08-16-2017, 08:48 PM
A Case Study of Wal-Mart s Green Supply Chain Management
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Introduction
Wal-Mart has undergone many growth stages since Sam Walton first decided to be the
best retailer in the world. His initial strategy was to target low-income families in rural areas by
offering significantly lower costs. When David Glass took over in 1988, Walton s mission was
truly realized through the use of technology in distribution and supply chain logistics, which
allowed Wal-Mart the opportunity to cut costs and lower prices for end users. Lee Scott took the
reins in 2000 to steer Wal-Mart toward sustainability. Scott s business model to strengthen
supply chain management processes by going green was a strategic decision that positively
impacted Wal-Mart s growth, distribution techniques, and corporate identity. His knowledge of
distribution systems and push for sustainability has transformed the company into an ecofriendly
powerhouse that continues to cut costs and remain at the frontier of distribution systems
technology.
Background
Wal-Mart leadership has done well to put the right people in the right seats on the bus to
drive the company forward. Founder and original Wal-Mart CEO Sam Walton strategically
chose his successor David Glass to lead the company in 1988. Art Turock claims that the most
impactful decision Sam Walton made during his reign was to select and develop successors
equipped to lead Wal-Mart to the next level of complexity (Turock, 2004). From 1988 to 1999,
CEO David Glass transformed the company from just a retailer into a retail distributor, using
technology to develop Walton s original goal while staying in line with his core values. While
Sam Walton built his strategy on low prices to the masses, CEO David Glass enhanced his
growth strategy through the use of technology.
Sophisticated technology boosted supply operations such that Wal-Mart s efficient retail
stores became the manifestation of a fast and flawless distribution business. When Glass
succeeded Walton, he believed that technology would ultimately drive this business to be the
size that it is which was the fundamental difference that set his approach apart from that of
Walton s (Turock, 2004). The late 80s and 90s began a technology boom, with the computer
industry making rapid advancements. Glass identified this as a strategic opportunity to enhance
business and distribution at an early stage in development. Emphasizing visibility through the
sharing of information with suppliers, Glass reframed the company strategy in terms of how to be
the low-cost operator and low-cost leader by focusing on logistics and distribution. A more
advanced distribution system would move product faster and more efficiently, allowing Wal-
Mart to maximize use of their suppliers as well as internal distribution lines. Glass used cutting
edge technology to create a logistical competitive advantage in an industry with high volume,
inelastic pricing, fragmented market share, and inefficient distribution (Turock, 2004). Because
of David Glass work, Wal-Mart s supply chain and distribution system is now regarded as the
most efficient and remains their primary competitive advantage in the retail industry.Going Green
Requirements
Lee Scott took control of Wal-Mart in 2000 with a newly adopted strategy of making
logistical processes more economically friendly. Green logistics, at its core, means
implementing a system that can independently monitor overseas suppliers to make sure they
meet social and environmental standards. Though the push for becoming environmentally
friendly is important, a global company like Wal-Mart must consider the transformation s effect
on the bottom line. Lee Scott saw the two goals as intertwined: being a good steward of the
environment and being profitable are not mutually exclusive. They are one and the same
(MSNBC, 2005). Scott provided an example by calculating that improving fuel mileage
efficiency in the trucking fleet by one mile per gallon would save more than $52 million per
year. The move toward sustainability also integrated Corporate Social Responsibility (CSR) into
Wal-Mart s business model. Ideally, this CSR policy would function as a built-in self-regulating
mechanism where Wal-Mart could monitor and ensure their adherence to laws, ethical standards,
and international norms. This CSR policy would be a way for the company to embrace
responsibility for the impact of their activities on the environment, consumers, employees,
communities, stakeholders and all other members of the public sphere.