Waste Management And Reverse Logistics The Tesco Experience - Brian Gaunt - Christian Salvesen
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Waste Management And Reverse
Logistics
The Tesco Experience
Brian Gaunt – Christian Salvesen
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Agenda
•Our Businesses
•The Business Issue & Context
•Our Business Relationship and
what we have achieved
•Key Learning
•Questions
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2
Christian Salvesen
• One of the longest established logistics providers in Europe with turnover
of £890m
• Present in the UK, Ireland, France, Iberia and Benelux
• Transport Division -Shared User European Networks
• Logistics Division
– Dedicated Distribution
– Frozen and Chill
• Green Logistics
– Recycling & Waste Management
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Green Logistics
• Over 30 sites
• 360 million equipment movements
per year
• 1 million store returning vehicles per
year
• Recycle 330,000 tonnes of card and
plastic per year
• 2.3m electrical product returns per
year
• 2.5m books returned, processed and
recycled each year
• Carbon Modelling
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Large Customer Base / Diverse
Operating Profiles and Data
800,000 Locations 2,000,000 Trade Items
70,000 Orders
Per Day
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5
Tesco in 2007
68m sq ft of selling space
3,250 stores
Group sales of £46.6bn
UK’s No. 1, operations in Europe,
Asia and US
World’s third largest retailer
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Five Part Corporate Strategy
Maintain strong UK core business
Develop strength in non-food
Retailing services
International growth
Community
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Source: Company 7
Key UK Store Formats
Tesco Extra (147 stores at Feb 07)
• Hypermarkets
• Up to 50,000 SKUs
•Av size c. 70,000 sq ft (up to 50% non-food)
•Major area of growth (c.40% of UK space)
Tesco (433 stores at Feb 07)
• Core superstore format
• Av size 31,000 sq ft
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Key UK Store Formats
Tesco Metro (162 stores at Feb 07)
• Small urban stores
• Top-up shopping & lunchtime trips
• Av size 12,000 sq ft
• Site selection critical for success
Tesco Express (735 stores at Feb 07)
• Forecourt / convenience stores
• Average size 2,100 sq ft
• Major area of expansion (+85 stores over 06/07)
• Also 506 One Stop stores
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Business Context
The Environment & Improving
Margin
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Choice Editing
I Will if You Will
Image
Shareholders
Availability
Convenience Regulation Eco-Responsibility
Competitive Advantage
Emotional Resonance CONSUMER Globalisation ORGANISATIONS
Eco-Literacy Consumer Pressure
CSR
Leadership
Value for Money
Legitimisation
Trust
Innovation
Policy Stakeholders
GOVERNMENT
Source – Buying Green. Walker et al
2006. University of Bath School
of Management
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11Implications for the Supply Chain
• From the mid 90’s Tesco embarked upon a programme that would make it
the most successful and largest supermarket chain in the UK. The Supply
Chain’s part in achieving this was to:
REDUCE WASTE OF ANY KIND – SIMPLIFY STORE PROCESS
AND IN DOING SO REDUCE COSTS
• Take process out of the stores
• Break pack size
• Find ways of merchandising to improve availability and reduce cost
• Improve impact on the Environment and take waste out of the stores
• The pressure on the latter has increased significantly in the last two years
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12The World is WARMING UP
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13Companies Are Getting Serious
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14The Scope Is From Seed To Store
Shelf Local
Local
Air, Sea and Road Freight
Farm Transport Pack House
Transport
• Fuel • Energy • Fuel
• Energy
• Packaging • Fuel
• Fuel
• Fertiliser • Fuel
• Packaging
Secondary Primary
Transport Regional DC Transport
Store Pack House Supplier Transport
• Energy • Fuel • Energy • Fuel • Energy • Fuel
• Packaging
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15Implications for the Supply Chain
• We are going to look at how both businesses have
worked together to respond to these pressures by
looking at two specific areas:
– Shelf Ready Packaging
– Recycling Centres
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16“As an employee and officer of this
company I can prove we are doing
everything we can to control our carbon
footprint given the situation. I can tell
shareholders, customers, partners,
governments and my children we are using
the latest thinking and tools to make sure
we continue to reduce our carbon footprint
and global warming”
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17Our Business Relationship and What
Have We Done Together?
