… its 60,000 suppliers listen. Back in June 2003, for example, the mega-retailer issued its now famous RFID mandate and its suppliers quickly fell in line. Within months, they began shipping products to Wal-Mart DCs with RFID tags affixed to their cases and pallets, and the RFID era was born.
Now, Wal-Mart is hoping to do the same for environmentally friendly packaging. This fall, it launched a five-year program aimed at pushing its 60,000 suppliers to reduce the amount of packaging they use by at least 5 percent and increase their use of renewable materials. Last month, the retailer kicked off the program by introducing its 2,000-plus private-label suppliers to its online "green" packaging scorecard. That scorecard is based on a list of metrics Wal-Mart calls the 7 Rs of Packaging: Remove (i.e., remove unnecessary packaging), Reduce, Reuse, Recycle, Renew (i.e., use materials made from renewable resources), Revenue (i.e., achieve these goals without raising costs) and Read (i.e., get educated about environmental sustainability). At the same time, Wal-Mart is making information on packaging alternatives and environmentally friendly packaging materials available to those suppliers.
In February, Wal-Mart will share the packaging scorecard with the rest of its 60,000-plus global suppliers. During a one-year trial period, suppliers will be able to enter, store and track data, evaluating their own progress against competitors' and sharing their results as desired.
In February 2008, Wal-Mart will start using the packaging scorecard for real. The retailer says it will measure its worldwide supply base, evaluating how each company stacks up against other suppliers in reducing packaging materials, using more effective packaging methods, and sourcing these materials efficiently. Suppliers will receive an overall score relative to other suppliers, as well as relative scores in each category (for example, cube utilization or use of materials with recycled content). Though the initiative doesn't have quite the teeth of the RFID mandate, it's clear that Wal-Mart will be factoring suppliers' compliance into its buying decisions.
By achieving a 5-percent packaging reduction across its supply chain by 2013, the retailer hopes to prevent millions of pounds of trash from reaching landfills, save on energy costs, and keep 667,000 metric tons of carbon dioxide from entering the atmosphere. Wal- Mart says that equates to taking 213,000 trucks off the road annually, and saving 323,800 tons of coal and 66.7 million gallons of diesel. Wal-Mart also claims that the 5-percent reduction in materials used by just 10 percent of the global packaging industry will result in nearly $11 billion in savings. Wal-Mart alone stands to save $3.4 billion.
"We at Wal-Mart recognize that we have unique strengths and a unique opportunity to have a positive impact on the environment through our own actions, those of our customers, and those of our suppliers," says Matt Kistler, vice president of package and product innovations for the company's Sam's Club division. "As vital as the packaging initiative is to reaching our environmental goals, it is also very good for our business and our suppliers' business."
Gartner, Inc.