Until recently, collaboration on green initiatives was a case of all talk and little action. But retailers are now reaping the benefits of working together to reduce their environmental impact. Alison Clements reports.
Greening the supply chain is about reducing waste, cutting distribution mileage, burning less fuel, optimising the use of warehouse space and filling vehicles to capacity wherever possible. If retailers, suppliers and third-party hauliers work together towards these ends, far more can be achieved.
Sounds straightforward. But as retailers are all too aware, in reality it’s anything but.
“Collaboration has long been talked about, but hasn’t been widely implemented until now,” says Martin Taylor, managing director of retail at supply chain operator Wincanton. “Recently, however, the green agenda has kick-started a great deal of innovation in this area. In the past 12 months, our retail clients have been making environmental collaboration a priority. By vehicle-sharing, for instance, they can cut down on transport miles, shrinking their carbon footprint and reducing costs in the process.”
Co-operative Group director of food and retail logistics Trevor Ashworth says his organisation is reducing its environmental impact in two areas: buildings and transport. “Transport collaboration with supply chain partners saved us 650,000km last year and 450,000km in the first half of this year,” he says.
He adds that collaboration needs to work in tandem with other green supply chain initiatives. This means introducing greater-capacity vehicles, improving engine specifications and running vehicles on alternative fuels – in the Co-op’s case, compressed natural gas.
Envirowise head of retail, food and drink Matthew Rowland-Jones points out that it is not just consumer, investor and government pressure to supply goods
in an ethical manner that is driving change; the rising cost of fuel and raw materials is also a factor. “Collaboration is now an attractive option for companies that want to be seen to be going green. They acknowledge the cost and efficiency benefits of working with business partners,” he says. “If you want to dramatically reduce packaging waste in the supply chain, it makes absolute sense to team with suppliers to design exactly what you both need to get goods to customers in pristine condition, but without creating unnecessary waste along the way.”
In the past, impediments to collaboration have been numerous. They include corporate resistance, the complications of tax accounting and invoicing when sharing resources, competition issues around sharing space and information, a restrictive, silo view of the supply chain and a lack of management time invested in such projects. However, sophisticated accounting, inventory and warehouse management IT systems are now increasing visibility throughout the supply chain and making collaborative activities easier to design
Share and share alike
Supply chain experts argue that sharing resources will be crucial if the latest fulfilment models, particularly in the grocery sector, are to operate without having a disastrous environmental impact. “Retailers are increasingly looking to minimise inventory and satisfy demand for smaller quantities of a wider range of products,” explains Jeff Anderson, managing director of Wincanton’s manufacturing business. “This has led to requests for smaller consignments, which presents a challenge for efficient vehicle utilisation.”
It is believed that delivery vehicles are empty for between 20 and 30 per cent of their time on the road. Collaboration could stem this. “Recent research shows that if implemented effectively, a collaborative approach could save the European logistics industry
up to £8.6 billion every year,” says Anderson.
In June, the Institute of Grocery Distribution (IGD) launched the Sustainable Distribution Initiative, which involves 37 UK food retailers and manufacturers – including Asda, Tesco, Sainsbury’s, Morrisons, Waitrose, Somerfield, Marks & Spencer, Iceland, Mars, Müller Dairy, United Biscuits and Kraft – working together to cut fuel consumption, miles travelled and trucks on roads. It aims to save 48 million food miles by the end of this year alone, conserving 23 million litres of diesel fuel in a full year.
“At a time when sustainable distribution is a priority, both for the food industry and the Government, and when we have some of the highest fuel costs in the world, IGD members have taken a radical industry-wide approach to the sustainability challenge,” says IGD president and Nestlé UK chief executive Alastair Sykes. “So far, the results are impressive, with more than 16 million miles saved in the 2007 pilot alone.”
Collaborative activities include vehicle-sharing, back-hauling and more efficient warehousing to minimise environmental impact. One green supply chain partnership, between Nestlé and United Biscuits, involves the use of round trips, which are more efficient and avoid empty truck movements. United Biscuits trucks collect a load of Nestlé products each day from factories in York and Halifax and deliver to the Midlands, eliminating two or three empty truck movements from the supply chain getting trucks off the road
Green logistics involves careful planning and close communication between the parties involved. “It is important first to focus on your existing assets and distribution routes and look at areas where there is waste and inefficiency,” advises Unilever distribution director for UK and Ireland Chris Broadbent. “From there, you can begin to optimise your resources. If a delivery truck is returning from a store to the distribution centre empty, but passing a supplier, teaming up and filling that truck will eliminate two empty legs.”
