The environmental responsibility has become a great challenge for all organizations in the planet. Wal-Mart has been the main example of a successful implementation of a supply chain; thus, the purpose of this essay is to find out literature evidence that demonstrates how Wal-Mart is adapting its supply chain into an environmentally friendly strategy, and how successful it has been.
Introduction
Decisions taken by some companies, which are part of their corporate social responsibility policies, seek a more harmonious relationship with the environment, understanding that the current economic realities belong to an administrative logic that goes against the welfare of the planet, as professor Omar Aktouf (2002, p. 248), from HEC Montréal, states:
“The argument that makes the liberalization of markets, the globalization, the general competition, the slogans of the neoliberal ideology, the path of a new order that benefits all, is radically contradicted by the principles of thermodynamics which show the empirical impossibility of the logic on which it is founded -possibility of infinity of resources and potential profits, maximalism”. (Aktouf, 2002, p. 248); in other words, there is a managerial logic that jeopardizes the destiny of the planet “between economic and financial, and between economic-monetary universe, illusorily conceived as infinite and physical universe, known precisely for its finitude” (Aktouf, 2008, p. 166).
Under this consideration, the current essay is divided into four sections:
Problem statement, literature review, response to the purpose of the essay, and conclusions.
1. Problem Statement
There is growing concern about how the new industrial age is affecting the environment, and how organizations, as Wal-Mart, may act by innovating in ‘green’ managerial and productive practices to preserve it for new generations with the single powerful understanding that we live in the only accessible planet with the capacity to support life. As stated by (Callan & Thomas, 2013, p. vi) with the recognition of the problem and the understanding that the organizations seem to be moving in the right direction to correct it.
Nevertheless, situational economic contexts as the European crisis and the decline of economic growth have changed the way organizations face their strategies to continue struggling in the market, and “have placed difficult burdens on countries around the world, which in turn constrain public and private initiatives, including those aimed at the environment” (Callan & Thomas, 2013, p. vi).
Additional to the crisis, the “high economic growth rates in developing nations, although moderating of late, stress already depleting natural resources, threaten water supplies, and add to carbon emissions and other pollution releases” (Callan & Thomas, 2013, p. vi).
Regarding the previous considerations, organizations should make important efforts to integrate their supply chains in service or manufacturing as part of the complex task of achieving sustainability throughout the supply chain to address challenges as environmental protection, productivity improvement, risk minimization, and innovation. (Krajewski, et al., 2013, p. 464).
The report A New Era of Sustainability UN Global Compact-Accenture CEO Study 2010 presented the opinions of 766 CEOs, from nearly 100 countries. Among the most highlighted results, it showed that:
“93% of CEOs believe that sustainability issues will be critical to the future success of their business, 91% of CEOs report that their company will employ new technologies (e.g., renewable energy, energy efficiency, information and communication technologies) to address sustainability issues over the next five years. 96% of CEOs believe that sustainability issues should be fully integrated into the strategy and operations of a company (up from 72% in 2007). And 88% of CEOs believe that they should be integrating sustainability through their supply chain”. (Accenture Institute for High Performance, 2010, pp. 13-14).
Now, considering Wal-Mart, it is important to give a short review about it. The company, set up in 1962 by Sam Walton, has been the greatest sample of a benchmark case for organizations that try to implement successful management techniques to compete in the market. Its supply chain “was long considered by many to be a major source of competitive advantage for the company. In fact, when Wal-Mart was voted ‘Retailer of the Decade’ in 1989, its distribution costs were estimated at 1.7 per cent of its cost of sales” (Johnson, 2006, p. 1). The richness of its innovative implementations has widely been copied and used by many other competitors. According to together with its management techniques, most retailers are using Wal-Mart’s implementations as bar codes, shared sales data with suppliers, had in-house trucking fleets to enable self-distribution, and possessed computerized point-of-sale systems that collected item-level data, in real-time, and lately, radio frequency identification (RFID) (Krajewski, et al., 2013, p. 328).
