Organizational Sustainability in Walmart - Case Study Example

Organizational Sustainability – Wal-Mart Case Organizational Sustainability – Wal-Mart Case Sustainability means to Wal-Mart Wal-Mart China immensely emphasizes on the inclusion of sustainability throughout its operations (Robert et al., 2008). Sustainability is DNA of the organization that is implemented as personal and business perspective throughout its high to mid level management. Wal-Mart’s takes sustainability as its responsibility, to make the world a better place of living. Unlike other organizations, Wal-Mart combines the innovative value and services to improve its operational strategies for sustainability. Environmental concerns, transparency and ethical conducts remain to be the dominant aspect for its operational strategies (Woensel, 2007). Currently, the operational strategies for sustainability of Wal-Mart include reduction in waste and energy and efficiency of supply chain. Moreover, the organization concentrated on the other Corporate Social responsibility concerns by involving 14SVNS in its operation. It is one of the major reason that the Wal-Mart was the largest organic seller and largest purchaser of organic cotton. Moreover, sustainability is integrated in its supply chain as well as its supplier and vendor’s selection (Woensel, 2007). For Wal-Mart China ‘Sustainability is a corporate direction that is not limited to the regional (Wang & Farhoomand, 2006)’. The Sustainable Operation Strategies of Wal-Mart China are based on the five SVN’s as follow: 1. Reduction in the cost of the stores and overall footprints of the Wal-Mart Stores. The Wal-Mart China’s employ T5 energy saving light bulb 2. Inclusion of sustainable products in order to improve its overall sustainability. Currently, Wal-Mart China focuses on the areas food, electronics, packing and textile 3. Improve supply chain management and efficiency through reduction in the costs, as well as footprints. In china, the operations of Wal-Mart Stress on energy saving technology in order to decrease energy waste in the business. 4. Develop effective communication in the stores and developing supply chain compliance and standards in its product development. It is one of the reasons that Wal-Mart china promotes products that are environmental friendly and energy saving to its customers. 5. Improve the efficiency of supply chain by developing strong relation with its supplier and vendor. Ensuring that every supplier and vendor of the organization meets the sustainable standards. Wal-Mart China’s Current Operational Sustainability Despite the fact, Wal-Mart China has incorporated various products and value service in its operation. However, currently Wal-Mart China is greatly focusing on sustainable logistic for the reduction of the carbon dioxide emission. Therefore, one of the major sustainability objectives is to reduce 31 tons of CO2 emission per year. It is because rapid industrial development in China has adversely affected environment that is evident from the global warming and other ecology challenges China is facing. It can be determined that in order to attain these objectives, Wal-Mart China has installed T5 light bulbs in its stores that has resulted in significant decline costs of the organization as it saves 20 to 30 percent of energy per day (Huffman, 2003). In addition, installation of solar panels and wind power generation has also reduced the energy costs approximately 7,300 kilowatt-hour per year (Robert et al., 2008). Moreover, the use of renewable shopping bags is also offered to its customers to ensure environmental sustainability (Silver et al., 1998). The merchandising department of Wal-Mart is involved in the continuous efforts to build sustainability by keeping a check on its suppliers and vendors. The efforts of Wal-Mart China can be identified as continuous efforts of Wal-Mart to increase its innovation and creativity for sustainability. Potential customers Analyzing the case study, it can be determined that the Chinese customers are more cost sensitive than other countries. Wal-Mart is considered to have higher customer satisfaction in China it is because the Wal-Mart has influenced customer’s loyalty in China significantly. It is because choosing Wal-Mart sustainability products offered by the company will not improve their personal living but also environmental protection (Zhu et al., 2008). Besides of the fact, Wal-Mart China offers prices a bit higher than the other local retailers but the advantages of cost reduction, energy wastage and environmental friendly products and value services have gained customer’s loyalty (Chandra et al., 2013). The customer prefers Wal-Mart because of its contribution and efforts for sustainability in its operations. Moreover, the brand image of Wal-Mart is recognized all around the world due to which the customers in china prefer shopping from Wal-Mart. Wal-Mart China’s Distribution System and Operations The success of the organization is dependent on the degree of commitment of the organization with its customers to provide high-quality products. The business operational strategies of the organization should ensure that quality standards that it offers should meet the demands of its customers. Thus, distribution center operations and inventory management of Wal-Mart China play a significant role in its effective management of stock level. Employee’s performance, technology and efficient private truck fleet can be identified as the core elements for Wal-Mart’s effective loading and delivery to its customers. Analyzing the case study, it can be determined that the Wal-Mart China distribution center are significant features for its efficient performance (Freeman, 2010). Sustainable Logistic Centers The case highlights sustainable logistic centers of Wal-Mart China, that are, its efforts to save energy by the installation of L5 light bulbs in its stores and warehouses that has resulted in the saving of energy to 20 to 30 percent daily. In addition, Wal-Mart controls its operations in stores to reduce energy waste by monitoring and controlling air conditioning and heating recycling system. In addition, the installation of solar panels and wind power station for the