People get very emotive over ‘food miles’. Consumers are beginning to question why simple fruit and vegetables have to come wrapped in metres of clingfilm and plastic, or why procduce that is readily available in season in northern Europe is trucked or airfreighted hundreds or thousands of miles so that it’s available all year round.
Supermarkets are having to take on board increasingly strident consumer concerns over the green-ness, or otherwise, of their grocery basket. Certainly, the big grocery retailers talk very green these days.
In fact, something of a ‘green war’ has broken out in the UK, with supermarkets vowing to introduce carbon labelling (Tesco) or become carbon neutral (Marks & Spencer). Tesco says that it will assign labels to all its products with a ‘carbon calorie counting system’ that will show how much has been emitted during manufacture, transport and consumption.
Crisps go green
Some of the manufacturers are also jumping on the bandwagon, with salted snack-maker Walkers carrying ‘carbon labels on its packets of crisps (75 grammes of caron dioxide are emitted in producing and shifting 34.5g of crisps from seed to store, it says).
Research into the area of carbon labelling is at a very early stage. No one really yet knows for sure whether it is environmentally better to grow produce in hot countries without greenhouses or other artificial heating and then truck them hundreds of kilometres north to cooler climes. Environmental activities are fond of quoting the example of green beans that are airfreighted thousands of miles, though even here the arguments are not entirely clear-cut. Most produce is airfreighted in planes that have been used to transport goods into developing countries and that would otherwise return to Europe or North America empty. That said, supermarket giant Tesco has pledged to cut its use of airfreight and to increase use of rail and sea transport.
Unfcomfortably for the green enthusiasts, some ‘organic’ footstuffs appear to have higher carbon footprints than conventionally cultivated products.
However, the fact remains that, for the moment, they use copious amounts of packaging. Their distribution model is still very often one of trucking over relatively long distances from producers to regional distribution centres and trucking from these to the retail outlets. The supermarkets’ efforts at going green are aimed at refining existing processes – filling vehicles better, recycling packaging or switching to trains where possible – rather than coming up with any radically new systems. No one is yet suggesting that we should go back to the acres and acres of market gardens that used to surround most major European cities until around half a century ago. Ironically, many of these disappeared because the flat terrain made ideal airport sites.
That doesn’t mean to say, though that they ignore the carbon footprint of their supply chain operations. France’s Carrefour – the world’s second largest retailer – has helped set up an ‘Environment Club’ that brings together industry, retailers, service providers and public sector players to work together on transport optimisation.
The Group is developing a national logistics network in every country where volumes are substantial enough to streamline flows and transport trips by pooling logistics and backhauling with trucks collecting goods from suppliers and delivering them back to the warehouses after completing their store deliveries.
Tony Bryant, business sector manager at K3 who, before he joined the systems specialist, had a long career at Marks & Spencer, says that retailers are exploring new distribution models, though usually for their more specialised operations. ‘For instance, the major grocers have put a lot of thought into how they serve convenience stores. When I was at M&S, we realised that for the new “Simply Food” offer, the one-size fits-all supply chain approach just wasn’t appropriate.’ Instead of a single 13-metre trailer visiting one mega-store, a smaller truck might have to do the rounds of several smaller shops in a city centre.
‘In Cambridge,’ Bryant continues, ‘we even tried to set up a co-operation with Safeway, which worked on a trial basis, although it wasn’t ultimately pursued.’ However, central London and many other big European cities are crying out for a similar approach. It might need a powerful mayor or some major financial incentive to knock a few heads together. Delivery vehicles running around city streets half empty do no one any good and the available evidence suggests that, having got into the convenience store market partly by accident – many of Europe’s major grocers have not been allowed to build all the out-of-town supermarkets they would have liked – retailers are finding that supply chain costs form a much bigger proportion of their smaller stores’ costs than for the bigger units – typically 10 – 18 per cent compared with 3 – 4 per cent.
There are though some interesting prototypes of how a more localised supply chain might work, he adds. One is Booths chain in the north of the UK, while another is the franchised chain of Costcutter convenience stores, all of which make extensive use of local suppliers. ‘It’s home-grown, it’s local, and it is happening today,’ says Bryant.
Economies of scale
Clearly, you cannot get quite the same economies of scale if the delivery pattern is ‘lots of little vehicles chugging around’ instead of one big one. A recent study of one convenience store suggested that there could be up to six or seven drops a day for a shop with only 3,000 sq ft and 4500 SKUs.
One possible solution might be mini distribution centres but another solution might be for some of the home delivery operations – most of whom are not truly profitable – to widen their scope and include delivery-to-store as well as home deliveries.
Jeff Stanton, chief executive of the Cert Group, a logistics company which mainly moves alcoholic drinks from suppliers to the regional distribution centres of the major UK supermarkets, says that environmental issues are very high on the agenda of all the big grocery retailers. Cert is currently measuring its carbon footprint and looking at ways of reducing it.
‘One way of doing that is to minimise empty running as much as we can,’ he explains. He calculates that, given sufficient co-operation between retailers and logistics firms, as much as 70 per cent of return vehicles could be filled. ‘We are already achieving 55 per cent,’ he adds.