1. Why are the logistics decisions of a retailer like Wal-Mart so important for other firms to be aware of and emulate?

2. Why has Wal-Mart taken a more environmentally conscious approach to logistics?

3. How does sustainable logistics equal ethical logistics?

Wal-Mart is the world’s largest retailer in sales. The company was voted No. 1 for Retail and among the top 50 in all industries on Fortune magazine’s “World’s Most Admired Companies 2015” list. Wal-Mart earned this award in part because of its commitment to sustainability, corporate philanthropy, and employment opportunity. The importance Wal-Mart attaches to these goals can be observed in the ambitious environmental targets the company pursues. As part of its sustainability efforts, the retailer set three main goals: to be supplied 100% by renewable energy; to create zero waste; and to sell products that sustain people and the environment. To realize these targets, Wal-Mart established initiatives such as sustainable sourcing practices, energy efficiency, renewable energy, waste reduction, and life-cycle management.

Because Wal-Mart operates one of the largest private trucking fleets in the United States and the United Kingdom, many of its sustainability initiatives address the efficiency of its fleet and distribution networks. Back in 2005, the company defined measurable fleet efficiency goals for the United States to be achieved by 2008 (a 25% efficiency increase) and 2015 (a 100% efficiency increase), respectively. To achieve these goals, Wal-Mart focuses on sustainable logistics solutions and innovative technologies.

Sustainable Solutions

Wal-Mart identified routing and loads as two of the major areas of sustainability improvement. By increasing the load per truck, the total number of vehicles needed was reduced and the number of empty truck miles decreased. From 2008 to 2009, Wal-Mart decreased the number of miles per driver by more than 7%, while delivering almost 1.5% more cases of goods.

This decrease in miles driven combined with improved truck technologies helped Wal-Mart avoid emitting greater than 180,000 metric tons of CO₂ emissions in 2009 and saved the company US$170 million. Furthermore, the company’s affiliate in the United Kingdom, ASDA (Asda Stores Limited, Leeds, West Yorkshire, U.K.), made further achievements by increasing the flexibility of its distribution systems, thus, saving 8 million trucking miles in 2008. Backhauls were increased, so trucks that usually traveled back empty from stores to distribution centers could be used by suppliers for direct deliveries to their distribution centers. In addition, more suppliers could make use of front hauls by filling their residual capacity with ASDA goods if they were heading in the same direction. Moreover, the existing infrastructure was upgraded: distribution centers were provided with retrofitting equipment, including more efficient light bulbs and energydemand monitoring systems that turn off lights and equipment when not in use. In addition, some distribution centers are already partially run on renewable energy. Since 2007, Wal-Mart has opened several high-efficiency stores that use 20% to 45% less energy than a typical Wal-Mart Supercenter.

Continued Efforts
Technological innovations mainly focused on the actual vehicles circulating between suppliers and distribution centers. Wal-Mart added several new technologies to its fleet to reduce emissions. The company has also tested many new technologies to see whether they are viable for business and provide a return on investment. The different measures range from installing fuel-saving technologies on trucks, to running routes with aerodynamic trucks, to using vehicles that run on alternative fuel sources, as well as to using different types of hybrid vehicles. In addition, the initiatives were expanded to the passenger cars the company makes available to its associates. By the end of 2009, Wal-Mart had managed to increase the efficiency of its U.S. fleet by 60%.

How have their sustainability targets been met to date? In 2015, the company announced that it had exceeded the goal, set in 2010, to eliminate 20 million metric tons of greenhouse gas emissions from its global supply chain. In fact, it has eliminated 28.2 million metric tons to date, the equivalent of the emissions of nearly 6 million cars over a year. Wal-Mart also has doubled the fuel efficiency of its fleet since 2005, through its innovations in loading, routing, and driving techniques, as well as through new tractor and trailer technologies, saving US$1 billion along the way. Other goals are proving more elusive. For example, the target that it “be supplied 100% by renewable energy” by 2015 has not been met; in fact, Wal-Mart reported that 26% of its energy usage is currently from renewable sources. On the other hand, the company’s goal of being “waste free” is nearly complete as it reported an 83% diversion of waste from its facilities in the United States.

Wal-Mart continues to make further efforts and, thus, has extended its sustainability program to its logistics suppliers. Wal-Mart announced plans to develop a worldwide sustainable product index. The effort includes supplier assessments, the creation of a life-cycle analysis database, and a simple tool to help consumers make more sustainable choices through product labeling. Said Mike Duke, former president and CEO of Wal-Mart, “The sustainability product index will bring about a more transparent supply chain, drive product innovation, and ultimately provide consumers with the information they need to assess the sustainability of products. If retailers work together with suppliers and logistics suppliers, we can create a new retail standard for the 21st century.