2. Literature review
Supply Chain
It is “the interrelated series of processes within a firm and across different firms that produce a service or product to the satisfaction of customers” (Krajewski, et al., 2013, p. 23), which turns into a need in a competitive world to add value to all processes in the organization. This means that it is a set of processes that needs the involvement of all members to act as a team from their functional position because “each activity in a process should add value to the preceding activities; waste and unnecessary cost should be eliminated” (Krajewski, et al., 2013, p. 27).
The set of processes in the supply chain in an organization is divided into the core processes and the support processes: “a core process is a set of activities that delivers value to external customers”, and “a support process provides vital resources and inputs to the core processes and is essential to the management of the business”. (Krajewski, et al., 2013, p. 27).
An effective achievement requires an appropriate and rigorous application of the supply chain management to guarantee value in the supply chain management which consists of a “synchronization of a firm’s processes with those of its suppliers and customers to match the flow of materials, services, and information with customer demand” (Krajewski, et al., 2013, p. 23), and a correct designing of the chain supply that leads “a firm’s supply chain to meet the competitive priorities of the firm’s operations strategy” (Krajewski, et al., 2013, p. 382).
As stated by (Krajewski, et al., 2013, p. 382) “the design of a supply chain must be a collaborative effort from the CEO down. All functional areas have a stake in an organization’s supply chains” to compete and find positive responses either for services or manufacturing.
The Supply Chain Sustainability and environmental responsibility
A more complex process arises when the environmental responsibility subject is involved, in this manner, the challenge to design and manage the supply chain turns to be more interesting when organizations think of sustainability which “means that they are meeting humanity’s needs without harming future generations” (Krajewski, et al., 2013, p. 463). Consequently, the new term ‘supply chain sustainability’ emerges with three variables to consider and integrate: financial responsibility, social responsibility, and environmental responsibility.
Therefore, environmental responsibility “addresses the ecological needs of the planet and the firm’s stewardship of the natural resources used in the production of services and products. The goal is to leave as small an environmental footprint as possible so that future generations can make use of abundant natural resources” (Krajewski, et al., 2013, p. 463), for all business sectors, included the service sector where “providers are examining ways to increase efficiency and reduce the impact of their operations on the environment” (Krajewski, et al., 2013, p. 464), and provide an assertive answer to this questions: “Is your own or your organization’s behaviour contributing to the weakening or strengthening of the local or global biosphere?” (Hollingworth, 2009, p. 4).
3. Response to the purpose of the essay
Wal-Mart’s supply chain sustainability model
To adapt its supply chain to an environmentally friendly strategy, Wal-Mart implemented the Wal-Mart’s supply chain sustainability model, presented in its Global Responsibility Report (Wal-Mart Stores, Inc., 2005-2016), labeled ‘Using Our Strengths To Help Others’, which has been published yearly since 2005. This model integrates three variables: Sustainability (Enhancing sustainability of global supply chains), Opportunity (Enhancing economic opportunity) and Community (Strengthening local communities) (Wal-Mart Stores, Inc., 2016, p. 10).
For achieving Sustainability, “Wal-Mart collaborates with suppliers, customers, nonprofit organizations and others to enhance the environmental and social sustainability of global supply chains” (Wal-Mart Stores, Inc., 2016, p. 11), by working in 6 main programs:
With the energy and emissions program, they aim to reduce the energy intensity and emissions in their operations, and work with others to reduce emissions across supply chains. For the zero waste program, their aim is to eliminate waste in their own operations as well as support waste reduction initiatives in the supply chain; this initiatives include Waste Reduction (food and other materials streams, in and through Wal-Mart operations), Product Design/Packaging and Recycling Education/Infrastructure. For the natural resources program, their objective is to preserve vulnerable natural resources which are at risk through collective action in deforestation, water and land conservation. Its sustainable food system program has the purpose of helping the world feed a growing population by creating a more accessible, affordable, sustainable and healthy food system. With the transparency and quality program they want to promote transparency and quality in products they sell, through initiatives in food/product safety, sustainable chemistry and animal welfare. Finally, the worker dignity program seeks to support the safety and dignity of workers in supply chains, through responsible sourcing and compliance initiatives (p.11).
