Sustainable Operations in Wal-Mart - Essay Example

? Sustainable Operations Case Analysis: Wal-Mart Sustainable operations are a pattern which is followed keeping in mind not only the present but the future as well. The pattern is growth in which resource-use aims to meet the needs of the organization while preserving the environment. There has been a growing pressure on companies to keep a check on the environmental and resource utilization results which result from their operations and processes. The outcomes challenges include integrating environmental, health and safety concerns. (Susops, 1998) The Wal-Mart’s strategy on Sustainability (Wal-Mart, 2010) states that sustainability is a key element for business like supply chains. Soon companies started realizing that profits and profitability are not the only factors of long term development but future of the people and the planet are also key elements for sustainable operations. Hence, these new objectives were classified as the triple bottom line (3BL) which included the three P’s of people, profit and planet. After all the recent developments and expansions, people have started to ask for more than mere salaries and profits. They now emphasize on factors like improved performance on environmental, health and safety issues. So now Wal-Mart has to make the decision of investing in such activities of environmental and health concerns and how do follow them in the most efficient and cost effective method. Wal-Mart, 2009. Media OnSugar [http://media.onsugar.com/files/ons4/2009/12/53/307/3075777/e343f2c5ac55a097_350px-Sustainable_development.svg.xlarge.jpg] “At Wal-Mart, we know that being an efficient and profitable business and being a good steward of the environment are goals that can work together. Our broad environmental goals at Wal-Mart are simple and straightforward: To be supplied 100 percent by renewable energy; To create zero waste; To sell products that sustains people and the environment. Our efforts have been recognized through numerous awards, which would not be possible without the support of our customers, associates and communities around the world.” (Wal-mart, 2012) Wal-Mart launched a global business strategy of sustainability to lessen the business’s burden on the global environment and hence become one of the leading supply-chain companies in the world. They aimed to be named as the most competitive and innovative company in the world. The emphasis was then on the fact that objective of profitability was going to be taken along with the implementation of development of the environment. (Wal-Mart, 2012) The management at Wal-Mart knew that they had to carry the program of improvement of environment along with business profitability to gain sustainable operations and growth in longer term. Wal-Mart hired a popular firm, Blu Skye for an overall analysis of the environmental impact and for consultation on issues related to sustainability in the globalized world. Wal-Mart collaborated with other companies as well which included; Conservation International (CI) and Environmental Defense (ED). ( Farfan, 2011) The team of Wal-Mart executives had identified 3 primary areas of environmental goals which mainly included; energy, waste and products. All these are divided into two sections; direct goals and indirect goals. Direct goals include increasing energy efficiency, transitioning to renewable energy and reducing waste in retail operations. All these were in immediate control of Wal-Mart and can be classified as primary factors. Indirect goals included basic operations and relationship with the suppliers. They focused more on sustainable operations and entire value chain of Wal-Mart. (Herrera, 2010) All the sustainable operations drive led by the management of Wal-Mart was highly confused as being more of philanthropist nature. After serious concerns and meeting, the idea was brought into the mind of many who were confused to clear all the misconceptions about the business handling being carried out. They stated that all the business activity carried out by Wal-Mart was not philanthropy but the overall objective was to derive economic benefits from improved environmental and social outcomes. Wal-Mart moved to the next step on defining sustainable operations by making teams known as sustainable value networks. Each team was cross-functional based focusing on driving sustainability if different departments of Wal-Mart. Wal-Mart took another initiative of handling the sustainability operations program. They incorporated methods and values inside employee’s job responsibility rather than hiring specific people to implement these methods. Thus by this Wal-Mart started this new scheme on a much productive level and the implementation stage became much easier and effective. For further help Wal-Mart also consulted; private consultants, nongovernmental organizations, suppliers, eco-friendly competitors, academics and even critics in this regard. The count of these value networks then rose to 14. (Wong, 2010) The networks were given the freedom of choosing their own path to follow and devise their own sustainability objectives. The networks had to go through a three step process of ‘engaging, exploring and expanding’. Engaging: to help improve Wal-Mart on its Environmental objectives and goals. It involved looking ahead of their routine stake-holders. Main purpose was to identify and assist broader groups of people in a community to provide information and their