I never thought I’d ever say this, but Wal-Mart may provide the impetus necessary to kick the sustainable supply management movement into high gear. Long critcized for poor supplier relations and harming local businesses, the world’s largest retailer has been quietly overhauling its business and supply practices with energy efficiencient operations, recycling programs, and initiatives to ensure suppliers use environmentally and socially responsible products and business practices.

Wal-Mart’s plan is profiled this week in a Fortune magazine cover story, entitled “Wal-Mart Saves the Planet.” And while the article title is a rip off of AMR’s Supply Chain Saves the World theme, it provides an excellent roadmap for sustainable business and supply management strategies. It also further illustrates how sustainabile approaches can improve both the top- and bottom-line.

Wal-Mart says it will invest $500 million in sustainability projects and has set aggressive goals to increase the efficiency of its vehicle fleet by 25% over the next three years. Reduce energy used in stores by one-third. And cut solid waste from U.S. stores by 25% in three years.

But the biggest improvements will likely come in the sustainability approaches Wal-Mart is using with its 60,000 suppliers. Wal-Mart Chief Executive Lee Scott said simply: “If you are a buyer, sustainability is going to be your business.”

• Reduce packaging: Wal-Mart worked with suppliers of its private-lable toys to eliminate excessive packaing. The retailer found that each year these actions save $2.4 million in shipping costs, 3,800 trees, and one million barrels of oil. Wal-Mart also used its muscle to encourage CPG giants Procter & Gamble and Unilever to replace bulky plastic jugs with condensed, slimmed down versions of all its liquid laundry detergents. The smaller package saves on energy, shipping costs, and shelf space.
• Endorse organic farming methods: According to the article, five years ago global production of organic cotton totalled just 6.4 million metric tons. At such low levels, growing organic cotton cost more than conventional methods, which use checmical pesticides and synthetic fertilizer that can contaminate drinking water and are harmful to the environment. Most buyers refused to pay the premium. This year, Wal-Mart alone with use as much as 10 million metric tons of organic cotton, and have committed to buying organic cotton for the next five years. This provides suppliers with the assurance they need to increase production and improve growing methods. Wal-Mart’s organic buying has already “cut milllions of tons of chemicals.”
• Protect supply and small suppliers: Wal-Mart also took a stance against unregulated fisheries and farmed salmon by announcing it would purchase all its wild-caught seafood from fisheries that have been certified as sustainable by the Marine Stewardship Council. Wal-Mart also emulated sustainable coffee-buying methods used by Starbucks to protect tropical regions and ensure fair labor practices.

According to the article, many of these ideas came from what Wal-Mart calls “sustainable value networks,” which are teams of Wal-Mart executives, suppliers, environmental groups, and regulators that meet every few months to share new environmental and sociall responsible strategies, set goals for improvement, and monitor progress. The retailer has developed 14 of these networks, each focusing on a specific area — ranging from internal operations and logistics to alternative fuels and packaging.

Although early in its initiative, Wal-Mart could very well have the muscle and funding to encourage the supply chain to adopt more sustainable strategies.