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Interview: Jeff Rice On Walmart’s Green Supply Chain Best Practices

Bill Roth | Monday May 2nd, 2011 | 3 Comments

This post has been edited since it was first published.

Jeff Rice, Director of Sustainability for Walmart, has a vision for his job and its role within Walmart’s business strategy. His goal is to improve the sustainability of products that our customers love to buy

It has been five years since Walmart made an enterprise-scale commitment to the greening of their supply chain. I reached out to Jeff to learn if this process has been successfully integrated into Walmart’s overall business strategy and what best practices have emerged that are applicable for other businesses.

In terms of integrating the greening of the supply chain with Walmart’s overall business strategy, here’s Jeff’s answer:

Walmart’s sustainability efforts are now part of our business model for offering the Walmart customer the broadest array of quality products at every day low prices. Driving sustainability in our products and supply chain will support our productivity loop, lowering costs, improving product quality and creating a more resilient supply chain while achieving meaningful reductions in our environmental footprint.

A best practice that is foundational to Walmart’s sustainability initiative is measurement. Identifying key sustainability metrics and setting aggressive targets to improve has unlocked the creativity of our associates to find creative solutions to sustainability and business opportunities. What leaped out to Walmart when we began measuring our environmental footprint was that roughly 90% of our global footprint was in our supply chain.

In response to this analysis Walmart embarked upon a dual strategy. One path was to focus upon the 10% of their environmental footprint that they had direct control over. In response they established these goals:

Running their stores on 100% renewable energy.  Walmart currently has more than 65 renewable energy projects including solar, wind, fuel cells and anaerobic digestion.

Implementing a zero waste system.  Walmart recently reported the program it created has resulted in keeping 81 percent of its waste out of the landfill in California. That program has now been rolled out nationwide.

Introducing or redesigning products that sustain people and the planet. Walmart is currently working with the Sustainability Consortium to develop measurement systems for the life cycle of consumer products in categories including food, beverage, toys, clothing, textiles, electronics, home and personal care and paper.

The second path was to focus upon greening the Walmart supply chain.

How significant of a step is this for our world? Paul Herman from HIP Investor estimates that Walmart touches one out of every three dollars of global commerce. Walmart’s greening of their supply chain maybe the world’s single largest sustainability initiative.

Rice explains:

What we found in Walmart, and what we are finding in helping our suppliers green their operations, is that improving efficiency is the step that typically offers the highest payback and is often the easiest to start upon for reducing emissions and saving money.

For example, at Walmart we have improved truck fleet efficiency by 65%. We achieved this huge result using three best practices. The first involved conducting detailed analysis enabled with software modeling to figure out better routes that reduced fleet miles. The second step was to pack our trucks in a manner that reduced the number of trips. Finally, we are investing in new technologies to make our fleet more efficient.

Here’s a key point. Walmart is focused upon investing capital in new truck design and technologies to cut costs and emissions for our fleet of trucks. With Walmart’s scale, we can play a role in developing these technologies and making them available for all trucking operators. A key best practice that other businesses can use is that improved-efficiency is almost always there to be harvested immediately.  And typically efficiency gains can be achieved at a fraction of the amount of money needed to buy new technologies. That was certainly the case in terms of our truck fleet where we cut both costs and emissions by using “smart” software and people to figure out a path for getting the job done in much fewer miles.

Walmart is deploying a similar approach in their Supplier Energy Efficiency Program (SEEP).  Here is how Rice explained what Walmart has done to improve the energy efficiency of their locations and their supplier outreach that is passing lessons-learned onto their supply chain:

Walmart is actively investing in making our stores more energy efficient. We have really moved up the learning curve of best practices from working in our own stores. We are now working  with suppliers to help them cut their location-based energy use. Through SEEP, we help provide an energy audit based on knowledge we have from making our operations more efficient. And we share best practices on things like lighting technology that we know will cut both their green house gas emissions footprint and their electric bill.

Walmart is also focused upon helping businesses that are outside of their supply chain. Walmart is a member of the Sustainability Consortium. Visit this site and keep coming back because Walmart and their fellow consortium members are beginning to post white papers on their best practices for cutting emissions and costs. And this site also provides email access to experts.

Here are five lessons-learned from the Walmart approach for making money by going green that every entrepreneur and business owner should consider for their company:

Measure. There is gold to be harvested for your business’ bottom line from mining your environmental footprint data and then arming your associates and suppliers with this data so they can provide their insights on how to reduce emissions and costs. Walmart works with the Carbon Disclosure Project to measure and track its carbon emissions and has established a program to help suppliers do the same.

Green Supply Chain. Like Walmart, your supply chain could offer the largest source of cost and emission savings. CLICK HERE to see the 15 sustainability questions Walmart submits to their suppliers as a starting point for engaging your suppliers. And if you are looking to grow revenues then consider how going green is a path to being competitive in winning a contract with a company like Walmart.

Dollar Focused, Value Driven. A strategy of being one or the other is not competitive. Aligning value with values is a sustainable business strategy that will win customers and increase your business’ bottom-line results.

Get To First Base. Vision is very important but your bankers/investors, customers and work associates want to see results, now! Similar to Walmart’s approach, what can you do now with the resources and investment dollars you have today? Need some ideas? Like Walmart, ask your work associates, suppliers and customers. How to ask them? Consider the Walmart model of arming them with the data on your company’s environmental footprint.

Green Leadership Requires Leaders. Walmart’s entire management team is focused upon their sustainability initiatives. It is core to their business strategy. A company’s leadership commitment to sustainability is the most important link in a company’s green supply chain. Case in point, here is Jeff’s summary of Walmart’s commitment to sustainability:

At Walmart offering lowest prices on our quality products is the foundation of our business model. What Walmart is achieving, and continues to work upon, is the development of sustainable best practices that are aligned with our corporate vision of Save Money. Live Better. Walmart’s greening of our supply chain and the adoption of sustainable business best practices are generating dramatic reductions in emissions and waste that align with our continuous process of reducing costs which enables our ability to offer lowest prices on quality products.

A best practice example of aligning Value with Values!

Bill Roth is the founder of Earth 2017, an open source site for emerging trends on the smart, healthy and green economy. His book, The Secret Green Sauce, profiles best practices of businesses making money going green.

 


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  • Greg

    The writer makes a claim that “It is estimated that Walmart touches one out of every three dollars of global commerce.” That does not seem to be plausible. Who made such an estimate? Is this a Walmart number or some independent entity? Of ALL GLOBAL COMMERCE? Really.

    • http://www.earth2017.com Bill Roth

      Hi Greg, good for you to question this number. The fact is that Walmart and their supply chain do represent the world’s largest commercial system. What gives me encouragement is their stories on how their associates around the world are engaging in sustainability. And how their international supply chain is responding to their 15 challenging sustainability questions. The question I wished you had raised is what about the other 2/3rds of world commerce?
      Bill

    • Jen Boynton

      Hey Greg,

      Bill got the number from Paul Herman at Hip Investor and I’ve updated the post with a citation. Thanks for the catch!

      Cheers,

      Jen