production of energy that has significantly decreased its expenditures. The efforts of Wal-Mart China collectively have decreased CO2 emission. Outsourced Standardized Trucking Fleet Wal-Mart China has outsourced standardized trucking fleet that has a greater capacity for the shipment from DC to DC and DC to SC. The outsourcing of these trucks has improved inventory management and reduction in the costs (Freeman, 2010). These trucks have improved efficiency of the Wal-Mart China’s logistic management because of its new electronic technology and speediness. The satellite system installed in the truck fleeting has provided complete access to the distribution department about the location and routes of delivery. In addition, the inclusion of electronic techniques and electronic map provide access about possible shortest routes for the truck that makes the delivery quicker (Robin, 2010). Therefore, the efficiency of Wal-Mart China distribution is a result of its constant inclusion of advance technology systems in its distribution system that has increased the efficiency of the product. Centralized Management of Returning Product Wal-Mart China’s distribution system also includes efficient way to manage returned inventory. The centralized management for the returning products in Wal-Mart china, which are complained about quality problem, low sales or obsolescence, is returned to the vendors. The integration of the returning inventory process is effectively managed by the organization so that the customers do not face any difficulty or issue. For the returning of the inventory, Wal-Mart has signed contracts with its vendors that facilitate the organization to overcome the delay in the process and eliminate losses emerging from returns of inventory. In the case of inventory with replenishment product and perishable good, that distribution center of Wal-Mart has special warehouses to reduce the costs and increase circulation of goods. Observing the Wal-Mart’s distribution management and operations it can be determined that the company has carefully aligned its inventory on the basis of needs and requirement of the organization. Wal-Mart China implies complete check and balance as well as a standardized system in its process of distribution. The efficiency of the distribution centers and operation are not merely an outcome of implying standardized system but also the inclusion of an adequate technology along with its control and monitoring of the process. Hence, it can be determined that the Wal-Mart attains competitive advantages in the China retail industry because of technology. Incorporation of sustainability in the process of selection and evaluation of Supplier/Vendor It is essential for an organization to incorporate sustainability in every process. The vendors and suppliers of the organization should also be selected and incorporated on the basis of sustainable standards of the organization. The organization selects its suppliers and vendor on the basis of the prices, quality, delivery, and provided services (Molamohamadi & Ismail, 2013). It allows an organization with an absolute implementation of sustainability concerns in its operations. Organization, vendor and supplier should ensure that their practices and conducts are in accordance to the responsibilities and roles defined. Wal-Mart China evaluates its supplier on major three dimensions that are, environment, society and economy. Hence, the suppliers and vendors are selected on the three components of sustainability pillars that are profit, planet and people, as well as an addition of technology. It is because the Wal-Mart Chine believes that ensuring sustainability in its every aspect is important to be responsive to the stakeholders for its quality price, social and environmental effects that the organization may imply in its business processes (Molamohamadi & Ismail, 2013). The selection of the supplier and vendor is important to seek the stakeholder’s satisfaction. Hence, Wal-Mart’s supplier and vendor selection criteria is based on the four main categories, that is, green competencies, current environmental efficiency, supplier green image and net life cycle cost (Molamohamadi & Ismail, 2013). Initially, the organization that is engaged to seek suppliers and vendors should put forward request of sustainability concerns that it wants to attain (Molamohamadi & Ismail, 2013). The organization should analyze potential vendors and suppliers that fulfill the criteria and standards of production techniques. Furthermore, the organizations should establish effective communication and collaboration with its vendors and suppliers to critically assess potential and capacity of suppliers with the objectives of sustainability that the organization aims to attain. Wang and Farhoomand (2006) states that for Wal-Mart the sustainability standards of the organization are based on the ROHS regulations standards through which the suppliers and vendors are selected (Wang & Farhoomand, 2006). Considering the selection criteria of Wal-Mart from the case it can be determined that the Proctor and Gambler is one of the major suppliers of Wal-Mart China. It is one of the leading international suppliers that have maintained its relationship with its customers with the inclusion of sustainability concerns in its supply. P&G operates sustainability programs with the concept ‘ensuring a better quality of life for everyone, now and for generations to come (Robb & Hopwood, 2009)’. It can be determined from the slogan of P&G that the company actively participates in sustainability development showing commitment to its customers. The second example can be derived from the Blue Moon chemical product company that is one of the major supplier of the soaps, cleaners and other chemicals in China. The company also has different sustainability programs with a slogan "protecting environment is protecting all of us" (Robb & Hopwood, 2009). Our products deliver not only cleanliness but also protection to its customers’. Moreover, Wal-Mart China also assesses its supplier and vendors on the basis of the standards of ROHS that explains several standards and criteria for the selection of the right supplier and vendor. Thus, Wal-Mart China