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How can retail deliver a more environmental supply chain?


This week the government’s Department for Environment, Food & Rural Affairs (Defra) launched a consultation on introducing mandatory reporting of greenhouse gas emissions for all UK companies.

Lobby groups such as the Confederation of British Industry and the British Retail Consortium have given the proposal tentative support, on the condition that it is made simple and replaces existing regulations, which proves green initiatives are back on the business agenda.

Retailers can be forgiven for being preoccupied with what they may consider more pressing matters, such as their bottom-line, during this prolonged period of muted sales activity.

Their supply chain operations alone require vast amounts of energy and, until electric lorries become common sites on UK motorways or teleportation is invented, they will continue to burn their fair share of fossil fuels.

Yet even with energy prices soaring at present, green credentials are increasingly acknowledged by retailers and supply chain specialists as a very valuable commodity.

New research from the Carbon Trust shows 45 per cent of shoppers would shun brands that do not take steps to measure and reduce their carbon footprints and 56 per cent, an increase from 2010, would be more loyal to retailers who do.

Along with Marks & Spencer and its well publicised Plan A scheme, Kingfisher is another major retailer investing heavily in reducing its carbon footprint, with 10.5 per cent of its total retail sales now coming from independently verified eco products.

Ian Cheshire, CEO of Kingfisher, commented recently: “UK consumers are reaching a tipping point. Increasingly driven by sustainability, they have high expectations of businesses to reduce their impact and are voting with their wallets by spending on brands that do so.”

So what measures can retailers easily take to reduce their emissions whilst not increasing their costs?

Cutting down on unnecessary deliveries is a start. Technology firms such as Torex and BT promote their improved back office systems as a way to ensure more accurate stock transportation and less wastage.

Charlotte Kula-Przezwanski, Senior Product Director for Retail at Torex, told Retail Gazette: “The back-end processes within the retail supply chain are key to cutting back on waste and improving the environmental impact of supply chain operations.”

She argues that by moving from traditional spreadsheet-based stock planning to unified stock ordering platforms, a range of variables such as demands of a local market, store type and planned promotions become easier to manage

For consumers this means being able to buy the items they want in the right size at the right time for them. For retailers it equates to less surplus stock and wasted garments,” Kula-Przezwanski added.

Should more retailers be looking to share delivery loads with other businesses?
Should more retailers be looking to share delivery loads with other businesses?

Jane Fazzalari, Senior Vice President for Retail at JDA Software, has experience of retail both sides of the Atlantic and she agrees that firms are becoming smarter at maximising logistics capabilities.

She says that larger retailer such as The Co-operative are increasingly looking at ways of sharing deliveries with other retailers to cut down on cost, which in turn cut emissions.

BT’s General Manager for Supply Chain Solutions Keith Sherry also says that back office technology can help retailers environmentally, and that by consolidating transport volume companies can decrease the number of journeys.

Using more fuel efficient modes of transport, such as ‘slow steaming’ where a ship’s speed is reduced by 20 per cent, can help fuel consumption by 40 per cent.

Traditional thinking suggest that slower delivery speeds make orders less desirable, but Sherry disagrees: “If your info is good enough, many customers are less concerned about how fast their assets are moving because they are more confident about where they are and when they will arrive.”

Journey times can of course be cut down by sourcing closer to home to keep supply routes short, and Fazzalari agrees with Sherry that more and more retailers are sourcing closer to home.

With China becoming economically stronger and increasingly producing for its domestic market, global firms, particularly in the US, are beginning to look at alternatives to the Asian giant to produce its goods.

Fazzalari added: “They are really looking at cost to serve: Actual landed cost versus estimated landed cost. Asking what the cost will be to produce outside of Asian, in terms of shorter lead times, less packaging restrictions, issues around dye and colour, or just purely less logistics.”

All of these developments seem to be aiding efficiency however the growth of multichannel and e-commerce are making the supply chain process more convoluted and therefore making it more difficult to be green.

Reverse logistics, a higher turnover of products and varying prices between channels are all contributing towards today’s supply chain being 64 times more complex than the traditional model, according to Sherry.

Fazzalari thinks that the market should head towards making stores operate more like distribution centres and making products more readily available.

“Life cycles of items are getting shorter,” she said. “You need to hold products as high in the supply chain as you can. With customers checking prices on their smartphones and looking for deals via GPS it is going to make the whole process more confused.”

It seems that the will and means to address green issues are present within the industry but it will not be easy to meet government sustainability and corporate performance targets.

Published on Friday 08 July by Editorial Assistant

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