Today I am presenting twice at the Sustainable Manufacturer Conference: first, on Walmart and sustainable supply chains; and second, on how clamshells became recycled.
I have copied my notes from the Walmart and supply chain presentation here. You can download the entire presentation here.
Clamshell recycling presentation to come!
Walmart's Made in USA Sourcing Initiative and the implications for sustainable supply chains
My name is Chandler Slavin and I am here to speak with you about Walmart’s Made in USA Sourcing Initiative and the implications for sustainable supply chains.
I am the Sustainability Coordinator at family owned and operated Dordan Manufacturing, located in Woodstock, IL. We design and manufacture custom plastic packaging and products in a conversion process called “thermoforming.” You can find our product at retail in the form of plastic clamshells and blisters; at a manufacturing plant as a work in process tray; or at a medical device company, protecting sterilized medical devices.
As Sustainability Coordinator, I became involved with Walmart because of the introduction of their packaging assessment “scorecard” in 2008. This supplier “requirement” assessed packaging not only on performance and cost, but its “carbon footprint.”
As an indirect supplier to Walmart, I participated in their Packaging Sustainable Value Network, which was a working group that focused on Scorecard metrics and implementation. We met in Bentonville, AR, about twice a year to tackle issues related to the packaging Scorecard. Those meetings dissolved when the Scorecard was consumed by the metrics of the Global Packaging Project.
This year I was invited to be a contributing writer to Packaging Digest Magazine, a popular industry publication. For my debut article, I wanted to learn more about Walmart’s US Sourcing Initiative-- introduced to stakeholders January 2013– which committed the retailer to buying an additional $250 billion of US-made products by 2023. As an American manufacture, the idea that Walmart would be encouraging its suppliers to manufacture/assemble in the States made me very happy, as these domestic manufactures will certainly be needing American made packaging!
I was introduced to the VP of US Manufacturing at Walmart, Cindi Marsiglio, who agreed to an interview with me for my Magazine article. This interview serves as the foundation for today’s presentation on Walmart’s Made in USA initiatives and the Implications for Sustainable supply chains.
Marsiglio has worked at Walmart for more than 8 years, serving in capacities within the government relations arm of the corporation. She has been spearheading the US sourcing initiative for about a year.
With Walmart’s commitment of purchasing 250 billion in product supporting American jobs by 2023, Marsiglio has a team that works across Wal-Mart’s merchant network to find and work with suppliers to identify domestic manufacturing opportunities. Wal-Mart does this in three ways:
• First, to simply buy more products from its existing American suppliers;
• Second, to find new U.S.-made products to sell at Wal-Mart; and
• Third, to look where it makes sense to manufacture or assemble products in the U.S.
According to Wal-Mart’s customer research, after price, the biggest indicator of purchasing preference for customers is country of origin.
There is economic motivation for procuring more U.S.-made products and reshoring overseas operations. Much rhetoric exists on the American Manufacturing Renaissance; that is, how the global economies are shifting in America’s favor due to escalating labor, shipping and regulatory costs of manufacturing overseas. For Wal-Mart, these changing factors across the globe make the U.S. more attractive.
The company’s interest in U.S. sourcing is three-fold:
1. It is great for business;
2. It facilitates shorter supply chains; and
3. It allows the company to procure products geographically close to where they are being sold, enhancing responsiveness and seasonal rollout campaigns.
According to Marsiglio, Wal-Mart can lower the costs of goods sold at its stores by sourcing in the U.S.
Once the proclamation of Wal-Mart’s U.S. sourcing initiative was made, the retailer spoke with its overseas suppliers, trying to understand the hurdles to reshoring. For many, it was where to locate. Everything from where to find the raw materials to creating the required supply chain married with the complexities of workforce development and tax incentives added to the complexities suppliers face when reshoring products.
The company tapped into the many resources it had in governmental affairs and sponsored a variety of events targeted at bringing manufacturers and governmental officials together to discuss opportunities and solutions. By creating the platform where suppliers and state agents could cut through the complexities of reshoring, Wal-Mart provided the mechanism by which overseas suppliers could begin to look at how to bring their operations home.
Two years since the introduction of the initiative, the retailer has several success stories.
Kent International, a global supplier of bicycles for major retailers, is building its new bicycle manufacturing facility in Clarendon County to supply Walmart with its first U.S.-assembled bicycles. The $4.3 million investment is expected to bring 175 jobs to the area.
KORONA Candles has reshored its tea lights from Poland to Dublin, Virginia. The factory line opened last month and our stores across the country are carrying these U.S.-made tea light candles. By the end of 2016, the company expects to hire over 175 employees.
And Ranir redesigned an electric tooth brush head in order to make the product in Grand Rapids, Michigan, instead of China.
In business school, we studied why Walmart was great. One of the reasons was because of the company’s revolutionary hub and spoke distribution model. This allowed for efficient –and sustainable—supply chains between merchant and retailer.
The case study reads (1989),
Only 20% of the inbound merchandise was shipped directly from the vendors to the stores. The rest passed through Wal-Mart's two-step hub-and-spoke distribution network. One of Wal-Mart's 400-plus truck-tractors would bring the merchandise into a distribution center, where it would be sorted automatically onto another truck and delivered to the store-usually within 48 hours of the original request.
Because Wal-Mart stores were packed together, one truck could resupply two or three on a single trip. Any merchandise that had to be returned was carried back to the distribution center for consolidation. Since many vendors operated warehouses or factories within Wal-Mart's territory, trucks also picked up new shipments on the return trip. In the early 1980s, Wal-Mart's trucks were running 60% full on backhauls.
US Sourcing– and bringing the production of products sold at Walmart closer to the retail stores, is reminiscent of the hub-and-spoke distribution network that is hallmark of the company’s exponential growth. By encouraging the creation of more localized and regional supply chains, Walmart is facilitating more efficient, and therefore sustainable, supply chains.