In response to market and competitive pressures, the grocery industry has developed a number of tactics which may be seen to be raising sustainability challenges or conflicting with the aims of sustainable distribution.

Without finding a means to manage these supply chain developments, we are likely to see an increase in food miles and related costs.
 

The role of consolidation

Whether you are a small or large supplier, the current retail environment is demanding less volume, higher frequency deliveries. Smaller suppliers have to deal with more regular low order quantities, and larger suppliers need to meet the demands of retailers who are looking for daily drops of reduced amounts, enabling them to flow products smoothly through their supply chains.

Consolidation will mean less trucks on our roads

Consolidation can be a positive driver for sustainability and the answer to dealing efficiently with current industry demands. Combining more than one supplier’s products on a delivery allows the businesses involved to offset the increase in food miles and costs. This enables suppliers to maintain full load efficiencies, whilst retailers still get the smaller, more frequent deliveries they require.

We can therefore use consolidation as a means to stop the trend of daily deliveries equating to increased food miles and expense, and not only will there be benefits from a cost point of view, but we will be promoting sustainability and reducing environmental impact. Examples of where companies have used consolidation to deliver real business and environmental benefits:
 

How to deliver real business and environmental benefits

Kimberly-Clark opened their first consolidation centre, in Raamsdonksveer in the Netherlands in 2003, as joint venture with Unilever. The development of this site allows both companies to increase delivery frequency to their customers, whilst reducing the number of deliveries to retailers and improving the efficiency of inbound receiving processes.

By working with their retail customers to synchronise order and delivery cycles, they have improved order fill and increased on-shelf availability, reducing retailer inventory levels and removing 12,500 miles from the roads each year.

Following the success of this project in the Netherlands, Kimberly-Clark has continued to develop its consolidation capabilities across Europe. The latest of these is a joint operation with Kelloggs in the North West of England, set to save 270,000 road miles every year.
 

In the UK, Ceva operate a consolidation centre for the supply of Tesco’s ethnic food range.

Tesco had experienced poor on-shelf availability and high DC stock levels for their ethnic food, and in addition to the long lead times of products, inbound replenishment was a challenge. Tesco therefore aimed to improve both supply chain efficiency and on shelf availability by introducing a consolidation centre into the supply chain.

Having initially started with a trial of 18 suppliers, Tesco aims for a complete roll out of the supply of ethnic foods through Ceva’s consolidation centre in January 2009.

The results from this initiative have been encouraging, with availability already improved to 93% (an increase of some 16%), driven by increased visibility of stock and communication with suppliers.
 

How to identify the right consolidation solution

While it is recognised that the use of consolidation networks provides a means to manage the demands of lean and agile supply chains, it can be difficult to know where to start.

To help, ECR UK has created a free practical guide that enables businesses to identify and implement the consolidation solution which is right for their particular circumstances.

This online resource is designed to offer support in;

• Understanding the alternative types of consolidated distribution available.
• Providing insight into the thinking and direction of major retailers.
• Identifying the approaches manufacturers are taking.
• Providing a directory and map of consolidation providers to act as a handy guide for businesses who need a consolidation service but are not sure who to contact.
• Highlighting some of the likely challenges in implementing the different consolidated distribution options and how to overcome them.
   

More information:

	Consolidated Distribution This free Consolidated Distribution resource featuring case studies, an interactive map of consolidation sites and advice on the best sustainable distribution approach for your business.
	Sustainable Distribution in 2008 This report provides practical insights into the range of measures which can be used to cut CO2 within companies’ logistics systems, specific tools to measure the impact of distribution and best practice examples of implementation