Wal-Mart China: Sustainable Operations Strategy

Wal-Mart China: Sustainable Operations Strategy 1. Explore through the literature the concept of (Business) sustainability and explain it briefly. Also using references on Operations Strategy describe what sustainability in operations strategy means. Traditional cost management models tend to only focus on production costs, whilst ignore products cost of design, development and customers using. In other words, the business concern visible costs and ignore intangible costs that means the destruction of the surrounding environment such as the cost of social responsibility during production the process. Thus, enterprises want to win the competition, they must change the traditional model of cost management and maintain the lowest cost in the life cycle of product. A broader perspective of product life cycle cost which includes social responsibility cost should be a part of business operations strategy or should be a part of business sustainability strategy. Business sustainability is a business approach have policies of environmental and human rights which means the business creates long-term shareholder value from no negative influence opportunities and managing risks on global or local society, environment, community and economy [3]. Smukowski [2] claimed that the concept of business sustainability is a prior plan of the long-term viability and optimizing resource needs, reducing environmental, energy or social impacts which will not damage the profitability of business. It can be summary from above that sustainable business means the enterprise consider not only financial factors, but also more comprehensive concern the impact of environmental and resource efficiency. 2. Discuss what Sustainability means to Wal-Mart, Wal-Mart China, and Wal-Mart Chinas current and potential customers. What would you see to be a balanced definition of sustainability for the business? Answer: (1) Wal-Mart In order to run business sustainability, Wal-mart combined value and service concepts of innovative operational strategies and set three sustainability objectives including more efficiency of vehicle fleet, reduce waste and energy saving. First of all, to combine value and service of its innovative operational strategies involve 14 SVNS made Wal-mart became the largest organic seller and the largest organic cotton purchaser. In addition, Wal-mart also through its integration of supply chain and ROHS compliance which including supplier or vendor selected and scored to achieve business sustainable aims. For instance, Wal-mart sold 110 million compact fluorescent lighting successful with its partner called GE. (2) Wal-Mart China In term of Wal-Mart China, its through 5 SVNS reach business sustainable. First of all, the strategy of sustainable store and operation can help Wal-Mart China reduce cost and decrease Wal-Mart Chinas footprint of operations. Secondly, to develop sustainable products such as food, electronic textiles and product packaging extend its business sustainability supply chain and compliance. Thirdly, to enhance efficiencies of its supply chain not only reduce cost but also footprint of whole chain. Fourthly, to make a good communication with its stakeholders is another critical issue of its business. Fifthly, Wal-Mart China also through share learned experiences with its supplier or vendor to make its sustainable supply chain more successful. Sixthly, Wal-Mart China employed T5 energy saving light bulb and double sides copy to decrease its energy waste of its business. Lastly, Wal-Mart China promotes the product which is an energy efficient bulb for its customers that is also an activity of business sustainability. (3) Wal-Mart Chinas current Wal-Mart Chinas sustainable logistics centers helped its reduce 31 tons of CO2 emission per year. For example, T5 light bulbs can save 20 to 30 percent energy per day in warehouse areas and resting places and to use solar energy and wind power generator can 7,300 kilowatt hours per year. In addition, Wal-mart encouraged its customers to use reusable shopping bags through some prizes including special express checkout line. Finally, Wal-Mart Chinas merchandizing group still continuing builds sustainability measure tools for supplier selection and some on going evaluation of purchase quantities which can enhance its suppliers efficiency of sustainability. Wal-Mart China also continuing creates innovative initiatives of sustainable and implements best practices for communicating to all of its stakeholders. (4) Potential customers If customers can choose Wal-marts sustainability products which not only improve the personal activity of environmental but also protect the Earth. Although the sustainability products price might higher than others, it still have some advantages such as reduce cost of electronic, long time for use and non pollution. According to the article, T5 energy saving light bulbs could save about 20 to 30 per cent energy which means its can also reduce the cost of electronic of 20 to 30 per cent. 3. Identify the distinguishing features of Wal-Mart Chinas distribution system and operations. Explain how it achieves relatively high availability with similar levels of stock to other companies. Answer: In order to provide high quality products for customers and the commitment of businesss operations strategy, Wal-Mart China combines their high employee productivity, latest technology, experienced co-transport sector, an efficient private truck fleet and distribution center operations which not only is an advantage of Wal-Mart Chinas inventory management but also increase efficiency of loading and delivery. According to the article, there are some advantages of Wal-Mart Chinas distribution center: (1) Sustainable logistics centers First of all, Wal-Mart Chinas distribution center uses T5 light bulbs which can save 20 to 30 percent energy per day in warehouse areas and resting places. Secondly, in order to reduce energy waste, Wal-Mart Chinas distribution center maintains control their air conditioning and heat recycling systems temperature. Thirdly, there are 25,550 kilowatt hours saving caused by ten solar energy water heaters which provide 1.7 tons hot water per day. Lastly, Wal-Mart Chinas distribution center use solar cells and wind power station to make up to 7,300 kilowatt power per year. As a result, each Wal-Mart Chinas distribution center also decreased CO2 by it. (2) Outsourced a standardizes trucking fleet Individual supplier ship was lower than expected fill rates. Wal-Mart China outsourced an efficient private trucking fleet which