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Wal-Mart has shown continued success by continues focus on building awareness, community involvement, in- store initiatives and supplier management. China entry in real-time and under an extreme situation of uncertainty is a much more complicated task. After reviewing of Wal-Mart, it is evident that this Wal-Mart has been successful in expanding its operations in China. Â Wal-Mart China had established itself as the largest retailer in world. Wal-Mart was very successful in aligning itself with the Chinese culture to maintain sustainability. Wal-Mart is spreading its power and knowledge throughout China. Wal-Mart has set three major goals:
(1) to be supplied 100 percent by renewable energy;
(2) to create zero waste;
(3) sell products that sustain resources and the environment.
This approach guides the company's expansion efforts centered on integrating sustainability by engaging Wal-Mart's associates, suppliers, communities and customers (Global, 2009). Wal-Mart's sustainability program, consisting of "green" facilities, products, and consumer initiatives, leads the retail industry. Wal-Mart is missing an opportunity to promote their services, mission and brand and leaving competitors the chance to do so first such as Carrefour. Therein lies an opportunity to promote the corporate giant's advances in energy conservation and recycling, encourage participation of consumers and other constituents, and build awareness around an important, national issue- saving energy and money. Of these solutions, we have found that the most effective and efficient strategies are to promote and revaluate the existing practice. After studying these strategies proposed, we conclude that the best way to obtain a sustainable competitive advantage is to focus joint effort with all corporations' involvement.
China opened its retail industry since 2004 and reduces its restraints on overseas investment in licensed chain store businesses in 2005. In less than two years, competition in the retail domestic market has hit an all-time high. Retail companies such as Wal-Mart have been expanding at breakneck speed in order to stay ahead. Wal-Mart has presently 189 units in 101 cities, and created over 50,000 job opportunities across China. Wal-Mart China has more than 20,000 suppliers in China and over 95% of the merchandise in China is sourced locally due to the regulation by the Chinese government. Wal-Mart has faced various challenges in Chinese business environment. Wal-Mart is working with its suppliers and government to help them streamline their operations. Wal-Mart has attempted to maintain its tradition of providing quality merchandise at low prices, and friendly customer service. The retailer has introduced advanced retail techniques and concepts to improve operational efficiency and customer service. China is also becoming an important centre for Wal-Mart's global procurement activity. Wal-Mart has already had some success in pushing U.S. suppliers to cut back on packaging, and the company has set a goal of eventually producing now waste and using only renewable energy sources. However, now that much of the low-hanging fruit has been taken, achieving larger sustainability goals is likely to take more work. Wal-Mart are bringing the experience and knowledge gain in U.S. to share with the Chinese. Wal-Mart are working closely with non-governmental organizations to help plant inspectors in China understand the company's sustainability initiatives. Wal-Mart priorities in China will be appropriate waste disposal, overall waste reduction and reducing greenhouse gas emissions, as well as reducing packaging and boosting energy efficiency rather than doing business along
A research done by Bird, Proctor, Putzbach & Widjaja (2009) found that Chinese consumer were the cost-sensitive compare than other countries and Chinese consumer would shop around to find the lowest prices. Chinese consumer satisfaction level greatly influenced consumer loyalty and the greatest determinant of this satisfaction was made up of perceived value. The perceived value is composed of three sub factors: (1) Product price, (2) Relative price and (3) Promotion. The other factors for consumer satisfaction in descending order of its importance are Image, Merchandize, Shopping environment, Service, Check-out process and Store policy. Wal-Mart thrived for offering quality merchandise at the lowest price and with best consumer service possible. Wal-Mart also had a reputed image as a branded supermarket chain. There are many fake or poor quality products in China, everyone knew in order to buy a generous product could only found at mega mart. Most mega mart will be located faraway urban area and come with high price tag. Chinese consumer prefers doing big-stop shopping in Wal-Mart. Wal-Mart is committed to a philosophy of giving back to community. Each year, they donate millions to charities, schools and create job opportunities and improving people life. For example, Wal-Mart Direct Farm Program which helped farmers better adapt to market conditions and also benefit consumers for fresh, safe, delicious, affordable and sustainable produce Wal-Mart stores provide convenient, one-stop shopping with wide selection and amazing services that are not available in many other stores. Wal-Mart also import products internationally which open up the Chinese market. Wal-Mart policy allow consumer to returning used product for full price refund (Wal-Mart Services, 2007). This attractive package gain trust from the Chinese consumer and due to all these favourable factors consumers patronized Wal-Mart China stores.
