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Unformatted text preview: the Walmart’s Sustainability Strategy (A) OIT-71A p. 14 use of certain hazardous substances in electrical and electronic equipment (effective July 1,
2006). This particular manufacturer was ahead of schedule and planned to ship RoHS-compliant
products to Europe in January 2006. On learning more about the program, Cook asked if he
could buy these machines on the same timeline.
Ultimately, the supplier agreed to sell the RoHS-compliant product to Walmart as long as
Walmart would guarantee the order, essentially eliminating risk to the supplier by making a
commitment for 12-weeks of inventory as opposed to the more typical 4-week commitment.
“We'll take that risk,” said Cook. “We want to be the first one in the U.S. to sell RoHScompliant PCs.” Walmart’s commitment also created an economic benefit for the supplier
because it did not have to shift its production line between RoHS-compliant and non-RoHScompliant machines, which was a costly and time consuming process.
Traditionally, Walmart sought to avoid long-term purchasing commitments and maintain very
low inventory levels because of high demand uncertainty and high rates of inventory
obsolescence in the electronics industry. Introduction of a new version of any key component
would make the entire product obsolete. This happened frequentlyfor example, new
microprocessors were introduced every three months or so, making Walmart’s PC inventory
obsolete. Unfortunately, obsolete electronics immediately became e-waste. According to one
environmental organization “electronic products [are] virtually disposable due to rapid product
obsolescence. For example, the lifespan of a computer has shrunk from four to five years to
about two years. It is estimated that up to 50 percent of computers turned in for recycling in the
U.S. are in good, working order. The electronics industry vigorously promotes this fad of
increased consumption. It is the largest and fastest growing manufacturing industry in the
However, to make the RoHs...
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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.
- Winter '10