deliver products from DC to DC or from DC to SC. It not only helps Wal-Mart China achieves a well inventory management but also reduce out of stock rate. In addition, in order to make its trucking fleet teams more efficiency, new electronic technology is used in its logistics management [6]. First of all, Wal-Mart China through the electronic technique of satellite, GPS controls the state of transport. Secondly, Wal-Mart China also uses the electronic technique of GIS which provide digital electronic traffic map can suggest the best route of its delivery. Thus, it can be concluded from above that Wal-Mart become a world-class company is not accidental. Advanced electronic technique of Wal-Mart Chinas distribution system not only increase efficiency of its products delivery, but also decrease the situation of out of stock. (3) Centralized management of returning products Wal-Mart Chinas distribution system also has an advantage of centralized management products which has quality problems, slow sales or obsolescence. These products will also be returned to vendor by Wal-Mart Chinas distribution system. In summary, it is clear that Wal-Mart Chinas distribution system and operations can offer a stable inventory which is part of Wal-Mart Chinas safety stock. By way of replenishment products intensively from distribution center, it not only reduces time of out stock but also increase the circulating of goods. In addition, as Wal-Mart China has a very complete and standard systems or process of distribution such as outsourced a standardizes trucking fleet, new electronic technology and centralized management which also let Wal-Mart China become a highly competitive advantage of Chinas retailer industry. 4. How sustainability should be incorporated in the process of selection and evaluation of suppliers/vendors? Answer: In order to achieve business sustainability successful, both enterprise and its suppliers or vendors have responsible of their roles. First of all, enterprise should offer the requests of sustainability, and then try to find the suppliers or vendors who have production techniques of sustainability. Furthermore, to have a good communication and collaboration including share learned experiences with its suppliers or vendor is a critical part of objectives of sustainability. According to the article [4], in order to achieve ROHS compliance, Wal-Mart adopt ROHS regulation standard in some of its operations including supplier selection and product selection. For the first example, P G which is a large international supplier has a long standing working relationship with Wal-Mart in other parts of world including the U.S.A. It has a sustainability program concept called ensuring a better quality of life for everyone, now and for generations to come throughout its worldwide operations [4]. As can be seen from it, the sustainability development program for P G not only is a slogan, but also is a commitment for its customers. For the second example, Blue moon which is a Chinese national chemical products company supply some soap and cleaner in china. Blue moon also has a sustainable program of its products called Protecting the environment is protecting all of us. Our products deliver not only cleanliness but also protection to our customers [4]. In order to achieve its object of sustainable, biodegradable materials which meet a green environmental requirements used in Blue moons products. For the third example, Wal-mart China also created a initiative sustainable objective which called P2E2 program allowed suppliers to quickly and inexpensively equip their factories with cost saving equipment [4]. In order to continuing meet sustainable objectives, Wal-mart builds a sustainability evaluation tools which used in its supplier selection and product or material purchase. For instance, Wal-mart china had implemented a packaging score to measure and calculates efficiency and objective. In the end, this program also a 13 per cent cost reduction in Wal-marts packaging. It can be summary, if the enterprise wants to achieve, to integrate whole supply chain members such as suppliers and vendors are very important. In other words, to develop sustainable supply chain strategy is the only approach to make business sustainability which not only creates a perfect brand image for customers but also protects the Earth. 5. How sustainability can be improved in Wal-Marts distribution and retail operations. Answer: According to the article, Dong [4] asserted that sustainability will be differentiating factor between a good enterprise and a great one. (1) Energy efficient lighting Wal-mart used T5 energy saving light bulbs which could save about 20 to 30 per cent energy in its warehouse or space of rest. (2) Less waste of air conditioning and heat recycling system Wal-mart maintained the temperatures of its air conditioning and heat recycling system which also is an approach of energy saving. (3) Alternative energy Wal-mart used ten solar energy water heaters which can save up to 25,550 kilowatt hours each year to produce hot water. Wal-mart also used solar cells and wind power generators which can provide 7,300 kilowatt hours per year. These alternative energy not only save Wal-mart cost of electronic but also reduce 31 tons of CO2 emissions every year. (4) Outsourced third party logistics Outsourcing a standardized trucking fleet not only improve Wal-marts effective of shipments but also reduce the risk of goods traveling. (5) Reusable shopping bags Wal-mart encouraged its customers to use reusable shopping bags through some prizes including special express checkout line. (6) Offer two energy efficient bulbs Wal-mart China offer two energy efficient bulbs for the price of one and work with local suppliers in its region. After this, Wal-mart China accepted responsibility and the associated cost of the safe disposal of fluids. (7) Batteries placed In order to solve batteries placed problems, Wal-mart provided a recycle place for customer to deal with it. (8) Packaging reduction Wal-mart china had implemented a packaging score to measure and calculates efficiency and objective in its apple suppliers. In the end, this program also a 13 per cent cost reduction in Wal-marts packaging. As can be seen above, generally speaking, business sustainability concept including logistics, marketing and supply chain has many benefit of the enterprise. Refer to the article; the authors [4] believe that more economical situation caused by more sustainable options. In other words, it not only reduce cost of operations but also make more loyal in long run of its customers.