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1/12/2010
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Wal-Mart, SAP Set Sights On Sustainability

Execs stress profit potential of energy savings. Carbon tracking seen as next must-have enterprise software functionality.

A press release from the National Retail Federation declared that "greentailing" would be the hot topic at this week's big NRF Convention & Expo in New York, but Matt Kistler of Wal-Mart Stores and Peter Graf of SAP where having none of it.

"The term 'green' is too one-dimensional whereas 'sustainability' is about economic survival, environmental initiatives and social policy; it's much more of a business conversation," said Graf, chief sustainability officer at SAP.

In a joint presentation at NRF on Monday, Kistler and Graf enumerated ways retailers, and manufacturers in their supply chains, can improve profits by focusing on sustainability.

"We set a goal a few years ago to double the efficiency of our truck fleet," said Kistler, senior vice president of sustainability at Wal-Mart Stores. "On the trend line of that goal, we should now be at 25 percent, but today we're already 38 percent more efficient."

Graf cited the examples of SAP customers, including retailer 7-Eleven, which has reduced energy consumption 12 percent through changes in cooling. Among manufacturers, Dannon has cut fuel costs 22 percent through better fleet utilization, and wine maker Kendall-Jackson has cut lighting costs by 40 percent, Graf said, noting that energy savings fall right to the bottom line.

Both executives stressed that improvements won't happen if companies don't determine their baselines of energy consumption and waste. Software supports the reporting, goal setting and tracking of progress toward reduction targets.

"What surprised us early on is that only 8 percent of our total [carbon] footprint was under our direct control -- our stores and our fleet," Kistler said. "The other 92 percent was in the supply chain."

That realization led Wal-Mart to develop 15 questions that it now asks all suppliers, seeking basic data on their energy consumption, use of resources, material efficiency and labor policies. Multiplied by Wal-Mart's 100,000-plus suppliers, this requirement has had a huge impact on the development of sustainability policies and adoption of supporting technologies.

Some 85 percent of Wal-Mart suppliers are SAP customers, according to Graf, and he says the vendor is ramping up its sustainability offerings. Late last year SAP released the SAP BusinessObjects Sustainability Performance Management Application, which is designed to help companies track energy consumption, emissions, use of water and raw materials, worker hours and safety, and economic impacts such as community investment and purchasing of local content (see New SAP App Targets Sustainability as Strategic Advantage. Just as global language and currency support, and Internet connectivity became must-have software capabilities, Graf says demand for sustainability functionality will grow.

"Today, things like carbon tracking and sustainability management are small add-ons," he said. "Down the road, sustainability will become a pervasive [enterprise] software requirement, and it will be embedded throughout our portfolio."

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