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Schm6221 Assignment 2

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Submitted By eeb8907
Words 1087
Pages 5
Walmart has been taking the necessary steps to move toward 100% sustainable seafood for the better part of ten years. In working with the MSC they are establishing guidelines for fisheries and encouraging their suppliers to process and distribute sustainable fish, be it wild caught or certain farm raised varieties. As of the end of 2009, “Walmart’s wild seafood was 55% MSC certified… you can’t be 100% certified when you can’t be certified on a number of products. We’re working with MSC to encourage them to build these other certifications standards.” While Walmart is making the necessary changes on the back end to improve the sustainability in their supply chains, they have not truly begun advertising the value of sustainable seafood to their customers. As a result, customers are less likely to pay the higher costs for these “sustainable” alternatives, when they do not recognize the value. In the article outlining Walmart’s Sustainability Strategy specific to inventory management within their seafood supply chain, The Fishin’ Company is one supplier that has embraced Walmart’s asks, spending more time, effort and money to adhere to their sustainability standards. One of the main issues that Walmart faces is the length of time in which it takes for a fishery or supply-company to become MSC certified; the process can take up to two years. Given the increased demand, Walmart cannot afford this lapse in time. Walmart needs to work with the MSC to expedite the process.
In order to meet demand, Walmart must also utilize more suppliers who have adopted sustainable methods of catching and processing seafood. The cost to become MSC certified can be up to $500,000. For smaller fisheries, this cost is not necessarily attainable. One recommendation would be for Walmart to invest in some of their best and most loyal suppliers, helping them on their way to reaching the certification standards. This shows Walmart’s investment in their business, and will likely deliver a larger return on their investment. This is a huge incentive for fisheries to make the necessary changes in their processes, as Walmart has a growing seafood demand it must meet on a year over year basis. Walmart’s philosophy is that “as long as they see reasonable and measurable progress in correcting problems, the will continue to work with those fisheries.”
In analyzing Walmart’s majority supplier, The Fishin’ Company, it is evident that the costs of maintaining MSC certified fish are high, as is the effort associated with remaining sustainability-conscious. The cost of wild salmon outweighs that of farmed salmon when considering the cost per pound. Farmed salmon costs $3.00/lb; that value combined with shipping and processing costs equals out to over $37 million for the 10 million pounds of fish that Walmart sells a year, not taking into account the costs that Walmart sustains in shipping from The Fishin’ Company’s distribution centers and keeping it there month over month based on their demand. Wild salmon, which Walmart reportedly sells roughly 5 million pounds of per year, costs just over $20 million a year when accounting for shipping, freezing, re-freezing and other supply chain costs. Doubled to ten million (when considering equal quantities), this cost would be over $40 million dollars. The profit that Walmart makes on their farm-raised fish far outweighs that of their wild caught. (Selling prices = $6.00/lb farm fish; $4.50/lb wild caught).
While all of the Fishin’ Company’s processes in place fall under the MSC criterion, it is difficult not to analyze the process and wonder if there are ways in which Walmart can reduce costs while remaining sustainably responsible. While both the farm and wild-caught fish are within the MSC guidelines, in previous studies, farm grown fish has been known to lack nutritional value, with some fish becoming riddled with various toxins and diseases. Long-term, farm raised fish as they exist now, will likely not continue to be a sustainable alternative. One potential recommendation would be to take the costs associated with the farmed salmon and put that money towards additional wild salmon – be it through The Fishin’ Company or various other suppliers.
In tandem with this change, Walmart needs to continue to invest in its suppliers so that they are able to meet demand. The growth of fish improvement projects locally are one way in which suppliers are working to make more fish available to be wild-caught. There are also ways to improve the current processes around farm-raised fish. Those currently in place are not leading to healthy or environmentally-conscious alternatives. Walmart can support its suppliers by investing in more responsible methods such as cluster farming or more eco-friendly farms.
An additional long term plan for Walmart to consider would be to stop outsourcing the processing and freezing of their fish. While the cost to employ workers in Alaska is far greater than those in China ($2000 vs. $200); the long term effects of this transition could be promising. Not only is it stimulating America’s economy, but the fish are enduring less processing making them healthier for the consumer. In its current supply chain model, Walmart charges less for wild-caught fish than it does for farm-raised as the wild-caught is twice frozen. This process is proven to reduce the quality of the fish. Perhaps Walmart along with their suppliers could incentivize the Alaskan fishermen, promising guaranteed sales or appropriate compensation based on the quantities of fish caught. In turn, Walmart needs to meet their goals around Public Awareness. Consumers must be aware of the environmental issues associated with seafood. Consumers would then likely be willing to pay a higher premium for wild-caught fish if they are aware of the positive health implications and the manner in which the fish are obtained.
Walmart needs to continue to stress upon its five primary initiatives established in 2006. They need to continue to work with the MSC, making their certification process more attainable for a variety of suppliers. They need to utilize healthy farming methods, such as cluster farming and eco-friendly options. They need to educate their consumers, making them more aware and conscious of where their seafood comes from and the value that they put on sustainability. Finally, they need to work with the government and other external stakeholders to promote sustainable fishing. By implementing these changes and striving after these initiatives, they will be able to modify their supply chain spending less money to support their existing sustainability efforts.

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