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Because if you start measuring too many things that are not relevant to the
customer, you’ll push your suppliers in the wrong direction. For example, in
electronics, phantom load [the amount of energy consumed when a product is on
but not being used] is probably a metric that makes sense to customers because it
results in a benefit that goes right to the customer. However, recyclability may
not have a customer benefit today. Although it’s the right thing to do, if we push
our suppliers to do it but our competitors don’t, then we’ll just end up losing
market share and have less ability to influence our suppliers later.
Ruben also explained how Walmart would seek to exert more influence over supplier behaviors
as it sought to consolidate its business with a more select group of high performing direct
suppliers. “Right now we account for 2 percent of a lot of people’s business, especially
overseas. We know that needs to be a lot largermaybe in the 50 or 60 percent,” he said. This
positioning would motivate suppliers to participate to maintain or expand the amount of business
they received from Walmart. “We’re trying to stimulate a race for the top,” said Phillips.
f As of February 2007, there was a waiting list of interested parties seeking to join the packaging network. Walmart’s Sustainability Strategy (A) OIT-71A p. 24 Associate Performance Measurement
Internally, Walmart planned to translate sustainability attributes into an objective measurement
system to track the performance of associates in important functions such as merchandising,
strategic sourcing, and other roles that were directly linked to its sustainability efforts. However,
as of late 2006, decisions regarding how (and if) to measure these contributions had been left to
the discretion of the networks captains. In some areas, such as electronics, broad preliminary
metrics had been put into place. For example, electronics buyers for Sam’s Club were required
by Ohm to have at least 25 percent of the products they bought (by SKU) involved in some form
of sustainability initiative (e.g., packaging reduction, RoHS compliance, improved energy
efficiency). However, in most areas of the business, a form...
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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