Walmart's Strategy for Ongoing Responsible Sourcing

As a part of their commitment to high standards, Walmart has taken major steps toward building upon the trust of customers, suppliers, and the communities they serve. While Walmart themselves have long used third-party social and environmental compliance audits to manage supply chain risk, they recently released a new policy for their Responsible Sourcing program.

In the past, Walmart suppliers have been grouped into one of three risk categories based upon their location. Those located in the United States and Canada fall into Category 1, and were previously sampled at an annual interval to determine which facilities would have to submit an audit to Walmart.

Under the new requirement, Walmart has transitioned the auditing of all Category 1 facilities from the previous paradigm to a new routine audit cadence - requiring regular third-party social and environmental audits from every facility in the category rather than only a small subset.

About the Audits Required

While the new requirement will be phased in over the years to come (with full implementation scheduled for 2028), it's wise to begin considering the best options for meeting Walmart's expectations. There are a number of standards that have been designated as acceptable, but many include stipulations for non-applicable commodities (such as electronics) or are overly complex. Among the options approved by Walmart to satisfy their audit requirement for fresh produce and other food-related operations is the Sedex Members Ethical Trade Audit - or SMETA.

SMETA is an audit methodology that rigorously assesses a business's practices from the perspective of both ethics and responsibility. The 4-pillar SMETA audits that fulfill Walmart's requirement of suppliers covers compliance in these areas:

How Ratings Work for Walmart Suppliers

The first step toward undertaking a SMETA audit is choosing a recognized auditing body - also known as a Sedex Affiliate Audit Company (AAC) - these include entities such as DNV, a partner of Provision. Once the audit is scheduled with and executed by the chosen AAC, the supplier's results are shared with Walmart, and a color-based rating is issued to designate the perceived risk as evaluated from the report. These colors range from green - indicating a high level of compliance with Walmart's standards - to red - indicating serious violations that may risk termination as a Walmart supplier.

Within each facility, a "base" color will be given, with additional aspects of the operations receiving their own colors depending on the inherent risk of the activity or issue. These colors may influence the final facility rating depending on the severity of risk or the likelihood of escalation.

Facilities receiving red ratings or too many consecutive orange ratings may be suspended or terminated as viable suppliers for Walmart. Depending upon the severity of the issue in question, other consequences may follow, such as supplier "strikes" or the possible reduction of purchasing. Similar consequences may follow if suppliers do not meet the requirement for audit submission or possible future inspections of suspect facilities by Walmart itself.

Building Toward Future Compliance

As the expectations and requirements of industry's biggest players continue to evolve and develop, it's more important than ever that managing the data and documentation at play is a unified effort within each operation. Compliance management platforms, including Provision, offer an all-in-one space to handle not only SMETA or GFSI standards, but traceability and internal analytics as well. By keeping such efforts organized and in one central location, software costs are reduced while simultaneously streamlining training and making compliance easier. To see how Provision can help integrate task management, data entry, review and verification, and provide powerful analytics reporting, request a free demo.