At the present rate of 1.3 billion populations in China, sustaining resources is impossible in perpetuity. China cannot continue consuming at a rising rate while resources begin to fall. China rated highest on sustainability awareness amongst the world (RCIS, 2009) If Wal-Mart continue expanding it business without any consideration, the resources will be furnish out very soon. Wal-Mart understands being an efficient and profitable business and being a good steward of the environment are goals that can work together. Sustainability is about building a better business and meeting the expectations of consumers. Wal-Mart understand working with supplier and government closely in order to keep the consumer committed ( H. Lee Scott, 2008). Wal-Mart focus on areas aimed at meeting or exceeding social and environmental standards, driving innovation, and efficiency and building stronger partnerships with suppliers, government, and NGOs. The regulation has an agreement that will serve as an example of a partnership that benefits both industry and government. Wal-Mart proactive action has to support local suppliers and their communities, produce more food with fewer resources and waste, and to sustainably source key agricultural products. Sustainable is a tremendous opportunity for Wal-Mart to make a difference across a range of issues and in many people's lives. As the China population continues to grow, it only becomes more important for China Wal-Mart to ensure the resource is grown in a responsible manner, environmentally and socially.
Wal-Mart encourages supplier to create products that are energy efficient, highly recyclable and contain significant amounts of recycled materials and low amounts of hazardous materials.In order to achieve Wal-Mart develop a set of compliance for their vendor to comply in order to have business with them. These vendor compliance manuals standards make it easier for Wal-Mart to streamline their operation process, which allowing them to do business with thousands of consumers without becoming overwhelmed. Supplier selection decision is one of the critical issues faced by operations and purchasing managers to help organizations maintain a strategically competitive position (Chen, Lin, & Huang, 2006).
Managing the supplier qualification and selection process is a necessary step for Wal-Mart seeking to manage their corporate legitimacy and reputations. Wal-Mart supplier selection criteria can be developed with intent of focusing on meeting government regulations, focusing on process improvement, and focusing on environmental policy. P.K Humphreys, et al (2003) has suggested either Qualitative or Quantitative criteria could be applied for supplier selection depends on the company approach. Wal-Mart as a big organisation should use a proactive environmental management strategy which is quantitative criteria. As proactive approach are more innovative and their strategies are specialized to tackle environment challenges. Organizations normally look beyond their current processes and beyond their internal functions (S. V. Walton, April 1998) which are Wal-Mart usual practice continues improvement. By integrating other members in the supply chain they increase the range and quality of environment management outcomes (P.K Humphreys, 2003).Some techniques used by organization involve the closed loop supply chain, Total Quality Environment Management in planning and operations, and Product Life Cycle Cost Analysis.
Qualitative environmental criteria:
These criteria are subjective and the application depends on the weight given to each one depending on its importance to Wal-Mart business and total points score obtained on the bases of the measured parameters.
â€¢ Management competences
â€¢ Green image
â€¢ Design for Environment (DFE)
â€¢ Environment Management Systems
â€¢ Environment competencies
Wal-Mart could lay out a series of higher requirements for potential supplier. Walmart could work closely with the Chinese government and supplier partners, and associations to have a common agreement that will require factories to certify compliance with laws and regulations where they operate along with rigorous social and environmental standards. Wal-Mart should treat supplier as partner, by providing resources such as fund, training, knowledge sharing and best practices with all them. Wal-Mart should reward their supplier who did well in by providing more business opportunity to them. Giving empowerment to the supplier which makes them all feel like owners, this will result them to show a greater sense of commitment, stewardship, compassion and joy in their work, and the business thrives as a consequence, as does the community as a whole. Develop a supplier quality team, to monitor and perform annual audit on the supplier. As a big brother Wal-Mart should chair a committee together with the Chinese government and supplier to buy up any issue raise, monitor their progress and maintain a good relationship with them.
