Wal-Mart Sees Green in Green

Nov. 1, 2006
Opting to take its case to the user-group who will probably feel the greatest impact, Wal-Mart Stores Inc. (Bentonville, Ark.) Wednesday released its

Opting to take its case to the user-group who will probably feel the greatest impact, Wal-Mart Stores Inc. (Bentonville, Ark.) Wednesday released its “packaging scorecard,” a major piece in its commitment of reducing packaging across its global supply chain of 60,000 worldwide suppliers. The goal is a reduction of 5% of the packaging material used by 2013. The intent of the scorecard is to help Wal-Mart and its suppliers improve packaging and conserve resources. The company first announced this packaging initiative at the Clinton Global Initiative in New York City in September 2006. It did not reveal the specific metrics until Wednesday’s PACK EXPO keynote address, The Wal-Mart/Sam’s Club Packaging Vision.

“We at Wal-Mart recognize that we have unique strengths and a unique opportunity to have a positive impact on the environment through our own actions,” said Matt Kistler, vice president of package and product innovations for Sam’s Club. “As vital as the packaging initiative is to reaching our environmental goals, it is also very good for our business and our suppliers’ business.”

Kistler emphasized that the company’s buying decisions will not be restricted to price alone. Wal-Mart’s packaging scorecard is a measurement tool that allows suppliers to evaluate themselves relative to other suppliers, based on specific metrics. The metrics in the scorecard evolved from a list of favorable attributes announced earlier this year, known as the seven R’s of packaging: Remove, Reduce, Reuse, Recycle, Renew, Revenue, and Read.

Through months of consultations, the Packaging Sustainable Value Network, a group of 200 leaders in the global packaging industry, including suppliers, experts, and internal and external stakeholders, outlined the following metrics for the packaging scorecard:

  • 15% will be based on GHG (Greenhouse Gas) /CO2 per ton of Production;
  • 15% will be based on Material Value;
  • 15% will be based on Product / Package Ratio;
  • 15% will be based on Cube Utilization;
  • 10% will be based on Transportation;
  • 10% will be based on Recycled Content;
  • 10% will be based on Recovery Value;
  • 5% will be based on Renewable Energy;
  • 5% will be based on Innovation.

These criteria are valuable tools for suppliers to determine how their packaging innovations, environmental standards, energy-efficiencies and use of material match up against those of their peers. Suppliers will receive an overall score relative to other suppliers, as well as relative scores in each category.

For example, a supplier may find it is in the 50th percentile in the Cube Utilization category for effectively using space on pallets and in shipping containers. That same supplier, however, may only be in the 20th percentile in Recycled Content. This model gives suppliers the opportunity to focus on specific changes within the context of a fluid environment, driving constant change and improvement in the supply chain.

“The packaging scorecard is a great tool for Wal-Mart to run a more efficient business,” said Ben Miyares, vice president of industry relations for the Packaging Machinery Manufacturers Institute (PMMI). “It also has significant benefits for its suppliers.”

Miyares added that the company is showing real leadership by introducing a tool and a process to get tangible results toward an ambitious goal.

The presentation by Kistler and Amy Zettlemoyer, director of packaging, Sam’s Club, was made to an overflow crowd at the show. Reaction on the show floor was mixed with praise as well as cynicism. Machinery manufacturers did not foresee changes in their businesses. Material providers did. Opting to reduce corrugated, selecting alternative material and generally reducing the material content currently used in packages were topics for discussion.

“This program will have a major impact on how people chose shipping platforms,” said Gary Garkowski of OptiLogistics. His company is a member of the sustainable value network and has already been working with Wal-Mart suppliers to reduce the use of wood pallets and corrugated. “The program is far reaching,” said Garkowski, “going clear back to the suppliers’ suppliers. How a company positions itself on environmental issues will now be part of whether it is a Wal-Mart supplier.”

And the packaging material supplier data will be visible to any company sending product to Wal-Mart, making it possible to determine the “best” supplier not by price, but by how environmentally friendly it is.

On the less-than-enthusiastic side of the issue, Ralph Rupert, packaging engineer at the Center for Unit Load Design, said there are many aspects of the program that need more investigation. “The entire system, not just the package, needs study,” said Rupert. “Wal-Mart’s distribution system is tough on transport packaging, that’s why companies design packages and shipping platforms the way they do.” There are already programs in place, such as the pallet design system (PDS) to help a shipper determine the proper pallet for the job, he added.

Wednesday’s announcement was the Latest step in a plan to reach a 5% packaging reduction across Wal-Mart’s supply chain by 2013. In addition to preventing millions of pounds of trash from reaching landfills, it will save energy and reduce greenhouse gas emissions. Starting today, more than 2,000 private label brand suppliers will gain access to the packaging scorecard, including the ability to input information and measure their performance against competitors. For all other suppliers, an automated online demonstration is available at www.scorecardlibrary.com. An additional website, www.marketgate.com/packaging, showcasing the Packaging Supplier Virtual Trade Show, will also go live today to help product suppliers find packaging suppliers, consultants and others who can help them make improvements and conserve resources more effectively.

On February 1, 2007, Wal-Mart will share the packaging scorecard with its global supply chain of more than 60,000 suppliers. During a one year trial period, suppliers will be able to input, store and track data, learning and sharing their results as desired. As of February 1, 2008, Wal-Mart will begin using the packaging scorecard to measure and recognize its entire supply chain based upon each company’s ability to use less packaging, utilize more effective materials in packaging, and source these materials more efficiently relative to other suppliers.

“We are encouraged by the positive response from our suppliers and are looking forward to continuing this collaboration,” added Kistler. “We have an opportunity to make a real positive impact and inspire change across the packaging industry.”

Source: Wal-Mart Stores, Inc.