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Wal mart’s ambitious engagement towards supply chain

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#Supply Chain Management
In a little more than 10 years, the giant American retailer Wal mart, has evolved incredibly around the concept of Corporate Social Responsibility, passing from the ugly duckling who headed the news for poor working conditions, to a role model and a sustainability leader. In 2008, the company launched a 4 years plan to improve 200 of its Chinese suppliers’ energy efficiency by 20%. Two years later, the results were so encouraging that Wal mart decided to raise the bar and announced its intention to eliminate 20 million tons of GHG emissions from its global supply chain by the end of 2015.




{{LNK|Wal mart’s sustainable strategy|http://walmartstores.com/Sustainability/}} focuses on 3 “simple and straightforward goals:
1. To be supplied 100 percent by renewable energy;
2. To create zero waste;
3. To sell products that sustain people and the environment.”

The brand plans to hold its first commitment by “operating energy efficient stores, using renewable energy and increasing fleet efficient”. “We will focus on reducing GHG emissions from our direct operations (stores and fleet) and will continue that focus throughout our supply chain which has a carbon footprint much larger than that of our direct operations,” explains the company.

In that context, Wal mart announced a plan to eliminate 20 million tons of GHG emissions from its global supply chain by the end of 2015, which is quite ambitious considering that this number represents the total emissions of 3.8 million cars in one year. According to Richard Schuchard, Manager at {{LNK|Business for Social Responsibility|http://www.bsr.org/}}, this objective is “four times the collective annual commitment of nearly 200 companies in the US Environmental Protection Agency’s {{LNK|Climate Leaders Program|http://www.epa.gov/climateleaders/index.html}} “.

But why would Wal mart officially engage itself to reach such a difficult target? And why focusing on its supply chain emissions instead of its direct operations emissions? In fact, “reductions can come from any phase of a product lifecycle, including sourcing, raw materials, transportation, customer use and life disposal”. But Richard Schuchard explains that “Wal mart, a relentless cost-saver, sees it as a way to make suppliers leaner, more resilient, and more competitive”.

In actuality, many Wal mart suppliers are located in China, a country where GHG emissions have sky rocketed in recent years due to economic expansion and high energy demand. According to {{LNK|Tripleundit|http://www.triplepundit.com/2010/06/wal-mart-energy-efficiency-china/}}, “Chinese factories use roughly 11 times as much energy than their Japanese counterparts”. Wal mart’s GHG emissions reduction program in such an energy demanding country could considerably influence its global supply chain performance. “As we make progress, we plan to share our innovations throughout the supply chain, which we believe will create a ripple effect and magnify these solutions on a global scale,” explains the brand on its official website.

Richard Schuchard insists on the role of large companies like Wal mart in influencing global supply chain, above all in Developing Countries: “The job of international companies in supply chain energy efficiency is to keep China’s specific challenges in mind and build bridges between energy service companies and suppliers”. He recommends 5 steps to implement a successful responsible supply chain initiative:

1. Establish common ground between the company and its local suppliers (mainly growth)
2. Show and explain them the program road map.
3. Use accountability to “look over suppliers’ shoulders”
4. Build capability among suppliers: train and support them.
5. Implement efficient solutions.

Wal mart, as the world’s largest retailer, has a large impact on its global supply chain regarding sustainable issues, and has the influence to change the way products are sourced, produced, transported and sold across the world. This is one of its responsibilities to lead its suppliers towards sustainable business practices, hoping that competitors and other industries will follow its example.



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