expertise. Exploring: was done primarily to analyze the environmental issues and life-cycle of goods and services. Expanding: was done in context of the similarities between business activities to matching issues. And is there any method of doing the job under consideration in any different matter to make the operations more sustainable and efficient. The business model was targeted at a broader horizon towards the community and the stake-holders. According to Wal-Mart’s ethical standards program, the compliance department was responsible for monitoring supplier performance. This department was not much involved in sustainability initiatives and was collaborating with global organizations to straighter their efforts in a single path. (Fishman, 2007) Wal-Mart has been implementing a change of five ‘Strategic Value Networks’ responsible for leading sustainability changes within the organization. They wanted to have a broader approach for acceptance by their associates and stakeholders. The methods for sustainable should be operational and efficient as well as cost effective. (Environmental Leader, 2010) Other than that Wal-Mart had been facing other issues of increasing public conflict and legal issues regarding low health benefits to their workers and gender discriminations in sections such as promotion and internal branding were concerned. Other astonishing facts which bothered them were about their consumption of electricity which was approximately 1.5 million kilowatt-hours per year per store. It has to emphasize and look deeper in to matter regarding its ecological footprint. (Winston, 2010) Wal-Mart soon started to adopt a new strategy to align with its aim of sustainable operations. It was replacing some of the food and basic use items with their organic alternatives. Although they came with a much higher cost and price-tag but the increasing demand has signaled a call to display such goods at their retails outlets. Wal-Mart collaborated with Chinese companies to address its issue of electricity utilization and improve efficiency and environmental impact. Wal-Mart has emphasized on its suppliers that use environmentally healthy methods in their processes and uses energy efficient lighting throughout its stores. Rutta, G. 2007. Wal-mart’s sustainability strategy. [electronic print] (exhibit 5. How Networks drive sustainability goals) Wall-Mart keeps a sustainability index to create a more transparent supply chain, increased innovation and provide sustainability information to stompers and stakeholders. The index has three phases: 1. Supplier Sustainability Assessment Suppliers are providing with brief survey to evaluate their own sustainability. It allows for transparency in their supply chain 2. Lifecycle Analysis Database They work with non-government organizations and government to conduct research and development to long term sustainability strategies and produce good database of information on product lifecycles 3. A simple tool for customers Improve the sustainability performance of the products consumed by customers. It includes proper arrangement for products, handing out complete tools to suppliers and retailers, proving customers with complete information and helping them save money while at the same time preserve the environment. The Sustainable Value Networks (SVN) has helped Wall-Mart in all areas of their business. By these methods all the stakeholders including the customers all included in this relationship. Wall-Mart develops solutions that benefit all the stakeholders including the environment and the community. (Wal-Mart, 2012) Rutta, G. 2007. Wal-Mart’s sustainability strategy. [electronic print] (New Display Packaging for Shower Soothers) There have been numerous changes in the business operations to Wall-Marts operations. All these operations are now energy efficient, reduced wastage of resources and introduction to environmental friendly products for its customers by the sustainability drive. Their networks include; Greenhouse gas, Sustainable facilities, Logistics, Waste, Packaging, Wood and Paper, Agriculture and Seafood, textiles, jewelry, electronics and chemical intensive products. (Team, 2012) Wal-Mart has a little program by the name of Supplier Energy Efficiency Program (SEEP) which promises effective energy utilization by its suppliers and lowered costs. It has trimmed down the electricity bills of Wal-Mart by introducing innovative and energy efficient products. Wal-Mart has come a long way from this as they were previously the major uses of electricity on the national grid. This program has become quite popular in the industry and many new organizations are taking steps to make sure that they also make their operations sustainable by adopting such strategies. By this program named as SEEP, other suppliers can also take advantage of these facilities by partnering with Wal-Mart in this program. It has attracted a lot of agencies and organization to move forward and partner with Wal-Mart in this move towards sustainability and environmental friendliness. The industry has allowed a lot of research and development to take place after SEEP’s introduction and since its opening, it has experience a positive response. (Gates, 2010) The program of SEEP works as follows: Interested companies contact Wal-Mart Receive a pre-audit questionnaire They sign a memorandum of understanding It is a voluntary program which allows partnering companies to have new opportunities and to innovate and develop. (Cheng, 2009) Wall-Mart has also gone a step ahead in the sustainability of the environment by ensuring proper disposal of batteries. The important components are retrieved and recycled to be used again in future. Which lessons the cost of producing them again, reduced the pollution and the carbon-print on the environment.