SCO3001 - Walmart Sustainability Strategy PDF

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Walmart Mission: saving people money so they can live better Objectives: cost, quality, flexibility, delivery Low cost Customers’ quality of life Decisions: process, quality system, capacity, and inventory Reducing amenities, limited workforce, high inventory as stores work as a warehouse, developed distribution centers Distinctive Competence: Number of stores, lowest prices Provide an example of environmental consideration in the Operations Management Decision Decision process. Write at least one paragraph on each of the following: ●

Does the initiative provide a Competitive Advantage for the company?

Walmart has several sustainable initiatives in effect. One of their initiatives involves operating their stores off renewable energy. “Finding cleaner and more affordable energy is vital to everyday low cost. Scaling renewable energy while accelerating energy efficiency is our vision for a more sustainable world and is the right direction for our business.” (http://corporate.walmart.com/global-responsibility/sustainability/) Walmart believes if they hit their targets they could reduce their energy billl by an estimated $1 billion by 2020. (https://logisticsviewpoints.com/2015/04/27/walmart-has-one-of-the-worlds-most-sustainablesupply-chains-really/). ●

What are the benefits for the company as a: ○

Product Imitator: Responsible packaging Walmart is following the trend of offering products that were responsibly

designed to cut waste and save customers’ money. Being an imitator allows Walmart to compare its practices to their competition. It requires less “brain power” for Walmart to imitate packaging solutions or partner with suppliers that practice responsible packaging than it does to innovate how products are packaged on their own. ○

Product Innovator Walmart has one of the world’s most sustainable supply chains. “Walmart

has always been highly efficient in the use of their truck fleet. But in 2005, they set a goal of reducing their fuel footprint by doubling fleet efficiency by the end of 2015. Through 2014, they achieved an 84.2 percent improvement in fleet efficiency over the 2005 baseline. This was achieved through better routing and truck loading; driver training focused on minimizing idle time and progressive shifting; and by focusing on

their equipment, for example, improved truck aerodynamics fuel-efficient tires, and increased purchase of compressed natural gas powered trucks.” ●

What are the risks the company incurs?

In November of 2016 Fortune published an article stating that “Walmart said it planned to be 50% powered by clean and renewable energy sources by 2025”, a plan produced by Walmarts CEO Doug McMillon. (http://fortune.com/2016/11/04/walmart-sustainability-2025/) But, Walmart might not be able to complete this previously stated goal to support sustainability. According to Solar Energy Industries Association, Walmart has the highest solar capacity to produce green energy in the US. However, the competitive market Walmart competes in everyday makes it difficult for this low cost leader to implement renewable energy plans as it is not always economically beneficial. Since Walmart is surrounded by a highly competitive retail market, they have found that they need to allocate more money to set up an online retail segment to compete with rivals, such as Amazon. Also Walmart has closed 3.3% stores in the US to turn around the corporate structure. Therefore, even though this giant company has highly developed and controlled cost management it is hard to budget extra money to invest in a renewable energy segment, particularly when it is not profitable. As a result, the company spends only 4% green energy of total electricity use, meaning 96% of the energy consumption is coming from fossil fuel sources. Additionally, Walmarts sustainability plan for 2050 could potentially harm their reputation as a company if they fail to meet their goal. This is because as the public becomes increasingly aware of the importance of renewable energy resources, they want to shop with a company that is able to be environmentally conscious and friendly....