Broadbent says that key to such collaborative work is having face-to-face meetings with people who are able to make distribution changes. “Then, decisions can be made relatively quickly,” he says. “A fair amount of planning and administration is needed, but the actual processes themselves, once given the go-ahead, are simple and basic. For Unilever, there is often just a two-week timeframe between proposing a collaborative opportunity with a retailer or fellow manufacturer and it going live.”
Collaborative activities are expected to spread to European-wide distribution routes and through the upstream supply chain, as manufacturers focus on collaborating with their raw materials and packaging suppliers. Retail sectors beyond grocery are likely to adopt best practice, too.
“When you consider that our annual mileage into Tesco is about 4.2 million miles, you can see the cost and environmental benefit of cutting out even a small percentage,” says Broadbent. “And, with the price of fuel preying on everyone’s minds just now, thinking collaboratively is a very sensible option.
Tesco and Unilever
- What it involves: Through the IGD’s ECR UK programme, Unilever and Tesco have teamed up to form the Selective Hauling Committee. The objective is to work together to study journeys and find ways of optimising shared resources in the delivery of household, health and beauty, chilled food, ice cream and ambient food products.
- How it works: Back-hauling, factory-gate pricing (retailer picking up from factory), road transport and rail freight are all delivery options open to Tesco. Working with Unilever, the most green and efficient can be selected. Brands such as Dove and Lynx were previously delivered by Unilever from its Doncaster distribution centre to Tesco’s distribution centre. Now returning Tesco vehicles pass through Doncaster and pick up the products for delivery to Tesco’s distribution centre. This has helped take 500,000 miles off the road.
- Benefits: Less use of diesel leads to reduced emissions and major cost savings. Depending on the journey type, savings between a few per cent and as much as 50 per cent have been achieved. On the back of successes in selective hauling, Asda, Sainsbury’s and Morrisons are also getting involved with Unilever in this way.
Woolworths, WHSmith, Stylo Shoes and Wincanton
- What it involves: High-street multi-user collaboration for deliveries to the southwest of England and remoter parts of Scotland. The scheme will be extended to the Northeast before Christmas.
- How it works: Wincanton’s customers share space in lorries destined for outlying rural areas, so that vehicles travel as fully loaded as possible.
- Benefits: Significant cost savings, because a single vehicle is making deliveries to a region instead of three. CO2 emissions are also reduced and CSR objectives fulfilled.
Wincanton and retailers with large delivery fleets, including Matalan and Comet
- What it involves: Collaboration to reduce the number of lorries running empty on return journeys.
- How it works: Wincanton links empty legs with other work on its books so that vehicles return to distribution centres full.
- Benefits: Better use of vehicles means lower emissions, less fuel consumption and lower costs for participants.
Ginsters, suppliers of raw materials and Envirowise
- What it involves: The Cornish pasty producer Ginsters embarked on a three-year environmental programme with sustainable business experts Envirowise and has since nearly halved its food wastage and saved 250,000 food miles.
- How it works: Envirowise helped Ginsters collaborate with suppliers to reduce unnecessary packaging and adopt a policy of buying locally and supporting local farm production.
- Benefits: By reducing bulk purchasing and eliminating excess packaging from raw material suppliers, Ginsters achieved a 30 per cent reduction in cardboard waste. The local sourcing policy has led to the purchase of £9 million of produce from local farms a year and saved 250,000 food miles.
Third-party logistics providers and Argos/Comet
- What it involves: Large retailer-owned distribution centres are often only half- or quarter-filled for parts of the year, so third-party logistics providers buy spare space from them, maximising use of the assets.
- How it works: Warehouses such as Argos’s massive site in Kettering, Northamptonshire, and Comet’s facility in Harlow, Essex, rent space out to logistics operators, making the most efficient use of space.
- Benefits: Retailers generate revenue and maximise use of their resources, while logistics companies cut down on heating/lighting that would be needed in alternative storage space.
Asda and CHEP Pallets
- What it involves: Asda works with the pallet provider to fill empty journey legs.
- How it works: Chep previously sent empty vehicles to Asda’s distribution sites to pick up spare pallets. By matching empty journey legs with Asda’s distribution needs it was possible to identify the routes where transport collaboration could be applied.
- Benefits: The initiative has saved the two companies more than 500,000 miles a year.