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Wal-Mart Sustainable Strategy
Gowtham Veluon 28 April 2014
Transcript of Wal-Mart Sustainable Strategy
Supply Chain Gang:
In 2005, Lee Scott, the CEO of Wal-Mart, announced that the company would be launching a business sustainability strategy.
To become "the most competitive and innovative company in the world".
Create partnerships with suppliers and other stakeholders
Develop sustainable value networks within Wal-Mart
Wal-Mart's current business strategy
Cost leadership through economies of scale and purchasing power
Expand market share
Wal-Mart’s internal structure in 2005 was focused on establishing functional networks to effectively introduce sustainability strategies.
Three Areas of Focus:
Sustainable Value Networks:
Established 14 sustainable value networks
Value networks sought ideas from outside the organization
Challenged to focus on both economic and environmental benefits
Integrated sustainable practices into the culture of Wal-Mart
Goal of the sustainable value networks:
In 2005, environmental concerns drove Wal-Mart to analyze its entire supply chain – itself, its suppliers, and multi-tier suppliers
Changing Business Environment:
Governmental regulations on emissions and pollution can add significant costs to Wal-Mart’s business
Consumers are more eco-concious and are changing their spending habits based on Wal-Mart's reputation
International governments are imposing varying regulations that add complexity to business practices
Technological developments in the various product categories could lead to more sustainable products
Sustainable Value Networks:
Strong Presence Domestically
: In 2006 – Wal-Mart second highest market share of Electronic sales in the U.S.
Most e-waste ends up in our landfills and incinerators. In 2011, we generated 3,410,000 tons of e-waste, according to the EPA.
Out of 3.41 tons of e-waste generated in the U.S. in 2011, 2.56 million tons went into landfills and incinerators (75.1%) and only 850,000 tons (24.9%) was recovered for recycling. However, a significant amount of that was exported.
Despite this off-shoring of pollution, computers and other electronics still account for some 40 percent of the lead in U.S. landfills.
New Strategy focuses:
E-waste contains a bonanza of toxic and hazardous components that, for the most part, are currently being shunted into landfills.
Much of the remaining portion is exported to developing nations, where many laborers, working under unsafe, unregulated conditions, recycle this e-waste.
E-waste dangers stem from ingredients such as lead, mercury, arsenic, cadmium, copper, beryllium, barium, chromium, nickel, zinc, silver and gold.
exposure can cause paralysis, coma and death
can cause skin irritation
can affect the lungs, liver and kidneys.
leads to negative effects on brain
Interchangeability and Refurbished Products
New technology is constantly emerging making that old working gadget no longer desirable.
Some electronic products simply don’t last as long as they should, and they are cheaper to replace than to fix.
Walmart has so far attempted to conduct programs, which can efficiently recycle the entire product.
It has never tried to find a way to reuse those reusable parts of the e-wasted devices.
Developing countries are still looking new technology.
One proposal would be to replace only those parts of a product that are faulty or obsolete; as a result the amount of e-waste should drop.
Capture markets in developing countries with refurbished products.
Will increase lifespan of project.
Diminish the required landfill area.
Decrease the amount of pollutants generated.
Requires redesigning of the current manufacturing processes.
Tough to get all the suppliers on board for this cause, since major investments will be required on their part as well.
Motivating the suppliers to manufacture products with high interchangeability scope.
Sending the obsolete products back to the suppliers, getting them disassembled, then reassembled with the latest technology and getting them back into the market.
Taking out and spreading the news of sustainable development to customers and getting their feedback for improvement.
Share the burden of investments with the suppliers for redesigning new manufacturing processes.
Enter into long term contracts with the suppliers who are ready to adopt these new developments.
Introduce an environmentally friendly Walmart generic brand for some electronics.
Urge developing countries to buy refurbished products.
Actions to be taken to attain goal:
Wal-Mart's profits will increase since they don’t have to sell an obsolete product at a salvage price.
Increase brand value which will help in Wal-Mart's business growth and in increasing profits and shares.
Support from Governments and NGO’s.
This can help them venture into new markets.
Think and Act for