It's not easy being green

Over the past two years, Wal-Mart has been rolling out an ambitious environmental sustainability program, and it's taking its suppliers along for the ride.

By Clifford F. Lynch

It's not easy being green, as Kermit the Frog noted in his 1972 song. Nor is it easy being environmentally sustainable. Just ask any of the 60,000-plus companies that supply goods to Wal-Mart.

Over the past two years, the mega-retailer has been rolling out an ambitious environmental sustainability program, and it's taking its suppliers along for the ride. Among other goals, the retailer says it intends "to be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain our resources and our environment." It's already selling organic food and clothes made from organic cotton. It's working to cut its truck fleet's greenhouse-gas emissions by 25 percent. And now it's pushing its suppliers to reduce total packaging by 5 percent by 2013.

Supply chain executives should take particular note of this last initiative. As with previous Wal-Mart programs, this one will have an impact on a large number of companies—at least 60,000 worldwide. And impacted they will be. Wal-Mart has made it clear that it expects its suppliers to cut back on packaging and make more use of renewable materials, and it will be monitoring their compliance. The retailer has developed a packaging scorecard that enables suppliers to measure their progress against a set of metrics. They have one year to get ready. After that, Wal-Mart intends to start keeping score for real.

It's hard to argue with Wal-Mart's eco-friendly packaging intentions, but veteran supply chain managers may well have some qualms about the program—and with good reason. Over the past two decades, they've seen a number of initiatives aimed at promoting greener packaging practices, and not all of those programs have been a success.

Take the introduction of recycled corrugated into the supply chain, for instance. Recycled corrugated hit the grocery industry's supply chain at about the same time my company opened a new distribution center in Jacksonville, Fla. After dropping, tearing and otherwise subjecting the recycled corrugated cartons to their tests, the packaging engineers assured us that the containers had passed with flying colors. But they apparently neglected to stack the product three high in a high-humidity warehouse. Goodbye, bulk storage. Hello, expensive racks.

Things didn't go much better when the grocery industry tried to cut down on its use of corrugated boxes some years later. In place of boxes, participants in the program packed products in cardboard trays, which were shrink-wrapped before being fed into conveying and sorting systems. Coincidentally, at about that time, one of the leading vendors of automated warehousing equipment had developed and installed (at considerable expense to the purchasers) a system that used traditional belts and conveyors, but also relied on vinyl slides to move cases from one level to another. It quickly became apparent that the fastest way to shut down an automated warehousing system was to try to "slide" a shrink-wrapped case down a vinyl panel.

These problems were solved, of course, just as other ones can be. But these experiences underscore why logistics and DC managers need to stay involved in the package design process. Although a number of disciplines within the company will have input into packaging changes, the distribution function has the biggest stake in the outcome. Invariably, the distribution process is where problems such as inadequate stacking capability, pallet overhang and underhang, and susceptibility to damage first become apparent.

That's not to suggest that what's good for the planet can't be good for the supply chain operation as well. It can. And as a responsible supply chain executive, you certainly don't want to lose sight of the overall green objective. You do, however, want to make sure it's accomplished in a logistics-friendly manner.

Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider of logistics management advisory services, and author of Logistics Outsourcing – A Management Guide and co-author of The Role of Transportation in the Supply Chain. He can be reached at cliff@cflynch.com.

More articles by Clifford F. Lynch

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