Walmart Sustainability

Product assortment pricing and communication with

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Unformatted text preview: ent with such innovative processes when no one in the industry was demanding it. MEASURING SUSTAINABILITY As of late 2006, sustainability metrics and monitoring processes were still under development. At the network level, each team had been asked to define the “sustainability attributes” of its products and services. For the textiles network, said Calahan Klein, the attributes of an environmentally friendly garment might be that “it’s made of renewable materials, it’s produced using a process that is efficient and minimizes waste, and it uses inputs with minimal toxicity.” These sustainability attributes would become the “North Star” toward which each network would direct its improvement efforts. Next, each network would define specific performance metrics that corresponded to its sustainability attributes to support decision-making (e.g., regarding product assortment and pricing) and to enable communication with customers and the public, as well as to motivate suppliers and associates. Product Assortment, Pricing, and Communication with Customers In past product assortment and pricing decisions, Walmart was focused narrowly on its customers’ desires. Now, Walmart needed metrics to drive sustainability into its product assortment and pricing decisions. Expanding the product assortment would increase the company’s sourcing and inventory costs. While new green products might draw new customers or result in additional purchases, they also cannibalized sales of conventional products. As Walmart considered adding green products, new metrics were needed to help the company decide how many and which of these green products to offer, which conventional products should be retired, and how to price the related green and conventional products. Walmart had to consider multiple perspectives when devising these new metrics. For example, many NGO partners advocated against the use of PVC due to negative human health effects associated with toxins (such as dioxin) generated by the production and incineration of PVC, as well as the leaching of carcinogens from PVC additives...
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This note was uploaded on 01/14/2014 for the course LGST 210 taught by Professor Sep during the Winter '10 term at UPenn.

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