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•Four Key Challenges
•Availability
•Range
•Store Cost Reduction
•Environmental Impact
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19Shelf Ready Packaging
•Key Issues
•Suppliers (Own Label & Brands)
•Store Mix
• Ranging
• Supply Chain
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20Shelf Ready Packaging
•Results
•May 2006 Tesco had 15,000
lines in Shelf ready Packaging
•Plans for a further 10,000 lines
•Part of the “better, simpler and
cheaper” plan that has saved
between £200m and £300m pa
since 2001.
•Re-invested in price
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21Our Partnership
•First Site in Harlow 1992
•Contract for 9 Recycling sites 1994
• New 10 year contract 2001
•13 sites responsible for store delivery equipment
(maintenance, cleaning, storage, stock records at supplier
locations) and ensuring maximum turn on this equipment
•Equipment owned by Tesco and operated on an open
book basis
•We add technical innovation, systems (equipment
records linked to invoicing) and operational innovation
and management
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22SITE LOCATIONS
Livingston
Belfast
Middleton Doncaster
Dublin
Hinckley Peterborough
Didcot
Chepstow Harlow
Avonmouth
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23Tesco Reverse Network– Process
Flow
Fresh products in
Fresh products in
trays
trays
Tesco
Distribution
Centre
Damaged base
Repaired & empty
equipment &
base equipment
packaging waste
Tesco
Store Supplier
Empty clean trays
• Dirty trays
• Packaging waste Service Centre
Baled packaging
• Base equipment waste
• Ancillary equipment
Waste
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24What Have We Achieved?
2006 – Cage Management,
2007 – Tray
1996 – Plastic Recycling Scrap Metal, Flower buckets,
repairs, Office
Mushroom Trays
Paper, Trailer
2005 – Egg Shippers Washing, Dolly
1997 – Confidential Waste
repairs
2004 – Polymer Semi-Pallets,
Banana MU’s & Animal By-
1999 – Merchandisable Units Products
2003 - Comet Introduced
2000 – Potato Shippers &
Disposable Cameras 2002 – Valencia
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25What Have We Achieved?
• We have worked together to help convert suppliers from card to plastic
trays and now handle 240m tray movements a year from a population of
11m trays
• We now collect 225,000 tonnes of card and 20,000 tonnes of plastic p.a.
• We have extended the use of trays into country of origin e.g. Spain and
made this cost effective through the delivery of collapsible trays
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26What Have We Achieved?
•In doing this we have improved our own
carbon footprint and reduced costs as we
have developed through the application of
improved design and technology
•Rainwater Harvesting
•Reduced Wash Temperatures
•Reduced Detergent Levels
•Encapsulated Wash Plants
•Automation
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27Alternatives for Tesco?
• In-house capability in control systems and technical expertise
•Non Core at a time of significant business growth, a
distraction to the business
•Setting up in house facilities would not have allowed Tesco to
maintain “distance” between these sites and their main DC’s
•Separate Union
•Different Wage Structures
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28Alternatives for Tesco
• Equipment pooling
– Allowed someone else to own and manage the assets
– Temptation to maximise assets in order to increase revenues
– Open Book arrangement with incentives to improve efficiency of
operation , turn of equipment and use of buildings/fixed assets
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29Key Learnings
•There is money in Packaging and Waste Recovery
•The model requires continuous improvement
• It helps our Environment which is increasingly
important for us as individuals and for our businesses
•Outsourcing can work where both partners are aligned
commercially and can provide complementary skills
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30Questions
?
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