Opinion is always divided about Wal-Mart, one of the world’slargest retailers. Some don’t like Wal-Mart because of its labor practices andoff-shore sourcing, while others envy its ability to effectively monitor andcontrol costs. Nevertheless, the company has some effective cost controlefforts that may provide ideas others might apply to their fleets.
When Wal-Mart announced in 2005 that it was going to doublethe efficiency of its fleet in 10 years, I was more than skeptical. However,between 2005 and 2008 the retailer improved fleet efficiency by 25%. When Irecently read those facts, I realized we should look more closely at itspractices. I thought that Wal-Mart said in 2005 that it would double the fueleconomy of its fleet by 2015, but instead it said it would double fleetefficiency.
Wal-Mart reduced fleet maintenance costs by implementingused oil analysis to extend oil change intervals significantly. The companyexperimented with additized oil filters to further extend oil change intervals.It also experimented with low viscosity synthetic engine oils to improve fueleconomy. Wal-Mart is currently testing state-of-the-art aerodynamics in hopesof further reducing fuel consumption.
The company investigated minimizing fleet miles bydeveloping fewer, more direct delivery routes from its 40 huge distributioncenters to its stores (each distribution center services about 75 to 100 storeswithin a 250-mile radius). When the company studied the operation of over 7,000tractors and 50,000 trailers, it was able to save 90 million miles.
The retailer also carefully examined the freight it hauled.It eliminated what it could (Wal-Mart stores sell locally-grown produce toreduce shipping costs) and began training suppliers to package goods moreefficiently. These items reduced both the number of trucks and the freightmiles needed to haul those goods. It also began training associates how to packtrailers more efficiently.
Wal-Mart has done a tremendous amount of testing to improvefleet fuel efficiency significantly. Most of our readers are familiar withthese efforts due to the trucking media. We know the company is testing hybridsfrom ArvinMeritor and Eaton to improve fuel economy. We know it is testingalternative fuels such as LNG, biodiesel made with spent cooking oil, and evenfuels made by processing grease from grease traps. A company the size ofWal-Mart can afford to spend a lot of money evaluating new technologies in itsoperation.
But, did you realize that Wal-Mart, knowing they must takeout all the fat if they intend to remain the world’s lowest-cost retailer, islooking at both its own and its suppliers’ efficiencies in some phases of itsoperations? The company has a vice president of sustainability who is chargedwith reducing Wal-Mart’s impact on the environment, eliminating as much wasteas possible and reducing costs everywhere. Let me give some examples.
New Sam’s Club buildings are very efficient. They utilize asmuch natural lighting as practical so overhead lights can be turned off onsunny days. New buildings harvest rain water, which can then be used forcleaning vehicles, cooling equipment and watering shrubs. They use LED lightingin frozen foods coolers to reduce electrical bills 50% (from both lightingrequirements and heat buildup).
Wal-Mart engineers often visit suppliers to share knowledgeof operating-cost reduction. They don’t tell the supplier how to make theproduct, but they audit the suppliers’ lighting and HVAC equipment to findareas where they might reduce operating costs. They recently reduced lightingcosts of a
So, my hat’s off to Wal-Mart, for its continuing,thorough efforts to reduce costs in a hostile economy.