( Wal-Mart, 2012) But sustainability comes along with a lot of cost involved. The main question which arises is what if the cost allocated to ensure sustainability can be spent on other more economically viable and profitable ventures in the industry. There is an always an opportunity cost involved. The factors regarding company’s own policy and the rules and regulations in that country also play a significant role in devising such strategies. Sustainability is considered more of a challenge and just a mere illusion to competitors. Although the customer might be convinced that a certain company is very environment friendly however there may be other factors like competition which come into play. The companies might be following the sustainability strategies just in order to compete with each other and to have the best positive image in the industry. Suitability might not be their personal motive for growth and development but just a mere formality they have to do to compete, follow rules and regulations of a certain country or to compete in the market with fellow competing companies. It is quoted that efficiency does increases but sustainability comes with an additional costs that any company has to bear which wants to adopt such a strategy. Sustainable operations are quite possible in these times but it’s normally regarded as polishing their appearance in front on the general public. Many companies fail to adopt such strategies due to limit budgets, unavailable resources, incomplete information and severe competition. Wal-Mart has chosen a competitive path to sustainable operations. It will not only allow it to progress on a global scale but also rank more than its competitors. It is a retails giant and hence its costs would also decrease unlike small businesses. This strategy also allows it to spread in other horizons of ‘going-green’ and it will expand their product variety from only good and services to environmentally friendly products. This strategy has also lured in other business to follow such steps. At current stages the changes and development would not be that significant but in the future it has guaranteed growth with lesser burden on natural resources. It will ensure future survivability and long term progress ahead of its competitors. The costs are high but will all the development and increase in demand for implementation of this strategy by customers; it is highly viable and profitable to follow. References Susops. (1998). Sustainable operating strategies. [Online] Available at: http://www.susops.com/ [Accessed 23 March 2012]. Wal-Mart. (2012). From reuse to rescue. [Online] Available at: http://www.walmartgreenroom.com/ [Accessed 24 March 2012]. Wal-Mart. (2012) Sustainability [Online] Available at: http://walmartstores.com/sustainability/ Wal-Mart. (2012). Sustainability Index. [Online] Available at: http://walmartstores.com/Sustainability/9292.aspx [Accessed 24 March 2012]. Farfan, B. (2011). U.S. Green Retailing: Wal-Mart profit from sustainability labeling. [Online] Available at: http://retailindustry.about.com/od/2009usretailanalysis/a/walmart_sustainability_index_labeling_analysis.htm [Accessed 23 March 2012]. Herrera, T. (2010).Wal-Mart’s emerging role in sustainability consulting. [Online] Available at: http://www.greenbiz.com/blog/2010/03/17/walmart-emerging-role-sustainability-consulting [Accessed 23 March 2012]. Wong, D. (2010). Wal-Mart Sustainability report. [Online] Available at: http://www.carbon49.com/2010/06/walmart-sustainability-report-%E2%80%94-canadian-operation-details/ [Accessed 24 March 2012]. Fishman, C. (2007).How Green is Wal-Mart. [Online] Available at: http://www.fastcompany.com/magazine/118/how-green-is-wal-mart.html [Accessed 23 March 2012]. Environmental Leader. (2010).Wal-Mart pushes energy efficiency on Chinese suppliers. [Online] Available at: http://www.environmentalleader.com/2010/03/01/wal-mart-pushes-energy-efficiency-on-chinese-suppliers/ [Accessed 23 March 2012]. Winston, A. (2010).Wal-Mart: the largest (sustainable) company ever. [Online] Available at: http://www.huffingtonpost.com/andrew-winston/wal-mart-the-largest-sust_b_565909.html [Accessed 23 March 2012]. Wal-Mart. (2012). An Introduction to Walmart.com. [Online] Available at: http://www.walmart.com/cp/An-Introduction-to-Walmart.com/542413 [Accessed 23 March 2012]. Team, T. (2012). Starbucks, Wal-Mart Rain on Green Mountain's Parade with Single-Serve Brewer Plans. [Online] Available at: http://www.forbes.com/sites/greatspeculations/2012/03/15/starbucks-wal-mart-rain-on-green-mountains-parade-with-single-serve-plans/ [Accessed 23 March 2012]. Gates, K. (2010).Supply-Chain Operations: Wal-Mart Stores. [Online] Available at: http://supermarketnews.com/sustainability/supply-chain-operations-wal-mart-stores [Accessed 23 March 2012]. Cheng, J. (2009). Wal-Mart China: Sustainable Operations Strategy. [Online] Available at: http://hbr.org/product/wal-mart-china-sustainable-operations-strategy/an/908D09-PDF-ENG [Accessed 23 March 2012]. Wal-Mart. (2012). Sustainable Value Networks. [Online] Available at: http://walmartstores.com/Sustainability/7672.aspx [Accessed 23 March 2012]. Read More