al-Mart?s online ?green? rating system for all of its suppliers marks a milestone in leveraging the Internet to force a massive change in competitive behaviour.

All for the benefit of our environment. Whatever you may think of Wal-Mart, you have to commend the effort and cash the retailer is putting behind its drive to cut waste, pollution and other environmentally damaging outputs in making and packaging the products it sells.

The world?s largest retailer certainly has the clout to swing suppliers behind its drive to create a sustainable business. Clout is third-quarter profits of $2.65 billion on revenues of $83.5 billion, as reported yesterday by the company.

The company?s online ?packaging scorecard? system is a bid by the retailer to push up to 60,000 of its suppliers worldwide to lower the amount of packaging they use by five per cent by 2013. The effort also aims to push them to use more renewable materials, and reduce emissions and energy use.

I was at Wal-Mart?s unveiling and demonstration of the online system on a screen before hundreds of packaging representatives at an exhibition in Chicago.

What is important here is the company has a an ambitious goal ?aligning its business more toward environmental goals ? and is giving its suppliers a tool and a process to get tangible results.

You can take a peek at the online scorecard system for direct suppliers at www.scorecardlibrary.com. The scorecard system for packagers, those that supply the suppliers, is at www.marketgate.com/packaging.

Suppliers first sign in to their scorecard site and then begin inputting detailed information about their businesses and manufacturing sites. They then input all the details of each individual product they supply to Wal-Mart. Through a complex mathematical system (I saw the formula), the online engine generates a rating of the product based on the metrics.

The scorecard gives a 15 percent weighing to the amount of greenhouse gases produced per ton of packaging produced by the supplier. Another 15 percent of the score is geared to the value of materials used, 15 percent on the product to package ratio, and 15 percent on the use of cube-shaped packaging.

Another ten percent each will be weighed toward transportation factors, the use of recycled content, and on the recovery value of reusable materials.

Another five percent each will be based on the supplier?s level of use of renewable energy in their operations, and on the level of packaging innovations used in the final product.

The system then rates each supplier in a category against others. Everyone can see where they stand in the Wal-Mart universe. Suppliers will move up or down the rank in their product category depending on any changes they make, or that competitors make ahead of them.

Those that make efforts to change their packaging and products towards meeting Wal-Mart?s goals will be ranked at the top of the pile among their competitors, making them the preferred supplier.

supplier may find it is in the 50th percentile in the cube use category, for example by effectively using space in pallets and shipping containers of product sent to Wal-Mart. However the same supplier may only be in the 20th percentile due to its low use of recycled content.

?This model gives suppliers the opportunity to focus on specific changes within the context of a fluid environment, driving constant change and improvement in the supply chain,? says Wal-Mart.

The company is also attempting to supply the solution. A separate scorecard ranking system for packagers operates on similar principles. Packagers will input their data and move up or down the ranking in a similar manner to the rating system for Wal-Mart?s suppliers.

The online system will then direct suppliers toward the top rated packagers who can help them meet Wal-Mart?s targets.

Of course the threat behind the effort for those that do not make changes, is regulation to the lower ends of the ranking and the possible loss of their business with Wal-Mart.

Matt Kistler, Wal-Mart?s vice president of package and product innovations, told the Chicago gathering that the move toward sustainable packaging marks a significant change by the retailer away from choosing suppliers solely on price.

About 2,000 private label suppliers to Wal-Mart began imputing data on the packaging they use for their products into the groundbreaking system on November 1. ?Private label? refers to products carrying a Wal-Mart brand name but manufactured by a third party.

On February 1 next year Wal-Mart open the packaging scorecard to its full global supply chain.

On February 1, 2008, Wal-Mart will begin using the packaging scorecard to measure its entire supply chain based upon each company?s ability to use less packaging, use more environmentally-friendly materials in packaging, and source materials more efficiently relative to other suppliers.

All feasible goals, performed online, consistently and globally.

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