WALMART SUSTAINABILITY STRATEGY(C):

INVENTORY MANAGEMENT IN SEAFOOD

SUPPLY CHAIN

MANAS RANJAN TRIPATHY

MBA IB
500035420

INTRODUCTION
BY 2007, WALMART WAS SOURCING APPROX. $750 MILLION IN SEAFOOD
ANNUALLY
WALMARTS SEAFOOD BUSINESS WAS GROWING ROUGHLY 25% PER YEAR EVEN
WORLDS FISHERIES OUTPUT HAD DECLINED TO 3% OF THE YEAR-1900
(ACCORDING TO PETER REDMOND)
PETER REDMOND, VP FOR SEAFOOD AND DELI, BELIEVED SEAFOOD SUPPLY
CONTINUITY WAS THE SINGLE GREATEST LONG TERM ISSUE
WALMART ADOPTED SUSTAINABILITY STRATEGY IN 2005:
SUPPLIED BY 100% RENEWABLE ENERGY
0% WASTE
SELL PRODUCTS THAT SUSTAIN PEOPLE AND THE ENVIRONMENT

MARINE STEWARDSHIP COUNCIL

MSC PROGRAM WAS STARTED BY UNILEVER AND WORLD WILDLIFE FUND IN
1997
PROVIDED CERTIFICATION STANDARDS BASED ON UN CODE OF CONDUCT
FOR RESPONSIBLE FISHING
MSC-ACCREDITED CERTIFYING AGENCIES AUDITED FISHERY AND PROCESSOR
COMPLIANCE TO ENSURE PRODUCTS WERE MANAGED SUSTAINABLY FROM
BOAT TO PLATE
DIRECT COST OF CERTIFICATION RANGED FROM $50000 TO $500000 AND
WAS PAID FOR BY BOAT OPERATORS OR PROCESSING PLANTS
ON AVERAGE, CERTIFICATION TOOK 1-2 YRS FOR COMPLETION

WALMART AND MSC CERTIFICATION

TO HELP ADDRESS SUSTAINABILITY ISSUE, WALMART STARTED WORKING
WITH MSC
WALMART WANTED TO SELL 100% MSC CERTIFIED WILD-CAUGHT SEAFOOD
BY 2011
WALMART STARTED TO PUSH SUPPLIERS TO INCREASE NUMBER OF FISHERIES
AND PROCESSING PLANTS TOWARDS MSC CERTIFICATION

THE FISHIN COMPANY

MAJORITY SUPPLIER OF FROZEN FISH FILLETS TO WALMART
MANISH KUMAR, CEO EMBRACED MSC PROGRAM EVEN THOUGH IT ADDED
COMPLEXITY, TIME AND EFFORT WITHOUT INCREASING NEAR TERM PROFITS
KUMAR FELT HIS EFFORTS WOULD SECURE AND EXPAND BUSINESS WITH
WALMART IN THE LONG RUN
THE CASE DEALS WITH THE FISHIN COMPANYS SALMON SUPPLY CHAIN

WILD PACIFIC SALMON

SALMONS SPAWN IN FRESH WATER (NEAR SHORES) AND MIGRATE TO SALT WATER
SALMONS RETURN TO FRESH WATER TO SPAWN DURING MAY-SEPTEMBER
IN ALASKA, WILD SALMON FISHING IS ALLOWED FOR A LIMITED SEASON UNDER PERMIT, TO
CERTAIN OPERATORS, BY NORTH PACIFIC FISHERY MANAGEMENT COUNCIL
THE LENGTH OF SEASON VARIED TO ENSURE A SUFFICIENT NUMBER RETURNED TO SPAWN
SEASON VARIED FROM A WEEK TO A COUPLE OF MONTHS
PRICES COULD FLUCTUATE BY 30% IN A SEASON
AVERAGE PRICE OF HEADED AND GUTTED WILD PINK OR CHUM SALMON WAS AROUND
$1/POUND

CURRENT PROCEDURE
HEADED AND
GUTTED FISH
SENT TO CHINA
THAW, FILLET,
PACKAGE AND
REFREEZE IN
PLANT
50% CONVERSION
EMPLOYEE WAGE
IN CHINA- $200
FISH FROM
DIFFERENT PARTS
AND TIME CAN BE
PROCESSED

ALTERNATIVE
PROCESS FISH IN ALASKA
EMPLOYEE WAGE- $2000
HIGHER PROCESSING COSTS DUE TO UNCERTAIN SUPPLY AND ONLY SPECIFIC
SUPPLY PERIOD OF ALASKAN SALMON
PROCESSING DELAYS IN PEAK SEASON CAUSING DEGRADED QUALITY
TRANSPORT COSTS TO MAINLAND US

FARMED SALMON FILLETS

FARMED FROZEN SALMON FILLETS FROM CHILE
SALMON COST- $3.00/POUND(FILLET)
PROCESSING- $0.50/POUND
TRANSPORT COST FROM SOUTHERN CHILE TO US- $0.20/POUND
AVAILABLE YEAR-ROUND
KUMAR PURCHASED LARGE QUANTITIES FOR LOWER FREIGHT CHARGES

ADDITIONAL COSTS (IN US)

PORT TO COLD STORAGE- $0.01/POUND
HANDLING CHARGE TO MOVE FISH TO WAREHOUSE- $0.01/POUND
HOLDING FEE- $0.05/POUND/MONTH
GROUND TRANSPORT FEE- $0.15/MONTH
FISHIN COMPANY KEPT LARGE STOCK TO SUPPLY WALMART ON JUST IN TIME
BASIS
FARMED SALMON WAS BOUGHT TO STORAGE (RATHER THAN DIRECTLY
SENDING PARTIALLY FILLED TRUCKS TO WALMART) TO REDUCE GROUND
TRANSPORT CHARGES

FISHIN COMPANY ADDITIONAL DATA

WILD SALMON SOLD- 5 MILLION POUNDS
RETAIL PRICE- $4.50/POUND
FARMED SALMON SOLD- 10 MILLION POUNDS
RETAIL PRICE- $6.00/POUND
PRE TAX NET PROFIT FOR BOTH PRODUCTS- $0.05/POUND

DISCUSSION
HOW SHOULD WALMART RATIONALIZE ITS
SEAFOOD SUPPLY CHAIN TO REDUCE
COSTS AND PROMOTE SUSTAINABILITY?