Wal-Mart's focus on the supply chain service providers follows a similar drive to make manufacturers and packagers cut waste and emissions as part of their overall environmental impact based on a scorecard system set up by the company. Suppliers will be rated according to their environmental impact, with those performing poorly at risk from being dropped by the world's largest retailer. This stage of the scorecard will measure the efforts and success of companies involved in the shipping and logistics of products sold in the supermarket chain. In July, Wal-Mart assembled truck, rail, storage and distribution suppliers to begin the process of quantifying various sustainability measures that will be set. Lesley Smith, vice president of supply chain at Wal-Mart outlined its new expectations of its supply chain members, and to establish agreed categories of measure within the scorecard. The scorecard will become operational from October 2007 onwards and will examine the equipment, operations, facilities and corporate commitment of companies. "Our new rules for supply chain sustainability will cover everything from fuel use, to facilities and equipment standards, to the overall environmental commitment demonstrated by the companies we hire to ship and store our products," said Smith. The company expects that driving sustainability will also have a beneficial effect of costs. "By moving goods more efficiently, Wal-Mart Canada and its supply-chain service providers expect to directly contribute to the company's everyday-low-cost approach - lowering costs to ensure the lowest prices for customers, a key to Wal-Mart's business model," Wal-Mart said. In July 2006, Wal-Mart and shipping supplier SCM changed how many products were delivered to 10 stores in Nova Scotia and Prince Edward Island, from road to rail, reducing carbon emissions by 2,600 tonnes, according to the supermarket. For products where road haulage is necessary, 20 truck generators were converted to electric, saving 40,000 litres of fuel. The combined measures are expected to save about $2m in costs each year, according to Wal-Mart. Furthermore, another initiative involved changing some shipping crates from cardboard to plastic. This allows boxes to be used about 60 times instead of once, and has saved Wal-Mart $4.5m in costs, and the environment in 1,400 tonnes in waste and 10,000 in carbon emissions, the supermarket said. In February, Lee Scott, chief executive officer and Wal-Mart unveiled "Sustainability 360" - a company-wide emphasis on sustainability extending beyond Wal-Mart's direct environmental footprint to engage associates, suppliers, communities and customers. "Sustainability 360 takes in our entire company - our customer base, our supplier base, our associates, the products on our shelves, the communities we serve," he said in February. "And we believe every business can look at sustainability in this way. In fact, in light of current environmental trends, we believe they will, and soon." The company's substainable scorecard system is pushing 60,000 of its suppliers worldwide to lower the amount of packaging they use by five per cent by 2013, use more renewable materials and slash energy use. If the packaging reductions are met, this will be an effort equal to removing 213,000 trucks from the road, saving approximately 324,000 tonnes of coal and 67 million gallons of diesel fuel per year, Wal-Mart claims. The new measures add to Wal-Mart Canada's existing sustainability pledges including to become zero waste, to be totally powered by renewable energy, and to stock make more environmentally preferable products available.
Supply chain service providers to Wal-Mart Canada will be required to reduce the impact of their operations on the environment, or face losing out on the business to those that do.