It’s interesting that most of the Wal-Mart critics have said that the company’s success has rested solely on it’s badgering of supplier manufacturers and underpaying employees. I’ve been involved with the WMS Sustainable Value Network now for over half a decade and have found that and “cost” and “price” are contributive factors in serving the big box’s customers, it’s the inventory, brand names, greeters, convenience, and efficient service that differentiated Wal-Mart and Sam’s stores from Sears and K-Mart.
In initiating the Sustainable Value Network, Lee Scott found a way to reduce costs further by
- taking “head space” out of packaging — and got lower freight costs, more shelf space, and reduced product packaging expense off the ledger in the process …
- specifying laundry detergents with twice the washing power — with the same effect on size and space, plus more washing per bottle and less “water” as a standard diluter.
- packaging that recycles at high values so that baled spent wholesale packaging can be sold rather than having to pay for sending it to the dumpster and landfill
- prohibiting non-recyclable and other packaging that contaminates recycling streams (PVC and Styrofoam) or poison the atmosphere in production, and in doing so, increasing the fluidity of the value chain ….. (as example, the fresh protein tubs and platters can be sent back for recycling versus the yellow expanded polystyrene trays that float around at landfills).
I could go on, and on, and on with a long list but you get the idea.
Every penny that WMS saves or makes in these changes is going to reducing costs, easing recycling, or better serving to their customers (why carry home a four pound jug of Tide when concentrated a two-pounder will wash more clothes?)
The impact has been startling for those of us who are struggling to effect some of these changes without the commercial clout that WMS holds as “the” major buyer. The Sustainable Value network has altered the way all packaging is being considered for every buyer ….. not a bad service for the retail trade since they have also seen reduced costs of packaging, freight, and through added shelf space.
The effect has also contributed or been the primary driver in building new business concepts and products …… food trays made from corn-based plastic and fruit and nut trays made from palm frond wastes in Malaysia ………. kickstarts for a big company (Cargill/NatureWorks) and a startup (EarthCycle).
When I asked if the WMS shareholders were happy with all of these efforts to trim costs, streamline product flows, and recycle spent materials, all I got was a blank stare. The answer was, in fact, “many if not most of our clients are the hardest working people in the world, who often have two jobs and still earn total wages that are less than what our government characterizes as the poverty line, and every penny we can shave off of our cost of delivering products to them raises their standard of living to levels you and I take for granted.”
Yes … I agree that at Wal-Mart, it’s the “low prices …. always” but if this were really the only element in the WMS success, every street vendor selling sunglasses on Manhattan’s boulevards would rapidly become a major retailer. WMS knows it clients, loves everyone of them, treats them like family, and is the ultimate guardian of their living standard.
I concur in you observation, and know a dozen other companies that fit that customer focused model.
Scott Seydel is President of The Seydel Cos., which develops, manufactures and markets textile process chemicals. He is also the President of EvCo. Through EvCo Research, he has also made significant contributions to the recycled food packaging product industry in more than three dozen countries. Seydel has also founded the Manhattan Prospect, a venture which will be announced at the awards. He is also the Chairman of the Board for Global Green, USA. To me, he is a mentor and friend.