Walmart Sustainability Strategy Case
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1. Given that Walmarts customers generally are unwilling to pay a premium for environmentally-friendly products, how is the company deriving business value from its sustainability strategy? If they are not currently deriving value, how do you think they could derive value from a sustainability strategy?
Walmarts sustainability strategy has further improved its already efficient supply chain, resulting in tangible benefits to the society and the environment. In the very first year of its implementation, the strategy generated more than $1B in profits. The main business values derived from this strategy are as follows. 1) Consolidation in value chain: seafood network expects to reduce supplier costs through standardised packaging, reduced paper work and improved transportation efficiencies. These changes are estimated to result in $14M in increased revenue and an additional $4.3 million in profits annually. 2) Waste reduction and Waste minimization: Walmart used to spend nearly $16M annually to dispose plastic waste. However, sustainable initiatives helped it to reduce the plastic waste by 72 million pounds per year. This is equivalent to $28M saving a year to the company. 3) Reduction in energy consumption: Walmart provided more that 500 of its stores with low and medium temperature refrigerated display cases and installed occupancy sensors and LED dimming capabilities. This initiative helped the company realise 66 percent reduction in energy consumption, saved more than $2.6M annually in energy costs and reduced CO2 emissions by 35 million pounds. 4) Reduction in packaging cost and package size: Walmart saved 800,000 gallons of gasoline and prevented over 11 million pounds of CO2 gas emissions when it replaced produce packaging on just four products with corn-based packaging. By reducing the package size little bit of its Kid Connection product line, the firm reduced the number of required containers by 497 and generated a freight savings of more than $2.4 million a year. This is equivalent to protecting more than 3800 trees and saving 1000 barrels of oil annually. 5) Goodwill: sustainability strategy changed the peoples perception about Walmart. Earlier its reputation and image among consumers and environmentalists were declining. It emitted more than 19.1 million metric tons of carbon dioxide annually. Within one year itself, the strategy reinforced Walmarts commitment to society and environment by showing measurable and tangible benefits. For example, it encouraged its suppliers to follow more sustainable fishing practices and to have their fisheries MSC certified.
2. How is Walmart motivating its suppliers to continuously reduce the environmental impacts of products and processes?
Walmart always consolidated its business with the best available suppliers. Through consolidation, the network could eliminate goods stock-outs and raw material shortages while reducing supplier