Efficiency vital in the retail sector

The transport-intensive retail sector is striving for optimal efficiency. The food supply chain – from field to fork – is turning into a finely calibrated logistic science that will help save both expenses and the environment.

Efficient transport services with less environmental impact are increasingly important in the retail sector. The demands just keep increasing. For example, the Swedish-based food producer Lantmännen – with a portfolio including such major brands as AXA and Kungsörnen (cereals) as well as Kronfågel (poultry) – has set a target of cutting its CO2 emissions by 40 percent between 2009 and 2020. This is far tougher than the European Union’s climate goal, which is a 20 percent reduction compared with 1990.

“Our customers, including the major grocery chains, have high ambitions. We have also established demanding goals in the environmental field,” says Per Arfvidsson, supply chain director of Lantmännen.

Lantmännen has various operations connected to farming: aside from its Agriculture sector the group consists of a Food sector, a Machinery sector and an Energy sector that includes Sweden’s largest bioethanol producer – Agroetanol.

“Our agricultural and industrial operations affect the climate in various ways, so we must take responsibility for our operations, all the way from farm to consumer. Transport services are of central importance in this context,” Arfvidsson says.

The company’s strategy for reducing both its environmental impact and its transport costs includes everything from alternative vehicle fuels to advanced IT support for optimal route planning.

“It has been a long time since the era when transport services meant hauling things from point A to point B. Today’s logistics business is a matter of sophisticated real-time information processing, with standards of precision more similar to advanced traffic management,” Arfvidsson notes.

To achieve such standards, Lantmännen works according to the motto “from field to fork”. Each step in its supply chain must be optimised to achieve the greatest possible degree of efficiency.

Haulage companies, which keep the goods moving to Swedish retailers, present a similar picture.
“The demands have become stricter and we have been forced to become smarter. But this is a good trend, constantly pushing us to improve,” says Niclas Jansson, CEO and fleet manager of Kyl & Frysexpressen, which provides temperature-controlled transport services to the convenience goods sector in the Lake Mälaren region, including Stockholm.

High environmental standards
This family business was started by Jansson’s great grandfather in 1897 with a single horse. Today the company has 70 vehicles of varying sizes. Twelve of them run on ethanol. According to Jansson, they emit 70-80 percent less carbon dioxide than diesel-powered vehicles.

“Large buyers of transport services, in particular, demand high environmental standards,” he says.

His logistics company is thus working at a number of levels to reduce both costs and environmental impact: through its choice of vehicles, optimal route planning and ensuring in various ways that its drivers are more climate-smart behind the wheel.

“We are investing in a new transport management system, based on wireless communication. Our focus is shifting more and more towards comprehensive logistic solutions, including quality standards and feedback reports, rather than on hauling goods from one place to another,” says Jansson. He believes that more customers should follow the example of the major retail chains in the environmental field.

“In the short term, many customers look mainly at prices, in which case environmentally optimal transport services may appear marginally more expensive. But in a slightly longer-term perspective, there are large potential savings. We would welcome more ambitious demands from our customers,” he says.

“We also have close ties to customers’ customers”

To meet rising transport efficiency and environmental standards, Scania invests in developing comprehensive solutions in partnership with its customers, says Martin Lundstedt, Executive Vice President and Head of Franchise & Factory Sales at Scania.

What are the most common demands from retail companies that use the services of Scania’s customers today?
“Good transport management systems to coordinate shipments efficiently, increased uptime to avoid delays and sustainability improvements in order to minimise CO2 emissions while lowering fuel costs.”

What is Scania doing to meet new, tougher standards?
“We employ a holistic view, based on analysis and understanding of different economic sectors and their unique operating conditions. We pursue this dialogue both with our own customers and our customers’ customers. To succeed, we must understand what drives the revenues and costs of major companies, for example in the retail sector, even if these companies are not our direct customers. Such understanding enables us to deliver an optimised package of trucks and services to hauliers – our customers – as part of a finely calibrated logistics chain.”

Can you give an example of how this works?
“We have had a good dialogue with one of Europe’s biggest retailers. Their transport companies had restrictions on how early in the morning they could make food deliveries to stores, due to noise regulations. Through our collaboration we managed to lower vehicle noise, enabling the transport company to deliver goods one hour earlier. Assuming 3,000 trucks, this means saving 3,000 hours every day. That is a good example of how we work together to identify improvements, with our products and services becoming part of a comprehensive solution to a specific challenge.”