At Pack Expo on November 1, Wal-Mart Stores, Inc. announced to a standing-room-only crowd of 520 a packaging scorecard to continue its commitment of reducing packaging across its global supply chain by 5 percent by 2013, helping Wal-Mart and its suppliers improve packaging and conserve resources. The company first announced this packaging initiative at the Clinton Global Initiative in New York City in September 2006, but did not reveal the specific metrics until Wednesday's keynote address at Pack Expo, “The Wal-Mart/Sam's Club Packaging Vision.”
The detailed scorecard rewards sustainable packaging and efficient solutions including cube utilization.
"It's not about a mandate, it's about improvement," said Matt Kistler, vice president of package & product innovations for Sam's Club. “We at Wal-Mart recognize that we have unique strengths and a unique opportunity to have a positive impact on the environment through our own actions, those of our customers, and those of our suppliers. As vital as the packaging initiative is to reaching our environmental goals, it is also very good for our business and our suppliers' business.” The keynote was copresented by Wal-Mart's Amy Zettlemoyer, Sam Club's director of packaging.
Evaluative tool
Wal-Mart's packaging scorecard is a measurement tool that allows suppliers to evaluate themselves relative to other suppliers, based on specific metrics. The metrics in the scorecard evolved from a list of favorable attributes announced earlier this year, known as the “7 R's of Packaging”: Remove, Reduce, Reuse, Recycle, Renew, Revenue, and Read. Through months of consultations, the Packaging Sustainable Value Network, a group of 200 leaders in the global packaging industry, including suppliers, experts, and internal and external stakeholders, outlined the following metrics for the packaging scorecard:
- 15% will be based on GHG / CO2 per ton of Production
- 15% will be based on Material Value
- 15% will be based on Product/Package Ratio
- 15% will be based on Cube Utilization
- 10% will be based on Transportation
- 10% will be based on Recycled Content
- 10% will be based on Recovery Value
- 5% will be based on Renewable Energy
- 5% will be based on Innovation
For example, a supplier may find it is in the 50th percentile in the Cube Utilization category for effectively using space in pallets and shipping containers, but that same supplier may only be in the 20th percentile in Recycled Content. This model gives suppliers the opportunity to focus on specific changes within the context of a fluid environment, driving constant change and improvement in the supply chain.
Scorecard details
A supplier's score can change as either it or the packaging of its peers within the category is updated, Zettlemoyer noted.
There's even an allowance for packager's to receive "extra credit" such as using a third-part verification or sourcing packaging materials from a facility that uses renewable energy. The scorecard also takes into account regional and country differences.
In the scorecard, Wal-Mart defines a packaging "unit" as the unit that goes out the front door with the customer.
The company used as an example Unilever's ALL Small & Mighty concentrated detergent that saved 478 million gallons of water and 129 million lb of plastic resin. The item's out-of-stocks was also reduced by half.
“The packaging scorecard is a great tool for Wal-Mart to run a more efficient business, but also has significant benefits for its suppliers,” said Ben Miyares, vice president of industry relations for Packaging Machinery Manufacturers Institute (PMMI), sponsors of Pack Expo.
More than 2,000 private label brand suppliers will gain access to the packaging scorecard, including the ability to input information and measure their performance against competitors. For all other suppliers, an online demonstration is available at www.scorecardlibrary.com.
An additional Web site, www.marketgate.com/packaging, showcasing the Packaging Supplier Virtual Trade show, will help product suppliers find packaging suppliers that can help them make improvements and conserve resources more effectively.
Scorecard will be shared and used
On February 1, 2007, Wal-Mart will share the packaging scorecard with its global supply chain of more than 60,000 suppliers. During a one-year trial period, suppliers will be able to input, store and track data, learning and sharing their results as desired. After 2007, a $900 per year fee will be accessed to use the model.
As of February 1, 2008, Wal-Mart will begin using the packaging scorecard to measure and recognize its entire supply chain based upon each company's ability to use less packaging, utilize more effective materials in packaging, and source these materials more efficiently relative to other suppliers.
“We are encouraged by the positive response from our suppliers and are looking forward to continuing this collaboration,” added Kistler. “We have an opportunity to make a real positive impact and inspire change across the packaging industry.”
