As part of its global "green" campaign, Wal-Mart Stores will require its supply chain service providers in Canada to reduce their carbon footprint. Starting this month, the retail giant will rate its providers' performance on an environmental scorecard; suppliers who don't make the grade risk being dropped. Wal-Mart has a similar program under way in the United States.

To acquaint them with its environmental expectations, Wal-Mart Canada met with its motor and rail carriers as well as its warehouse operators and logistics service provider earlier this year. At the meeting, Wal-Mart introduced its "Supply Chain Sustainability Scorecard," which will assess providers' environmental performance in such areas as fuel use, facilities, and equipment.

Wal-Mart Canada, which operates 290 stores, believes the program will not only help reduce its environmental impact, but also cut costs. "As a company, Wal-Mart has introduced sustainability programs and measures throughout our business," says Lesley Smith, Wal-Mart Canada's vice president of supply chain. "As always, the business case and payback are twofold: a better operation with better environmental effect."

The program has already achieved some successes. For instance, Supply Chain Management Inc. (SCM), Wal- Mart's third-party logistics service provider (3PL) in Canada, has changed the way it ships products to 10 stores in Nova Scotia and Prince Edward Island. By shifting from road to rail, the company has reduced carbon emissions by 2,600 tons. In addition, the 3PL converted 20 truck generators to electric power, saving about 10,000 gallons of fuel. These two measures combined are expected to yield more than $2 million in annual cost savings.

Another initiative involved switching from cardboard shipping crates to reusable plastic. This change allows boxes to be used about 60 times instead of just once. Adoption of plastic crates is expected to save $4.5 million and reduce waste by more than 1,400 tons annually.

Wal-Mart's initiatives in Canada are part of a companywide "Sustainability 360" program unveiled earlier this year by Chief Executive Officer (and former supply chain executive) H. Lee Scott. That program seeks to engage Wal-Mart's suppliers worldwide in an effort to reduce environmental waste. For example, the retailer is pushing its 60,000 suppliers around the globe to cut the amount of packaging they use by 5 percent by 2013. (See "When Wal-Mart talks …," DC VELOCITY, December 2006.) Wal- Mart claims that these packaging reductions will allow the retailer and its suppliers to remove 213,000 trucks from the road, saving about 324,000 tons of coal and 677 million gallons of diesel fuel each year.