Success implementation of Wal-Mart’s supply chain to an environmentally friendly strategy
- Wal-Mart’s Successful results provided by Wal-Mart
In its Responsibility Report Wal-Mart states that among the greatest achieved environmental results since 2005 are that 75% of global waste has been diverted from landfill, more than 1 million acres of wildlife habitat has been protected, 35.6 million metric tons of greenhouse gas emissions has been eliminated from their supply chain, and two, U.S. fleet efficiency doubled since 2005, saving nearly $1 billion and eliminating nearly 650,000 metric tons of greenhouse gases in 2015 (p. 2).
- Wal-Mart’s Successful results provided by other
Negi & Anand, (2014) studied the ‘Green’ supply chain practices and green initiatives applied by Wal-Mart, and found that the company “has strengthened their supply chain management and coordination across the supply chain elements such as strategic sourcing, logistics management, supply chain information systems, and relationship management through ‘Green’ initiatives”(p.152). In the same way, they concluded that “the green initiatives adopted by Wal-Mart can also be applied to various industries and sectors to save our nature and environment, and also to sustain long business with maximum profit share and customer satisfaction.” (p. 154); similarly, (Plambeck & Denend, 2008) studied “how and why the world’s largest retailer is using a network approach to decrease its environmental footprint – and to increase its profitability” (p. 52), found that the adaptation of Wal-Mart’s supply chain to an environmentally friendly strategy has been a success, nevertheless, there are some risks the organization faces with its partners when it tries to implement the environmental supply chain. As a result, risks of losing its nonprofit partners, increasing costs, and having problems with fundraising are the most relevant network events Wal-Mart has to deal with as a challenge to succeed with the implementation of the environmental strategy.
4. Conclusions
The welfare of the environment is a responsibility that demands all organizations to take appropriate measures to align their business strategies to the needs of the planet. Wal-Mart’s supply chain plays an important role in the society since it is the major example to copy and follow by others, that is why, efforts to integrate ‘green’ policies need to remain despite the constrains set by the market.
Wal-Mart’s Responsibility Report (2016), Plambeck and Denend, (2008) and Negi & Anand, (2014) have demonstrated significant achievements of Wal-Mart to adapt its supply chain to an environmental strategy to preserve the planet and resources for future generations, however, adapting to this model may still present several risks for its business strategy since current economic conditions may limit the strategy. Finally, I conclude by affirming that it is a remarkable effort Wal-Mart keeps on doing to achieve its complex aims to help to decrease the negative impacts to the environment through a risky integration to the supply chain.
REFERENCES
Accenture Institute for High Performance, 2010. A New Era of Sustainability: UN Global Compact–Accenture, Chicago: Accenture.
Aktouf, O., 2002. La stratégie de l'autruche : post-mondialisation, management et rationalité économique. Montréal: Éditions Écosociété.
Aktouf, O., 2008. Gobernancia y pensamiento estratégico: Una Crítica a Michael Porter. Administración y Organizaciones: Desarrollo del Pensamiento Administrativo y Organizacional. Décimo aniversario, Diciembre, 11(21), pp. 157-183.
Callan, S. J. & Thomas, J. M., 2013. Environmental Economics & Management: Theory, Policy, and Applications. 6 ed. Mason: South-Western, Cengage Learning.
Hollingworth, M., 2009. Building 360 organizational sustainability. Ivey ID: 9B09TF07. London(Ontario): Ivey Publishing, Ivey Management Services.
Johnson, P. F., 2006. Supply chain management at Wal-Mart. Ivey ID: 907D01. London(Ontario): Ivey Publishing, Ivey Management Services.
Krajewski, L., Ritzman, L. & Malhotra, M., 2013. Operations Management Process and Supply Chains. 10 ed. London: Pearson.
Negi, S. & Anand, N., 2014. Green and Sustainable Supply Chain Management Practices- A Study of Wal-Mart.. Emerging Business Sustainability, pp. 141-157.
Plambeck, E. L. & Denend, L., 2008. The Greening of Wal-Mart. Stanford Social Innovation Review, pp. 52-59.
Wal-Mart Stores, Inc., 2005-2016. Global Responsibility Report Archive, Bentonville: Wal-Mart Stores, Inc..
Wal-Mart Stores, Inc., 2016. 2016 Global Responsibility Report, Bentonville: Wal-Mart Stores, Inc.
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