When Wal-Mart Speaks

This flexible package by NORDENIA used 80 percent less material than the rigid container system it replaced.
Wal-Mart is using its extensive supply chain to help it reduce packaging, 
reduce costs, and improve profitability.

Wal-Mart is a behemoth. When it moves, lots of things move with it, and these usually include many of its more than 100,000 worldwide suppliers.

Wal-Mart made a big splash back in 2003 when it announced it would require RFID labeling on pallets and cases supplied to its stores starting in 2005. The announcement initiated much development activity throughout the supply chain, and most likely advanced the development of RFID in these applications by a notable degree. However, the overall program became a shadow of the original goal because of significant cost and technological issues.

Today, RFID implementations are moving forward, albeit at a slower pace that is more dictated by market drivers based on costs/benefits. In fact, item-level RFID implementations in the apparel market are gaining traction and could be a major “foot in the door” for longer-term growth of RFID in general.

In 2006, Wal-Mart set its sights on another initiative, sustainability, when it announced its Packaging Scorecard. This Scorecard is designed to be a key element in the company’s stated 
commitment to reduce packaging across its global supply chain by 5 percent by 2013. There are many factors why this Wal-Mart initiative will go a lot further than its RFID efforts, not the least of which is that the typical Wal-Mart’s customer can relate to sustainability far more than RFID.

Another significant component can be seen in the overall objective to “reduce packaging.” Many factors that will meet this criteria will also directly or indirectly reduce costs throughout different areas of the supply chain. Several criteria included in the Scorecard’s nine metrics are closely related to cost reduction. These include product/package ratio, cube utilization, and transportation. Granted, Wal-Mart will use its leverage to get its “fair share” of the cost reduction, but with good management, others in the supply chain should benefit from both cost reductions and the potential for increased business.

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