and their own sustainability. But this measure is going to warrant drastic changes by the suppliers. Wal-Mart was the suppliers’ soothsayer today. However, knowing history, I wouldn’t be surprised to see suppliers complaining in the near future. This is what makes me apprehensive. Because this initiative of Wal-Mart should not fail. If it does, other companies will shy away from trying green ideas unless mandated.

 

This looks like a lot to swallow for Wal-Mart's suppliers too. Especially after they made significant changes  to their supply chain to eliminate delays in shipment. But it is in line with their overall strategy - and like it has always been: If you want to do business with Wal-Mart, you play by their rules. This new announcement might herald a new wave in CSR initiatives in the near future. But I'm betting that a lot of big companies will be waiting and watching - if the experiment is a success, it will trigger an avalanche.

'Baby Steps' - and a new Facebook page

Today, I am starting a new experiment with this blog. I am beginning to investigate newer ways to promote SCM blog. Social media is something that is of great interest to me and I see it as being the primary medium of communication as the Internet moves forward. I also see it as the future of supply chain management. This blog is more and more beginning to take the direction towards finding the next big thing in supply chain management. As a precursor to this, it is imperative that the current trends in supply chain management are analyzed and documented.

 

As you might have noticed I use links from a lot of social media websites like Facebook, Twitter, etc. Today, I'm proud to let the world know that SCM blog has another home at Facebook. If you use Facebook, visit the SCM blog page, become a fan and connect with other readers of the blog. Suggest the blog to friends who would find the content interesting. I am also looking at ways in which I can analyze and incorporate in this blog, the thousands of tweets that I read everyday. These tidbits more often than not contain vast realms of information.

 

The reason I'm sharing this information is because as SCM blog's readers, you are my end customer. I would be going against what I wrote if I did not keep you in mind and informed you of the developments on the website. Also, a few years down the line, it would be interesting to have documented proof of the base small steps that SCM blog has taken along the way. Today, I'm also starting a new tag called 'baby steps'. All posts that improve the blog's overall design, interface and user experience will be tagged 'baby steps'.

 

As always, I work hard to give you a clean, interactive experience while reading SCM blog. Blogging about supply chain management, is going to be a wonderful learning experience for me too. If you have any ideas that would improve your overall experience on this blog, do let me know. I am constantly looking for ideas (big and small) that I can incorporate into SCM blog. I look forward to your suggestions/comments. Keep a special watch out for future 'baby steps' . My special thanks goes out to the readers who've posted comments.

Supply to Zero - The Green Supply Chain [Green]

Bill Gates is doing some amazing work for the betterment of the world with his foundation. Today, I saw a video that showed me he is dedicated to his mission. This video is a talk he gave at a TED Conference. In this video, which I’ve embedded after the jump, he introduces the concept of “Innovating to Zero”. The idea behind this thinking is very simple. He introduces the concept of CO₂ as a function and explains the approach we need to take to innovate and bring the Carbon emissions level to zero. You can watch the video below.

I say it is a half hour well spent. Especially if you’re involved in some manner with a supply chain organization. It is the nature of our business to consume energy and produce Carbon Dioxide. Logistics is a key cog in Supply Chain Management and a potential area where most Carbon reductions can be made. Here’s a look at companies that have taken a step in this regard. See if you can do the same. Green is not only effective, turns out it costs less in the longer run too!!

 

Trucking companies, particularly those that haul temperature-sensitive freight, increasingly must adapt to “green” initiatives as food producers and retailers seek sustainable supply chains, reports the Journal of Commerce. The trend is being driven in part by grocery chains that are looking for greater control over inbound inventory and manufacturers looking for more sustainable shipping, reports the Journal of Commerce. This often translates into shipping more freight with fewer trucks to cut costs and carbon emissions, according to the article. The article cites Kraft Foods as an example. The company has cut more than 50 million truck miles over the past four years by shifting freight from highway trailers to barges, boats and railcars.

Source: Environmental Leader

FedEx Express, a subsidiary of FedEx Corp. (NYSE: FDX), today announced it will purchase 51 additional gasoline-electric hybrid vehicles from Azure Dynamics Corporation (TSX: AZD).  The FedEx fleet of hybrid electric and electric vehicles will total 325 when all 51 hybrid step-vans are delivered during November and December of 2009.  Most of the new FedEx gasoline-electric vehicles will be put into service at a Bronx, N.Y., station, making it the first FedEx all-hybrid facility with about 100 trucks. 

Source: Fedex News

See what you can do to improve your presence on this planet. I’ve written a few other articles about this. I introduced the concept of “Supply to Zero” – inspired by Bill Gates’ concept. The idea is that the amount of Carbon Dioxide that is emitted right from production until when the customer gets the product must be minimized. In this post, I’ve introduced the idea. Let me know what you think while I build on it for a future post.