The food industry is facing a new era in supply chain efficiency and sustainability. But developing a new culture of collaboration will determine how well the industry adapts to this brave new world.
ECR Europe Marketplace Guide Berlin, May 2008
Len Lewis

The road to a sustainable supply chain is likely to be a never-ending journey – punctuated by incremental improvements that will rely on more efficient use of resources, transportation, warehousing and deeper collaboration between all segments of the industry.
On the eve of the ECR Europe Marketplace and Forum in Berlin, the industry is clearly moving forward. Cost efficiency and product availability are still shaping the future supply chain. But additional issues, including CO2 and energy reduction and various infrastructure changes are laying the groundwork for a major redesign of the conventional grocery supply chain.

Transitional stage
“I think we are now in a transition stage where sustainability is becoming a ubiquitous aspect of the industry,” said Kees Jacobs, principal consultant, global sector for consumer products and retail, Capgemini. “It has to do with consumer choices, product ingredients, the production process and finally the supply chain. An ideal end state would be the complete renovation of the supply chain. But it will require new thinking, new approaches, new collaboration on infrastructures, a completely new way of working together and sharing information.”
Katrin Recke, ECR Europe, agrees that increased collaboration is the key to everything and is the centrepiece of the association’s planned roadmap on sustainable transport. “It’s all common sense. But now we have a reference and benchmarking tool that will encourage companies to do things in a more systematic way and to find a partner who is working in the same areas,” she said, citing such efforts as the new joint initiative by Cadbury and ASDA on sustainable transport in the UK.
As noted, many companies are already moving toward the goal of a sustainable supply chain – sometimes helped by regulatory forces. For example, in the UK, the food industry and government agencies collaborated on the creation of the Food Industry Sustainability Strategy (FISS), one of the key goals of which is a 20 per cent reduction in the food industry’s carbon footprint by 2012. But efforts by individual companies are driving sustainability. Among them:

• Tesco has made a number of infrastructure changes in warehousing and transportation. One goal is to reduce carbon emissions per case by 50 per cent by 2012, reduce packaging by 25 per cent over the next three years and consolidating distribution centres.

• Alliance Boots, has revamped distribution in Scotland, a move which has saved 150,000 litres of fuel annually, equivalent to 400 tonnes of carbon.

• ASDA has taken 22 million miles off the roads since 2002 by switching long-distance freight movements to rail and expects to save another nine million by reducing empty running between stores and distribution centres.

• Sara Lee and Cadbury are sharing warehouse space in France.

• Denmark-based Frode Laursen is building warehousing facilities shared by members of ECR Europe including Unilever, Nestlé, Kraft and Kellogg.

• Monoprix is addressing inner city distribution by using rail and barges instead of trucks for deliveries to stores in Paris.

Transportation roadmap

In the UK, ASDA and Tesco have purchased a train to reduce truck transport.

On another front, the planned roadmap on sustainable transport from ECR Europe – a project co-chaired by Simon Pearson of ASDA and Patrice Minzolini of Cadbury France and managed by the Boxwood Group – focuses on eight key areas for improvement. This includes efficient load fill, efficient deliveries, people and technology, supply chain network design, transportation modes, measurement and information sharing.
“Empty trucks on the road are always very visible and make the headlines,” said Recke, We want to do something about that so our motto is fewer and friendlier miles.”
For example, on the subject of efficient loads, the roadmap makes recommendations on how to make the most out of available space and avoid empty runnings. These recommendations include modular standards and to aim for a more harmonised approach to pallet height in Europe. This is already a trend in Scandinavian countries and some parts of France and Austria are moving in that direction.
“The problem arises when a pallet has to pass through the entire supply chain. At the moment, one

Rack height in distribution centres can be a bottleneck in getting pallets to pass through an entire supply chain.

of the bottlenecks can be the distribution centre because rack heights are not necessarily conducive to optimisation of the transport vehicle. We’re trying to tell companies that from a sustainable transport angle their main driver throughout the supply chain should be the best utilisation of the cube. But it’s always a matter of total systems efficiency,” she said.
“The reality is that companies sometimes have to trade off between efficiency in the warehouse and transportation.  For example, sometimes the weight may be maxed out but the cube is not because of regulations in Europe on maximum vehicle weight.”
Sharing transport, or load consolidation, is another idea that is gaining ground, said Recke. ECR France is using a web tool where companies can register their warehouse locations and routes so people can talk to each other about combining loads and deliveries. Another example is in the UK where Tesco and ASDA have purchased an entire train together in order to reduce truck transport. Meanwhile, joint warehousing is already working among ECR manufacturers in the Netherlands, France and Germany. “But it’s important to clearly establish the rules of the game to avoid antitrust issues."
“Collaboration is always tough but I think more companies are willing to work together,” noted Capgemini’s Jacobs. “But translating it into tangible results with a clear return on investment is necessary to move forward.”
However, there are some negative drivers as well, he said, citing continuing problems with inner city distribution. “Increasingly there are restrictions on companies whether it’s in the form of entry fees for inner cities, limiting the size of trucks or limiting the timeslots trucks are allowed in. You can label it sustainability, but it’s about adapting to a changing world in which companies need to be successful,” Jacobs said.