Wal-Mart Aims To Go Green With Global Supply Chain Makeover

Wal-Mart has demanded that its Chinese suppliers adhere to green, environmentally friendly and product safety standards. But experts say that ensuring compliance in the complicated, vast network of Asian suppliers will be nearly impossible.

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At the Wal-Mart summit, Mike Duke, vice chairman for Wal-Mart's international division, noted that confidence in Chinese products has been sagging after high levels of industrial toxins were found last year in exports ranging from toothpaste to toys, according to an Associated Press article. Last year, for instance, Wal-Mart pulled two brands of dog treats from its shelves after tests found that they contained traces of the industrial chemical melamine, notes the AP article. Melamine had been found in a Chinese-made pet food and was blamed for the deaths of dozens of dogs and cats in North America in 2007.

"We are expecting more of ourselves at Wal-Mart," Duke told attendees, "and we will also expect more of our suppliers."

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For all of the noble reasons Wal-Mart has offered for its new green supplier strategy, several industry watchers question whether the retailer can actually meet those "aggressive goals," as Wal-Mart called them, and deadlines for compliance.

AMR's Tohamy says that the plan to eliminate defective merchandise by 2012 will be most difficult. "The idea that there's going to be an elimination of that threat four years from now seems a little far-fetched," she says.

The problem lies in the complexity and vastness of China's supplier networks. "We're not talking about one nice, clean supply chain, where [Wal-Mart] can go to their tier 1 or tier 2 suppliers and be able to get this ability and eliminate some of the product quality, supplier and environmental risks," Tohamy says. "We're talking about a maze of supply chains." And as one moves downstream in each supplier's own supply chain, pushing far into operations of smaller manufacturers in Vietnam and Thailand, the visibility into supply chain information becomes narrower and narrower, she adds. (Wal-Mart media relations did not return repeated requests for comment.)

Michael Green, executive director of the Center for Environmental Health, a watchdog group in Oakland, Calif., told the New York Times that suppliers under pressure to offer Wal-Mart the lowest prices are likely to have an incentive to cheat, and outside auditors checking on suppliers' operations may not want to report violations for fear of losing big Wal-Mart contracts.