Along with reducing current energy costs and avoiding potential future fees, the company also has an interest in mitigating the decline in crop yields and increase in extreme weather, which could increase commodity prices or interrupt supply. With stores in in 28 different countries and over 100,000 suppliers, Walmart\u2019s geographical interest in preserving environmental integrity are far-reaching.[6]<\/a> This unparalleled size and reach also serve to magnify any altruistic motivation the organization has\u2014i.e., any small change made to operations can have a large environmental impact\u2014which may be in line with the values of the leadership team, or to \u2018green\u2019-minded shoppers and shareholders, or both.<\/p>\n How, then, have Walmart\u2019s supply chain managers capitalized on energy savings opportunities? Major streamlining efforts began in 2016 when the company signaled to suppliers that they would be required to reduce delivery windows from four days to two days and reduce packaging mistakes. Under the new On-Time, In-Full (OTIF) program, suppliers will be required to meet these higher standards 95% of the time by February 2018.[7]<\/a><\/p>\n To support such precise delivery schedules, Walmart is standardizing supplier appointment scheduling systems throughout its distribution network. Reducing variability in delivery timing avoids backlogs of trucks at loading\/unloading docks and worker downtime\u2014i.e., blocking and starving. Supply chain management also revised the merchandise replenishment prioritization logic such that distribution center managers can more closely coordinate inbound cargo with a store\u2019s \u201cmust-arrive-by-date.\u201d[8]<\/a> By reducing the throughput time between the production of merchandise to the shelving in stores, Walmart can reduce the inventory held throughout the supply chain. Indeed, 17Q2 results showed a slight decrease in inventory on the balance sheet compared to last year ($43.4B as of July \u201917 vs. $43.5B as of July \u201816) despite an increase in quarterly revenue ($122.0B vs. $119.6B.).[9]<\/a> This translates to lower warehousing costs\u2014including energy savings\u2014as well as savings from working capital improvements. In stores, Walmart reduced energy use by 20% between 2005 and 2016 for a run-rate savings of $1 billion per year.[10]<\/a><\/p>\n In addition to improvements in its own supply chain, Walmart has secured commitments from major suppliers to reduce the environmental impact of their own operations. In past years, eight of the world\u2019s largest food companies pledged to eliminate six million metric tons of GHG and expand sustainable agriculture programs to eight million acres of farmland.[11]<\/a> In partnership with P&G, Walmart is targeting a 25% reduction in water per dose for all liquid laundry detergent, which will reduce packaging and transportation costs and emissions.[12]<\/a> Such product innovation and production process improvements increase the sustainability of all goods sold by these CPG companies, not just those on Walmart shelves.<\/p>\n Looking forward to a retail industry increasingly fueled by e-commerce, Walmart should shift their \u2018greening\u2019 efforts from the producer-to-shelf supply chain to the producer-to-doorstep supply chain. In a case study conducted by Walmart and Bain & Company, online orders shipped to the home produced more GHG emissions on average than store purchases, driven by smaller basket sizes for online orders (see figures 1 and 2<\/em>).[13]<\/a> To minimize emissions related to omnichannel retail, Walmart should encourage in-store pickup for online orders, which customers are likely to coordinate with other purchases and errands.\u00a0 It could also offer pickup locations in higher-traffic areas than its existing supercenter locations to avoid extra car trips.<\/p>\n To date, Walmart\u2019s climate-friendly agenda has been budget-friendly, but it\u2019s unclear whether conservationist efforts that don\u2019t translate directly to bottom-line benefits are feasible for the publicly traded company. Will shareholders tolerate lower returns for an environmentally-friendly investment? Or could Walmart pass on cost increases to customers\u2014do Walmart shoppers care to go \u2018green\u2019? Walmart\u2019s supply chain innovations may need to stay true to the motto: Save Money. Live Better. (798 words)<\/p>\n <\/p>\n [1]<\/a> \u201cClimate Change 2014: Synthesis Report,\u201d Intergovernmental Panel on Climate Change, 2014, pp. 47 https:\/\/www.ipcc.ch\/pdf\/assessment-report\/ar5\/syr\/AR5_SYR_FINAL_All_Topics.pdf<\/a>. Accessed November 2017.<\/p>\n [2]<\/a> Ibid.<\/p>\n [3]<\/a> Walmart Inc. (March 2017). Form 10-K. <\/em>http:\/\/stock.walmart.com\/investors\/financial-information\/sec-filings\/<\/a>. Accessed November 2017.<\/p>\n [4]<\/a> \u201cTechnical Update of the Social Cost of Carbon for Regulatory Impact Analysis \u2013 Under Executive Order 12866,\u201d Interagency Working Group on Social Cost of Greenhouse Gases, US Government, August 2016, pp. 4 https:\/\/www.epa.gov\/sites\/production\/files\/2016-12\/documents\/sc_co2_tsd_august_2016.pdf<\/a>. Accessed November 2017.<\/p>\n [5]<\/a> \u201cCoal Prices and Outlook\u201d U.S. Energy Information Administration, https:\/\/www.eia.gov\/energyexplained\/index.cfm?page=coal_prices<\/a> Accessed November 2017.<\/p>\n [6]<\/a> Walmart Inc. (March 2017). Form 10-K.<\/em><\/p>\n [7]<\/a> Edwin Lopez, \u201cBehind the scenes of Walmart\u2019s new on-time, in-full policy,\u201d Supply Chain Dive<\/em>, October 2017 https:\/\/www.supplychaindive.com\/news\/Walmart-OTIF-inventory-flow-ecommerce-supply-chain\/507301\/<\/a> Accessed November 2017.<\/p>\n [8]<\/a> Ibid.<\/p>\n [9]<\/a> Walmart Inc. (August 2017). Form 10-Q. <\/em>Note: No causal link is explicitly reported between the OTIF and reduced inventory.<\/p>\n [10]<\/a> Kelsey Lindsey, \u201cWhy Walmart is a retail sustainability leader (but doesn\u2019t really want to talk about it),\u201d Retail Dive<\/em>, August 2016 https:\/\/www.retaildive.com\/news\/why-Walmart-is-a-retail-sustainability-leader-but-doesnt-really-want-to\/423713\/<\/a> Accessed November 2017.<\/p>\n [11]<\/a> \u201cWalmart asks suppliers to deliver supply chain innovation,\u201d Consumer Goods Technology<\/em>, April 2014. https:\/\/consumergoods.com\/walmart-asks-suppliers-deliver-supply-chain-innovation<\/a> Accessed November 2017.<\/p>\n [12]<\/a> Ibid.<\/p>\n [13]<\/a> Aaron Cheris, Casey Taylor, Jennifer Hayes, Jenny Davis-Peccoud, \u201cRetailers\u2019 Challenge: How to Cut Carbon Emissions as E-Commerce Soars.\u201d Bain & Company Brief<\/em>, April 2017 http:\/\/www.bain.com\/publications\/articles\/how-to-cut-carbon-emissions-as-ecommerce-soars.aspx<\/a> Accessed November 2017.<\/p>\n","protected":false},"excerpt":{"rendered":" An icon of consumerism profits from conservation.<\/p>\n","protected":false},"author":10362,"featured_media":27061,"comment_status":"open","ping_status":"closed","template":"","categories":[3629],"class_list":["post-24565","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-climate-change-and-supply-chains","hck-taxonomy-organization-walmart","hck-taxonomy-industry-retail","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\n![\"\"](\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2017\/11\/Figure-1-300x190.gif\")
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