What sustainability means in operations strategy?
Wal-Mart has over 65,000 suppliers. Many are largely or completely dependent on the company for their continued success. As a result, Wal-Mart has unprecedented power to drive change in many industry sectors. It is seeking opportunities to use its scale to drive commercialization of more efficient technologies in areas including transport, refrigeration, lighting and HVAC (Hopwood 2009). The company’s size and aggressive approach can help make sustainability a major focus of business in the 21st century.
Wal-Mart China’s merchandizing group is continuing to build sustainability into the evaluation tools it used for supplier selection and on-going evaluation of purchase quantities. However, moving towards sustainability often involves working with vendors over long periods of time to allow them to make the changes necessary to come into compliance (Jerry Adler 2006). At the center of the business sustainability strategy pursued by Wal-Mart is a shift from generating additional value through price-based interactions, relationships with nonprofits, suppliers, and other stakeholders.
Through the above networks, Wal-Mart is gaining a system perspective which helps retailers find ways to address environmental issues. In exchange for these suppliers addressing the issues, nonprofit network members gain huge leaps towards their overall missions because of the scale of the operations at Wal-Mart. Suppliers also enjoy not only the stability that more intimate relationships with Wal-Mart brings, but also the guidance and support from Wal-Mart’s nonprofit partners.
The Wal-Mart sustainability strategy no doubt looks to be off to a promising start; they must not become complacent and must press-on carefully in order to make these networks sustainable and able to expand without interruption (Hopwood 2009). The first thing they need to do is manage these partnerships carefully in order to keep costs down. They also need to be able to manage the balance between offering “green” and conventional “non-green” products in its stores.
Finally, because of the very high number of nonprofits in the network, Wal-Mart must manage the loss of these partnerships. Individual groups may be unable to get credit for a large reduction on environmental impact. Over time, these groups’ inability to be able to demonstrate their impact may cause some problems with their fundraising because donors will demand more and more data on their performance. These problems could eventually cause the nonprofit groups to withdrawal from the networks.
In pursuit of its ambitious environmental goals, Wal-Mart has established many sub-goals and initiatives, such as establish a US program within 18 months that gives preference to suppliers who aggressively reduce emissions. And Work with suppliers to reduce packaging, increase recycled content, and expand recycling of packaging. Establish independent monitoring of Wal-Mart’s factory certification program; separate the factory certification and buying functions; cease doing business with supplier factories that fail to meet Wal-Mart’s ethical standards; collaborate with industry, government and NGOs to improve sourcing in developing countries.