My visit to Bentonville: Inside the world’s biggest supply chain

Generation S

My visit to Bentonville: Inside the world’s biggest supply chain

At business schools like Berkeley-Haas that specialize in corporate sustainability, Walmart has become the unlikely gold standard for its groundbreaking, ambitious initiatives. So when I had the opportunity to attend a summit on the rollout of the company’s much-hyped sustainability index at the Walmart home office in October as part of a fellowship offered by the Center for Responsible Business and Walmart, I was more excited than I ever imagined I would be about a trip to Arkansas.

The purpose of the meeting was to introduce the supplier sustainability scorecards that Walmart had developed as part of a three-year effort with The Sustainability Consortium to a subset of Walmart and Sam’s Club merchants. These merchants would be responsible for engaging their suppliers to not only fill out the scorecards but also identify opportunities to improve their sustainability performance. Walmart announced in September that sustainability would now play a role in the merchants' annual performance reviews, which help determine pay raises and potential for future promotion, signifying that the company takes this initiative seriously.

The stakes are high for the success of this initiative. As the largest retailer in the world, Walmart has the potential to fundamentally change how companies across the globe factor environmental considerations into the way they do business. If Walmart asks suppliers to improve the sustainability of their operations, the impacts will ripple across a range of industries, from groceries to apparel to electronics. Competing retailers could also be pressured to follow suit, expanding this effect even wider.

But the challenges around educating and motivating buyers to invest time and energy into developing a sustainability strategy for their suppliers are immense. Walmart’s buyers are high-powered, busy professionals whose performance is measured on a daily, monthly and quarterly basis, so the idea of taking the time to develop a plan that would not yield results for more than a year was hard for them to digest. Additionally, sustainability is a whole new language to buyers. This is not something they are trained in. Without any guidance, it is very difficult for them to know where to start, how to identify which issues are the most important and what the environmental tradeoffs are of investing in one project over another.

Finally, greening a supply chain as massive and complex as Walmart’s is no easy task, even for experts. The current lack of transparency or processes for collecting and reporting accurate information all the way up and down the supply chain is a problem that cannot be solved without serious structural changes and education efforts.

Toward the end of the meeting, buyers were asked to reconvene as a group to discuss findings from their supplier scorecards and brainstorm action plans going forward. In thinking through improvement opportunities that could help reduce the negative impact of their suppliers’ practices, buyers will have to take into account the costs of implementing these environmental upgrades -- both to suppliers and to their own bottom lines. After all, Walmart may be embracing a new sustainability vision, but its core mission will continue to drive decision-making: "Save Money. Live Better."

My experience attending this meeting -- and working subsequently with Walmart and the Environmental Defense Fund (one of Walmart's nonprofit partners) to provide buying teams guidance on how to prioritize and implement sustainability goals -- was valuable. It brought to light a few key lessons around green supply chain initiatives.

While there is nothing I haven’t already heard or learned in school, getting to see the challenges around rolling out the sustainability index firsthand brought to light the importance of keeping these lessons in mind despite significant time and resource constraints:

  • First, internal education is crucial. Walmart’s buyers must understand the environmental impacts of their supply chain and what the levers are to improve them before they can begin to explain the opportunities and benefits to their suppliers.
  • Second, participation comes before improvement. Without a full data set, buyers will not be able to accurately assess where the biggest environmental impacts and improvement opportunities lie. So in the short-term, the priority must be incentivizing suppliers to fill out the scorecards. This will lay the foundation for long-term improvement.
  • Third, feasibility must be weighed along with impact. If goals are set based solely on the greatest environmental impact without attention to cost, stakeholder buy-in, or accessibility (i.e., does Walmart even touch this part of the supply chain?), they will never turn into action.

And finally, the BBQ in Bentonville was indeed as delicious as promised.

Image courtesy Walmart