determines the quality of the product that is being supplied by testing and inspection of the products on a regular basis. Herein, Wal-Mart has also created sustainable objectives for its suppliers that is called P2E2 program that assess the standards of the suppliers and vendor for efficient supply and ensuring that the transportation means and other technology that the organization uses are cost saving (Robb & Hopwood, 2009). Moreover, Wal-Mart China is constantly engaged in its dedication to attain sustainable objectives. Thus, Wal-Mart has designed evaluation tools and measures to assess selection of the product or material from its supplier (Robb & Hopwood, 2009). In the process mainly, the inspection and quality assurance teams are involved that inspect and test the product and material. The standards of the product or material do not fulfill the standards the product or material will be rejected. For example, Wal-Mart has certain packaging scores to measure the quality and standard of the product. The main objective behind the creation of standard is to reduce the packing costs of Wal-Mart to 13 percent (Robb & Hopwood, 2009). Improving Sustainability in Wal-Mart’s Operations and Distribution The inclusion of sustainability is one of the fundamental aspects to develop long-term image and value of the organization. Thus, the organizations operating in the retail industry should develop long-life sustainability products (Freeman, 2010). Despite the fact, Wal-Mart China has ensured effective sustainability concerns in its operation but still there are several ways that the organization can improve its sustainability operation strategies (Molamohamadi & Ismail, 2013). Wal-Mart can develop stronger relation with its supply chain management member and effective communication for spreading awareness and considerable importance for sustainability agendas of the organization (Johnson, 2008). The quality of the product and services that is offered by the suppliers and vendors should be done carefully implying supplier selection process and criteria. Besides the fact, the Wal-Mart is engaged in sustainable programs for saving energy and energy wastage (Molamohamadi & Ismail, 2013). The organization can further imply the use of T5 bulbs in its stores extensively. Moreover, the company can also make use of bio-energy as a source of energy. It will allow the company to reduce the costs and preserve environment (Peng, 2009). Wal-Mart China should concentrate on the inclusion of more CSR activities in its operations such as, Human resource management, supply chain, etc. (Chandra et al., 2013). It will not only provide company with the higher standards of sustainability but also improve its performance and cost reduction. Wal-Mart should increase the number of suppliers in its supply chain management that are constantly involved in the improvement of the sustainability. It can allow the organization to create a greater value and impact in the retail industry (Silver et al., 1998). The standards of the selection and criteria of supply chain should not be static. The company should keep on changing the standard keeping in the views environmental changes prevailing in the global society. Wal-Mart should come up with greater innovative ideas in order to response environmental and social challenges faced by the society. Hence, the company should not just concentrate on global issues but specifically regional issues. It can allow the organization to develop stronger relation with its customers as well as maintain its competitive edge in the industry. However, Wal-Mart is known for its low pricing but in China still the pricing of the product is relatively high than the regional retailers. Thus, Wal-Mart should develop strong supply chain management or inclusion of technology in its operation to reduce the costs of the products. Sustainability in the supply chain management of Wal-Mart china should constantly be improved and continuously analyzing the trends prevailing in the industry take the leadership and sustain its competitive edge in the industry. Promotion of transparency is one of the effective ways to overcome the issues, increase the partnership with its suppliers and vendors, inclusion of appropriate technology and innovative ideas can overall improve organization sustainability (Zhu et al., 2008). List of References Chandra, H. et al., 2013. Supply Chain Management with Cost Containment and Financial sustainability in a tertiary care hospital. JHHSA, pp.3-21. Freeman, R.E., 2010. Strategic Management: A Stakeholder Approach. Illustrated ed. Cambridge: Cambridge University Press. Huffman, T.P., 2003. Wal-Mart in China: Challanges Facing a Foreign Retailers Supply Chain. The China Business Review, 30(5), pp.46-50. Johnson, P., 2008. Supply Chain Management at Wal-Mart. London: Invey Publishing. Molamohamadi, Z. & Ismail, 2013. Supplier Selection in a Sustainable Supply Chain. Journal of Advanced Management Science, 1(3), pp.278-81. Peng, M., 2009. Global Strategy. Mason: South-Western, Cengage Learning. Robb, D. & Hopwood, B., 2009. Wal-Mart China: Sustainable Operations Strategy. [Online] Available at: HYPERLINK "https://hbr.org/product/wal-mart-china-sustainable-operations-strategy/an/908D09-PDF-ENG?N=1" https://hbr.org/product/wal-mart-china-sustainable-operations-strategy/an/908D09-PDF-ENG?N=1 . Robert, D., Zellner, W. & Matlack, C., 2008. Carrefour China, Building a Greener Store. London: Ivey Publishing. Robin, M.-M., 2010. The World According to Monsanto: Pollution, Corruption, and the Control of the Worlds Food Supply. New York: The New Press. Silver, E., Pyke, D. & Peterson, R., 1998. Inventory Management and Production Planning and Scheduling. 3rd ed. New York: John Wiley & Sons. Wang, H.I. & Farhoomand, A., 2006. Wal-Mart Stores: Everyday low Prices in china. Hong Kong: Asia Case Research Centre. Woensel, T.V., 2007. Consumer Responses to Shelf-out-stocks of Perishable Products. International Journal of Physical distribtuon& logistic Managementq, 37(9), pp.704-18. Zhu, Q. et al., 2008. Firm Level Correlates of Emergent Green Supply Chain Management Practices in the Chinese Context. International Journal of Management Science, 36(4), pp.577-91. Read More