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being reluctant to supply information to Walmart because it might somehow end up in the hands
of their competitors,” said Scot Case of Blu Skye, who had been working with the electronics
network. He continued, “For example, if one factory is significantly more energy efficient than
others, it’s got an advantage. And if it shares that information, the competition might gain a
much better understanding of its production costs and, therefore, its profit margins.” Some even
feared that this type of information potentially could be used by Walmart in its price negotiations
with the supplier.
On the other hand, “Anything that can be easily tested, most suppliers are more comfortable
providing,” said Case. “Information about how much energy a product consumes is not
particularly sensitive.” This hesitancy to disclose was challenging to Walmart not only from a
performance management perspective. Ohm added, “If someone comes up with a better, more
sustainable way to do something, we want to encourage them to share that with other suppliers to
increase the impact.” One way the network was encouraging its suppliers to accomplish this was
by encouraging suppliers to license their environmental innovations. The opportunity to derive
additional revenue from an environmental innovation would increase the incentive to suppliers
for investment in innovation, while licensing the innovation also would lead to improved
environmental performance across the industry and more widespread benefits for Walmart.
In some respects, the textiles network had a head start relative to many of the other sustainable
value networks. In spring 2004, Sam’s Club placed an order for organic cotton yoga outfits.
Customers were immediately drawn to them by the high quality of the fabric (even though
Walmart did not promote the outfits as organic beyond the labels inside the garments). Within
10 weeks, it moved 190,000 units, selling out of the $10 yoga tops and $14 pants in record...
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- Winter '10