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How greener supply chains could improve my morning
Every morning on my way to work at BusinessGreen's central London bunker, I walk along the world famous shopping thoroughfare that is Carnaby Street.
You'd think walking past all the chic little boutiques would be a rather pleasant affair, but regardless of whether I am taking a gentle early morning stroll at 7:45 or lie-in induced sprint at 9:55 I invariably find myself running the gauntlet of reversing, honking, gridlocked delivery vans as they jostle for position on the narrow, otherwise pedestrianised street.
This experience is infuriating for a number of reasons, not least amongst them that dodging slow moving Ford Transits first thing in the morning is unlikely to put you in a great frame of mind for the rest of the working day. But it is also a highly frustrating working example of how a sizable chunk of a firms' environmental footprint can be attributed to processes that could be easily optimised with just a little bit of lateral thinking.
The fact is that most of the stores on Carnaby Street are so small that their daily or weekly deliveries cannot fill a large lorry, hence the herd of small vans and trucks each delivering to their own little store. It doesn't take an expensive consultant with an MBA in time and motion studies to work out that this is a hugely inefficient scenario both in terms of supply chain costs and carbon emissions.
It would be far more efficient for all the companies to co-operate and develop a shared distribution and delivery infrastructure. Deliveries could go straight from the docks to an optimally located distribution point from where three or four large trucks a day could take requested deliveries to Carnaby Street. They may struggle to get articulated lorries down the narrow street, but a few porters could surely solve that particular problem.
It would be a huge, but not insurmountable, logistical challenge to make this work. But if it did the net result would be fewer journeys, less congestion, greater economies of scale, lower costs, drastically reduced carbon emissions and a quieter walk to work for me.
This idea seems so obvious and mutually beneficial for all concerned that the only question is why has it not happened already?
I did once hear of a pilot scheme in Bristol that aimed to serve many of the city's high street stores from a single distribution centre, but that aside the idea of integrated or outsourced supply chain logistics and distribution has singularly failed to take off.
The primary argument against such an approach is that the effective management of supply chain and distribution represents a competitive advantage for retailers and as a result they want to keep them under their close control.
Businesses - or perhaps that should be supply chain managers, supply chain consultants and supply chain software providers - frequently point to the timely delivery of products in response to customer demand as a key factor in commercial success and an area where a well-oiled internally-controlled supply chain can provide measurable competitive advantage.
But while this is undoubtedly the case when you are looking at the retailers' relations with the producers and manufacturers at the origin of the supply chain - where the ability to knock down prices, demand a certain level of quality and select the right products is a key factor in competitiveness - is it really true of the supply chain logistics, transport and distribution methods that get products from factory to store?
Could it not all be outsourced to a third party specialist, much in the way an IT department is outsourced. It would be a gargantuan organisational challenge but that third party service provider could then integrate the distribution network for one retailer with those from other retail customers, optimising journeys and slashing costs and emissions in the process.
Several years ago none of this would have been possible on the grounds that supply chain logistics still represented an area of commercial competitiveness - something I saw firsthand when working stacking the shelves for one of the UK's biggest supermarkets. At the time the supply chain and ordering systems were such a mess that each week during the summer the store would oscillate between running out of lettuces at midday and having so many that at clsing time we'd be selling them off for five pence a time.
Against this backdrop supply chain excellence was a bona fide commercial differentiator because, as irate customers would frequently tell me, if you didn't have lettuces people would just go elsewhere.
But a few years on it is remarkably rare to find the shelves in any UK supermarket anything other than fully stocked. All the major chains have such sophisticated finely tuned supply chain and ordering systems that the mix of products flowing into the store changes constantly in line with the weather, sporting events, fashions, TV ads and the vagaries of customer demand. The sold out signs are left gathering dust in the cupboard.
Similarly all the high street stores have determined what products will be in fashion months in advance in an effort to ensure that supply always closely matches demand. This might not seem the case when you are fighting for the last pair of jeans currently featured on all the fashion pages, but in reality supply chain and marketing departments are so closely integrated that shortages or unpredictable spikes in demand are pretty rare.
In short, the competitive edge delivered by strong supply chain logistics has been hugely diminished. If both you and your competitors are operating basically the same supply chain software, distribution network and logistics techniques where is the commercial argument for keeping these functions in house? Why not slash the carbon emissions and financial cost by integrating supply chains together through a specialist outsourcer?
Retailers would need water tight service level agreements and the ability to impose massive fines on the outsourcer if deliveries were not on schedule. But overall it would be cheaper, greener and would free up retailers to focus on the things that really matter to their business: marketing, product development, low costs, store design and customer service.
Perhaps the logistical challenge of integrating the supply chains of every store on Carnaby Street would prove too daunting, but the benefits that could accrue mean it is a concept that is at least worth trialling.
