Questions 1. How is Walmart deriving business value from its sustainability strategy? 2. Imagine that you are Andy Ruben or Tyler Elm, Evaluating the progress of the electronics, seafood, and textile networks. Which of these networks have been most successful in creating business value by reducing environmental impacts? What factors explain the success (or lack of success) of these networks? 3. How is Walmart motivating its suppliers to share information about and reduce the environmental impacts of products and processes?
Answers 1. To make the best use of its sustainability strategy, and thus to derive business value from it, Walmart focused on the improving its supply chain & waste management system, reducing its energy consumption, finding new sources of returns for e.g. by selling carbon credits, utilizing solar power by installing solar panels on store rooftops and thus not only cutting on its enerfy consumption but also adding up as a new source of energy.
2. The following table shows how the networks have impacted the business value of Walmart, where ‘+’ suggests a positive impact, ‘-‘ suggests a negative impact, and ‘0’ suggests no impact or neutral.
Networks Seafood Electronics Textile Alignment of environmental & Economical benefits + - + Effective network leadership + 0 + Consumer health label + - - Consumer operating savings - + - Credible Eco labels + 0 - Simplification of linear supply chain + - +
3. Walmart, to motivate its suppliers to share information about and reduce the environmental impacts of their products and processes is trying to consolidate the supply chain i.e. it’s trying to reduce the no. of suppliers thus giving more business to a few suppliers. It’s also bearing the risk to the inventory by committing quantity to the suppliers i.e. it signs up contracts with suppliers that they will purchase a fixed amount of material from them for e.g. the five year contract fo organic cotton.
By consolidating the supply chain Walmart has eliminated the brokers/ intermediaries. It has started interacting directly with its low tier suppliers, for e.g. in case of organic cotton it’s directly in touch with farmers. Walmart started with the making contracts with suppliers which had proper licenses for their functioning, thus encouraging the suppliers to reduce harmful chemicals and obtain business with Walmart. And last but not the least, Walmart implemented an auditing process i.e. to monitor health, safety and environmental impact of suppliers.