Wal-Mart continues sustainable programs with updates, changes

December 11, 2008

Wal-Mart caused a stir throughout its supply chain when it announced the creation of a sustainability scorecard that would help the retailer meet its goal of a 5 percent reduction in packaging by 2013.

Two years later, Wal-Mart is moving forward with its sustainable initiative with changes to the scorecard and by expanding the program to the global supply chain. In February 2008, Wal-Mart announced that it would push for more efficiency in its stores and from suppliers.

“This is not something we’ve just asked our suppliers to do, this is something Wal-Mart is doing itself,” said Amy Zettlemoyer-Lazar, packaging director for Sam’s Club and co-director for packaging for Wal-Mart Stores.
“Sustainability is about building a better business. This is a business imperative for us as a company.”

The sustainability scorecard has been successful so far, with about 90 percent of the items that can be populated at Sam’s Club are, but that doesn’t include items shipped through a third-party distributor, produce or meat. Wal-Mart Stores has about 250,000 items in the system.

In February 2008, Wal-Mart started to make improvements to the system that manages the large amount of data from the sustainability network. Those improvements include a “copy to” function that allows one scorecard to be submitted for multiple similar items, such as one produce with different packaging. The system has also been changed to allow for better item status visibility, a separate section for Internet sales and the extra credit questions have been modified with clearer questions.

February 2009 will mark the first update to the sustainability scorecard metrics, which will improve data reporting and fix some of the issues with the program. The metrics will be updated modified in 2010, and the final changes will be announced in February 2009, but they will include a recycled content value; a score for the recovery rate of packaging content captured by the distribution center or stores and recycled; country of origin labeling that tracks where conversion happens and not where the store is; and a score for product damage that will allow a supplier to add packaging but not hurt its score if damages are reduced. The company would also like to include a component the includes greenhouse gas emissions, which would score the raw materials and their conversion to the final packaging.

Also coming online in February 2009 are changes that include a fix to the third-party distributor reporting issue, better reporting by stores so suppliers can track progress and the ability for Wal-Mart’s buyers to be able to compare the items they buy, unlike the current system that defaults to the entire category.

The changes and updates to the system and the metrics will give the retailer better data to set its long-term sustainability goals, which will be announced in April.

What’s next for Wal-Mart’s sustainability initiative? The retailer is planning to expand its programs globally, with the scorecard being rolled out in Canada, China, Mexico and Puerto Rico in February to April and in Brazil, Central America, Japan and India between May and August. The United Kingdom and Argentina have yet to receive a rollout date. When those markets come online, the scorecards will be input to a Global Data Synchronize Network that will provide global data management on sustainability.

Wal-Mart has set a target of early 2009 for the completion of a “just right” test for packaging so that packages aren’t over-designed or under-designed. The test is being developed by the International Safe Transit Association that based on Sam’s Club’s distribution system and will test packages in simulations of what they will experience from the supplier to the distribution center, the distribution center to the store and in the store.

China is one of the retailers largest growing markets and the nation supplies many of the products sold at Wal-Mart. At a conference with the Chinese government in Beijing this year, Wal-Mart and its Chinese suppliers reached a new agreement that go into effect in 2009, and it will be a model for worldwide agreements by 2011.
The Top 200 factories that supply Wal-Mart agreed to make a 20 percent improvement in energy by 2012, reduce the number of returns due to defects to zero and have more transparency in their business operations. And Wal-Mart agreed to build new stores so that they use 40 percent less energy and half the water.

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