IN a move that’s bound to affect Wal-Mart’s kidstuff suppliers, the retailer has mandated a 5% reduction in product packaging worldwide by 2013. Interestingly, it was a trial run conducted last year with the Bentonville behemoth’s private toy label Kid Connection that convinced the company to move forward with the inventory-wide initiative.
By reducing the packaging on approximately 300 Kids Connection SKUs, Wal-Mart says it saved 3,425 tons of corrugated materials, 1,358 barrels of oil, 5,190 trees, 727 shipping containers and US$3.5 million in transportation costs in one year. Wal-Mart contends the extended 5%-plan will eliminate millions of pounds of garbage from reaching landfills, preventing 667,000 metric tons of carbon dioxide from entering the atmosphere. It will also give a nice boost to the bottom line, saving the retailer a projected US$3.4 billion.
Matt Kistler, VP of packaging innovation at Wal-Mart’s division Sam’s Club says the Kids Connection effort included reducing the size of the cube of the package. The move resulted in savings that rippled through the supply chain – cutting down on waste, reducing the footprint of the package in the distribution system, in storage and in-store, making handling easier.
To get the ball rolling, Wal-Mart distributed a packaging scorecard in early November to more than 2,000 private-label suppliers. The list aims to provide its buyers with information about packaging alternatives and sustainable materials that should inform purchasing decisions.
Global suppliers will receive the scorecard in February, and Wal-Mart is viewing the following year as a time to learn and share results about the process with these partners. In early ’08, the retailer will put the packaging scorecard to work and begin evaluating the efforts of its worldwide suppliers to use less packaging and more efficiently source materials.
Kistler says companies with less than stellar results on the scorecard will not be penalized. However, companies will be able to see their ranking among their peer group of suppliers, which he says, will hopefully inspire a race to the top. KC