Walmart is leveraging small cost savings projects to save major dollars across the supply chain. The company plans to save $60 million by changing the way it buys shopping bags. By using recycled materials, Walmart has reported 15% savings on the cost of vests worn by workers.
Additional savings: $100 million annually by centralizing how it maintains equipment in its stores thru energy efficiency, and a whopping $200 million by changing the light bulbs in stores and parking lots.
These are just a few of the savings Walmart has identified. The company is improving its bottom line by finding ways to be more efficient with a special emphasis on sustainability.
- Walmart Plans To Save More Than $200 Million With 2 Small Changes (Wochit News, Oct 16, 2018)
- Humes Says Going Green Saves Wal-Mart Millions (Bloomberg, Jun 27, 2011)
This post is based on the CNBC article, Walmart changed the way it buys shopping bags and saved $60 million – and that’s just one way it cut costs, by Lauren Thomas, February 18, 2020, and the YouTube videos featured in the Video Spotlight. Image source: SEG – ALL.
1. Walmart seems to be tackling inefficiencies in cost by using sustainable solutions. Why aren’t more companies following suit?
Guidance: Many students may feel that all companies can easily replicate Walmart’s cost savings strategies. This will likely be a good time to ask students to consider a smaller company of perhaps 5 retail stores. Would a small chain get the same quick payback on ROI as Walmart might? Would it take longer to get a good return for the small company? An equally good return but just on a smaller scale?
The point is for students to consider that a smaller company has less capital to apply to all the viable projects regardless of the ROI projected. Smaller companies are often more limited in what their capital budget will allow, which limits how many sustainability projects can be undertaken, when compared to the scale and scope of larger companies such as Walmart.
2. Why did Walmart decide to undertake these projects now instead of years ago?
Guidance: This discussion may have multiple possible avenues. It is likely that weaker sales than forecasted in retail may have led Walmart to look internally for ways to cut costs and thereby raise profits at this time. It is possible that none of these changes may have been implemented if sales were increasing.
Students should recognize that all sustainability projects can be cost-effective, but the timing and selection of such projects may have more to do with macro-operating environmental conditions than anything else.