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Production and Supply Chain Management Information Systems
ANOTHER LOOK

Supply Chain Going Green
The retail giant Walmart is trying to compel its suppliers to “go green” as part of its 113
efforts to build a more environmentally sustainable global supply chain. As it did with
promoting EDI and RFIDs in the early stages of those technologies, Walmart is leading
the curve with its sustainability efforts. In 2008, Walmart’s CEO, Lee Scott, told a large
gathering in China, “A company that cheats on overtime and on the age of its labor, that
dumps its scraps and chemicals into our rivers, that does not pay its taxes or honor its
contracts—will ultimately cheat on the quality of its products. And cheating on the
quality of products is the same as cheating on customers. We will not tolerate that at
Walmart.”
As part of this initiative, Walmart will survey its 100,000 global suppliers and
ultimately create a “sustainability product index,” which will allow the company to
evaluate suppliers on their sustainability efforts. Suppliers anxious to keep Walmart as a
customer will be motivated to improve their rating on the sustainability index. Some
experts think Walmart can change the business climate on sustainability. According to
Harvard Professor Rosabeth Moss Kanter, Walmart’s determination to use its
considerable influence to raise the standards for environmental sustainability “shows
that a single company using its unique clout can accelerate public action to reduce
greenhouse gases and reverse climate change.”
Walmart’s new initiative translates into a new burden on suppliers. By some
estimates, the company’s efforts to improve sustainability could increase the cost of
products by 1–3 percent, due, in part, to new requirements that suppliers label products
with a green index. However, these costs may be offset if the suppliers, as part of their
efforts to reduce their impact on the environment, can also improve their supply chain
efficiency.

Question:
1. Do you think consumers will be willing to pay increased prices to ensure their
products are sustainably produced and packaged? Would you be willing to pay
the extra cost? How much extra?

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