Rival retailers have begun to share lorries to help the environment and reduce costs. And joint distribution centres could be the next step. But logistical practicalities and the competitive nature of the industry are proving to be obstacles to innovation. Katie Kilgallen investigates
You’ve streamlined your supply network, introduced the latest eco-friendly vehicles and successfully engaged your workforce in your green supply chain agenda. But what’s the next step? How can retailers innovate to meet ever demanding targets and reduce their supply chain carbon footprint year on year?
To find the answer, more retailers are looking beyond their own businesses and finding opportunities in collaborating with other retailers.
The concept is simple. Sharing facilities means more efficient vehicle and warehouse use, which in turn translates to not just a smaller environmental impact, but lower costs.
It sounds like a simple win-win scenario. But, is it really plausible to link up two very separate supply chains seamlessly without a burdensome amount of disruption? Practicalities aside, is an industry as notoriously competitive as retail ready for collaboration of such an intimate nature?
Health and beauty giant Alliance Boots operates partnerships with several other retailers to get goods up to the far north of Scotland and the southwest corner of England.
Alliance Boots group head of corporate social responsibility Richard Ellis says the retailer is also working with a number of other potential partners to see where there are “good fits”. “I think the key thing for us is that when our trucks are on the road they are not transporting fresh air,” explains Ellis.
Grocery industry body the IGD has established what it calls “speed-dating” sessions for retailers, where retailers bring along all the data of where they go and when – and work out whether they can share lorries. The British Retail Consortium (BRC) hopes to do something similar, but focused on high street shops rather than large grocers and out-of-town stores.
BRC director of business environment Jane Milne believes there is potential to push this beyond simply sharing lorries to far-flung places. “There are lots of business opportunities and indeed some are already happening. Things need to be worked through, but it’s all up for discussion,” says Milne.
A logical next step could be to look at sharing distribution centres and hubs and driving efficiencies even further. Ellis acknowledges sharing DCs as a “natural” extension of sharing space in lorries.
But the opportunities don’t just stop at transporting product to stores in the most efficient way. Using the supply chain in reverse to backhaul waste for recycling is another area where retailers are looking at how they can collaborate to best effect.
Good intentions aside, putting all this into practice is proving to be tricky. Finding a partner you can work well with and for mutual benefit is no easy task.
Ellis says: “It’s not insurmountable, but the practicalities of making sure things work out mean it’s not straightforward. A bit of effort has to go into things to make it work for both parties.”
Among the questions retailers need to ask themselves are: do your respective products pack well together in the vans? And do they have different climatic storage requirements?
Another factor is the potential complications that can arise when you bring a new partner into your business. Companies relinquish a degree of direct control over their operations and risk adding an element of instability to an otherwise smooth-running supply chain.
Land of Leather supply chain director Ian Howell believes the nature of the retail business means that collaboration is simply not an option for consideration in certain quarters. “We’re not sharing at all, to be quite honest. In certain industries it’s quite protected in terms of information you share. It’s about commerciality,” he says.
IDS Logistics UK managing director Neil Yewdall says this is particularly true in the fashion sector. “In fashion, they are all keen on privacy and secrecy and are keen to keep everything separate. There’s not any real collaboration in this area, it’s more with the likes of blind boxes – soups, tins, baked beans etc.”
Running a business that serves a number of fashion retailers, he believes there are opportunities that retailers are missing. Yewdall says it would not be unusual for 17 separate vans all to be headed to the same high street on a Monday morning. “There’s money to be saved everywhere,” says Yewdall. “There’s scope with everything to save money and help the environment.” Yewdall, despite seeing little evidence of collaboration at present, is optimistic this will change. “Things evolve. Eventually something will happen.”
If the promise of a reduced environmental impact is not enough, perhaps the promise of more immediate cost benefits can be. Milne says: “It makes sense. There is not just a sustainability agenda. There are cost savings as well. And with current transport costs, you are bound to look at costs more clearly.”
Certainly, with the price of oil as it is today, the economics of cooperation start to make the additional effort and, in some cases, risks, seem worthwhile. As Ellis says: “The need to be sustainable is forcing everyone to be creative.”
After all, necessity is the mother of invention.