The Wal-Mart China has a very unique distribution system compare to other Wal-Mart in the world. Majority of store sales passed through Distribution Centres while most Wal-Mart China's sales were supplied via its Distribution Centres, due to large geographic of china and regulation barrier. Another feature of Wal-Mart China's distribution system was that the incoming shipments from suppliers arrived in diverse range of trucking and loading configuration while Wal-Mart outsourced standardized trucking fleet for all of its shipments to maintain efficiency. All loading and unloading was tracked by using mobile 3PL provider. Cartons were tagged to monitor until palletized for transport within the facility which will be hold at warehouse for staging or pass through normal inventory for sale within a day. There will be no pallet in used to fully utilize the space. Tianjin DC has 70 doors for shipment and 32 doors was cater for SCs and ShenZhen DC. Wal-Mart has a special program which is return vendor program was in place to handle excess stock. Wal-Mart China implement system such as Telxon portable bar code readers, retail Online (Retail link) and accelerate the billing system (Linerusher). Wal-Mart's sophisticated distribution system and information technology to track inventory has significantly improved its efficiency and productivity. Wal-Mart China has 39 stores, distribution centers use to reduce the cost of scale advantages. The heart of Wal-Mart's distribution system is its distribution centre. It has the latest in state of the art inventory control and materials handling equipment. The distribution centre is located in a circular pattern around it. In Shenzhen, there are eight Wal-Marts shopping plaza, a Sam's Club stores and two community stores, and established the first national distribution centre to support the Pearl River Delta in all stores. Part of purchase is done centrally from the company's headquarters and delivered to the distribution centres and then delivery directly to the stores daily. As consumers make purchases, sales amounts and the change in inventory are automatically sent to the computer by the electronic scanner checkout system. This information is then sent daily via Wal-Mart's own satellite system to headquarters and to the appropriate distribution centre. This daily updating of inventory allows distribution centre to send the precise amount of merchandise to the stores to maintain the optimum level of stock.
Similarly, the inventory information allows buyers to forecast and keep healthy level of goods flowing into the distribution centres. The remaining merchandise is delivered directly from the vendors and distributors. The efficiencies generated by this type of distribution system are enormous and play a large role in the success of Wal-Mart. The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system. Through this system, it was possible to monitor and track the sales and merchandise stock levels on the store shelves. The company asked its suppliers to ship goods in store-ready displays called pretty darn quick (PDQ) displays. Goods were packed in PDQ displays that arrived at the stores ready to be boarded on the racks. Wal-Mart's employees could directly replace the empty racks at the stores with fully packed racks, instead of refilling each and every item at the racks. Retail Link connected Wal-Mart's EDI network with an extranet, accessible to Wal-Mart's thousands of suppliers. The suppliers could find out how their product was performing vis-a-vis competitors' products in a particular product categoryWal-Mart worked together with its key suppliers on a real-time basis by using the Internet to jointly determine product-wise demand forecast.
The Centralize distribution center (DC) located in TianJin supplies 40% of the 31 Wal-Mart Super center's (SC) sales in different locations of China. How to applying the three "R's"- reduce, reuse and recycle (Wal-Mart, 2009) in the distribution and operation activities of these DC and SCs could significantly improve the sustainability.
In the DC and SC, the day light and T5 energy saving bulbs were used throughout the facility resulting in 20 to 30 percent energy savings. The air condition is set to a constant temperature to reduce the waste. The solar energy also applied in water heating and power supply to reduce 31 tons of Co2 emissions per DC annually.
Wal-Mart could continue improve in these areas to further reduce the natural resource consumption and Co2 emissions:
LED light has better energy efficiency than the T5 light (Taguchi, 2008). When Wal-Mart going to change the old or malfunction T5 bulbs, they should consider the LED as replacement.
Improve the daylight-covered space. A typical green building should have 75% of its space been lighten by natural daylight (Kats, 2003).
Use different types of clean energy through the operation. Not every DC or SC located area has sufficient sunlight, use Biogas, wind-power hot dry rock geothermal energy, ocean energy or any clean energy best available at the location to increase the sustainable energy usage.
