Wal-Mart studies environmental impact of DVD distribution

UPDATE: Aims to cut energy emissions in manufacturing, distribution

By Susanne Ault -- Video Business, 9/25/2007

SEPT. 25 | Wal-Mart is partnering with the Carbon Disclosure Project on a pilot program that will study the amount of energy used to bring products including DVDs to its store shelves.

The nation’s No. 1 retailer of DVDs, Wal-Mart is examining procurement, manufacturing and distribution processes with the goal of coming up with ways the retailer and its vendors can reduce harmful emissions on the environment.

For the last seven years, the CDP has worked to encourage major corporations to respond to shareholders’ concerns about climate change.

Already, 20th Century Fox Home Entertainment and Warner Home Video are providing Wal-Mart with information gleaned from their own recent supply chain analyses of the carbon impact from the production, manufacture and distribution of DVDs.

Specific supply chain processes researched include the amount of electricity burned in disc manufacturing operations and the amount of gasoline required during the transportation of finished DVD product to stores. Essentially, participating suppliers are tabulating the amount of carbon generated per DVD in the supply chain, with the goal of ultimately shrinking that footprint.

According to the retailer, Fox’s analysis has led to an industry standard in how to best measure the carbon impact of DVDs, one of the seven product categories Wal-Mart will be researching for its supply chain pilot. Wal-Mart also will be looking at the supply chain processes of toothpaste, soap, milk, beer, vacuum cleaners and soda. The chain specifically picked these products because of their frequent consumer use.

The DVD carbon research is just now being digested, and there has not yet been formal steps taken to improve the supply chain.

“Wal-Mart has been leading some of the drives in the whole environmentally friendly arena, and they asked us to participate, and we thought it was OK,” said John Quinn, Warner executive VP of service management. “This is part of an ongoing process to continue to look at every piece of [Warner] business to see if there are goals we can achieve to be more environmentally friendly.”

Warner will likely enact only those supply chain enhancements that do not require extra spending, Quinn admitted.

“If we can reduce the size of a carton or packaging, that may actually reduce costs,” he said. “We want to be at least cost neutral or in some cases do things that can save on costs.”

Earlier this year, Warner was one of the first major DVD suppliers to switch to producing all of its DVD art on partially recycled paper. Previously, Warner strictly used virgin paper stock, which includes no recycled material.

“We are grateful to our suppliers for their input and participation,” said Jim Stanway, senior director of Wal-Mart’s Global Supply Chain initiatives. “This is a learning process, and the members of this group are pioneers addressing some of the biggest challenges in the world today. With the help of our suppliers, CDP and other partners, we can better understand the impact of energy on our supply chain.”

The pilot is the latest thread to Wal-Mart’s Sustainability 360 initiative, which was rolled out in February to create environmentally friendly operations company-wide.

“This is an important first step toward reaching our goal of removing non-renewable energy from the products Wal-Mart sells,” said John Fleming, executive VP and chief merchandising officer, Wal-Mart Stores division. “This is an opportunity to spur innovation and efficiency throughout our supply chain that will not only help protect the environment but save people money at the same time.”

Among other drives, Wal-Mart’s Sustainability 360 aims to reduce packaging by 5% by 2013, an effort equal to removing 213,000 trucks from the road and saving approximately 324,000 tons of coal and 67 million gallons of diesel fuel per year.

CDP CEO Paul Dickinson points out that companies can boost their bottom lines by becoming more energy efficient. Consumers, increasingly seeking ways of their own to help the environment, may hike spending on green-certified products.

“[Being] green is also about dollars and profits, and reducing energy costs can make you money very fast,” said Dickinson. “More and more consumers are interested in putting their dollars behind solutions. They want to buy goods and services that required less energy to produce.”