When Wal-Mart speaks, suppliers act
How the retail giant is leading the industry into sustainable practices.
BakingBusiness.com, June 21, 2011
by Lime Energy
lime energy Food processing companies are under increased pressure to become more sustainable to satisfy supply chain requirements. In a speech at the American Bakers Association annual conference in San Antonio, TX, Wal-Mart’s former president and CEO Lee Scott warned food processing companies that they need to become more sustainable.

“We simply cannot make and sell goods the same way we have for the past century,” he said. “We have to be more efficient, using fewer raw materials and less energy. Our products also have to last longer, and when they have outlived their usefulness, they need to be recycled back into the value chain. This should not be about philanthropy. Make sustainability about your core business and your customers, and it will last.”

That comment highlights the fact that Wal-Mart, along with many other large distributors and retailers, expect their suppliers to adopt sustainability as a core tenant of their operations. An active sustainability program demonstrates supplier-management excellence as well as a lower cost structure that can be passed along to customers.

Wal-Mart, which is by far the world’s largest retailer with more than $400 billion in sales, found that 90% of its carbon footprint is accounted for by its suppliers. That led Wal-Mart to adopt an aggressive program for improving sustainability at its suppliers. In early 2010, Wal-Mart announced its intention to cut 20 million tonnes of greenhouse gas emissions from its supply chain by the end of 2015, or the equivalent of removing more than 3.8 million cars from the road for a year. Food products are one of the categories identified by Wal-Mart as having high carbon intensity, meaning that food processing companies are key targets for Wal-Mart in its supplier sustainability goals.

One of the key components of Wal-Mart’s supplier sustainability program is a focus on energy efficiency. The retailer encourages its suppliers to conduct energy audits, which almost always highlight low-hanging fruit projects that can be done to save energy and reduce carbon footprints with relatively short payback periods for the capital investment. A Wal-Mart executive tells suppliers that energy efficiency programs “can only make you more profitable — that’s it. And you get an environmental benefit at the same time.”

Going further, food processing companies that have achieved Energy Star recognition for their operations have a jump on the competition by proving that their operations are energy efficient. Dave Van Laar, CEO of Oak State Products, a Wenona, IL-based cookie and bar producer, was quoted by BakingBusiness.com as saying that when large customers ask about its energy plan, “we just show them we’re an Energy Star partner,” and no more questions are asked.

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