The plastic bag takes years and years to biodegradable. Many Governments has banned the use of the plastic shopping bags. Wal-Mart China subsidies 70% of the cost (7RMB) of the reusable shopping bag, and give priority queue and prize for the customer who using the reusable shopping bag.
Not limited to the plastic bags, the reusable item should be used wherever and whenever possible in Wal-Mart China. For example, the disposable cup in the office area should be replaced with a glass cup.
One of the Wal-Mart China's contributions in recycling activity is to provide the used battery drop off locations for customer. And also pays for the costly third party battery transportation to recycle center.
However, as a giant company, Wal-Mart could play a bigger role in waste recycling by:
Use recyclable package.
Recycle the water generated by the Air-Condition for non-drinking purpose.
Uses recycle paper for receipt printing.
Separate store waste into different categories.
Wal-Mart understands the importance of the innovation in helping move towards the sustainability goal. The company partnership with Cleantech research firm since 2007 to working together on the Cleantech Accelerator project which helps identify and adopt the technologies that could reduce, reuse and recycle wastes generated in the distribution and operation (Wal-Mart, 2008).
Some of the innovation areas that Wal-Mart focus on are:
Alternative battery technology for forklifts.
Closed-loop water processing.
Sustainable building materials.
Household hazardous waste
Wal-Mart also spent multi-millions dollar on software technology innovation for its Warehouse management, route planning, and truck dispatching. The improved efficiency results in less stock fill and petrol consumption.
Despite China's high economic growth rate, its environmental sustainability index is near the bottom among the countries of the world (Diamond and Liu, 2008). The good news is that the Chinese government had realized the environmental protection should be treated as an integral part of sustainable economic development. They aggressively push the environmental revolutions and leading the race to make renewable energy (NYTimes, 2010).To support Chinese government's movement and achieve organization environmental sustainability objective, Wal-Mart China has signed list of cooperative Memorandums of Understanding (MOUs) with Chinese government and it's association (Wal-Mart, 2010), below are some of the examples:
In October 2008, signed an MOU with the Administrative Centre for China's Agenda 21 (ACCA21) with an aim to provide support for domestic enterprises to achieve sustainable development.
In December 2008, signed an MOU with the Environmental Certification Centre of the Ministry of Environmental Protection (MEP) to develop environmentally responsible standards for all stores in China.
In October 2009, signed two MOUs with the Ministry of Commerce (MOFCOM) and the Ministry of Agriculture (MOA), accelerating the expansion of Walmart's Direct Farm program and promoting its experience.
As the giant multinational company, Wal-Mart gained the knowledge from global operation. The developed countries have strict environmental policy and advance infrastructure. Wal-Mart China could share the information and corporate with Chinese local government to adopt some of the good concept. For example, the CFL energy bulbs promoted globally by Wal-Mart contains small amount of mercury. The countries like United States and Germany already had much of the required recycling systems in place to handle this sort of product, but China did not. However, Wal-Mart could work with Chinese government to incorporate recycling cost into the initial sales. The fund helps Chinese government to setup its recycling system, and Wal-Mart's initial investment will eventually paid back from the increasing CFL bulbs sales or local government tax relief.
Employees' involvement is also crucial for Wal-Mart in advancing the sustainability. Associates started the Personal Sustainability Project (PSP) in 2006 at some of the US stores. The program is focused on helping employees integrate sustainability into their own lives by making small changes to everyday habits (Wal-Mart, 2007). The program will be expanded into Wal-Mart's International Store(Environmental Leader, 2007).
Wal-Mart China should promote the PSP project and encourage employees to participate. The organization could support the employees in the following areas:
Provide fund to the project.
Give time-off for the employees to do the community work. Such as help recycle the living wastes.
Incentive for the employees who activity participate the PSP project.
The front-line employees deal with the daily operation and customer, their ideas on how to improve the sustainability are extremely valuable for the Wal-Mart China. The organization should establish a feedback channel to allow every employee has a chance to express his or her opinion. The employees should be rewarded if their ideas could help the company reduce the ecological footprint.
To sum up, it requires Wal-Mart China, Its employees, and Chinese government's joint effort and corporation on waste reduce, recycle and innovation. Therefore, the overall environment sustainability can be advanced.