Tuesday Nov 29, 2011

Is there a low carbon future for the retail industry?

Recently Oracle published a report in conjunction with The Future Laboratory and a global panel of experts to highlight the issue of energy use in modern industry and the serious need to reduce carbon emissions radically by 2050.  Emissions must be cut by 80-95% below the levels in 1990 – but what can the retail industry do to keep up with this?

There are three key aspects to the retail industry where carbon emissions can be cut:  manufacturing, transport and IT. 

Manufacturing

Naturally, manufacturing is going to be a big area where businesses across all industries will be forced to make considerable savings in carbon emissions as well as other forms of pollution.  Many retailers of all sizes will use third party factories and will have little control over specific environmental impacts from the factory, but retailers can reduce environmental impact at the factories by managing orders more efficiently – better planning for stock requirements means economies of scale both in terms of finance and the environment. The John Lewis Partnership has made detailed commitments to reducing manufacturing and packaging waste on both its own-brand products and products it sources from third party suppliers. It aims to divert 95 percent of its operational waste from landfill by 2013, which is a huge logistics challenge.  The John Lewis Partnership’s website provides a large amount of information on its responsibilities towards the environment.

Transport

Similarly to manufacturing, tightening up on logistical planning for stock distribution will make savings on carbon emissions from haulage.  More accurate supply and demand analysis will mean less stock re-allocation after initial distribution, and better warehouse management will mean more efficient stock distribution.  UK grocery retailer Morrisons has introduced double-decked trailers to its haulage fleet and adjusted distribution logistics accordingly to reduce the number of kilometers travelled by the fleet.  Morrisons measures route planning efficiency in terms of cases moved per kilometre and has, over the last two years, increased the number of cases per kilometre by 12.7%.  See Morrisons Corporate Responsibility report for more information.

IT

IT infrastructure is often initially overlooked by businesses when considering environmental efficiency.  Datacentres and web servers often need to run 24/7 to handle both consumer orders and internal logistics, and this both requires a lot of energy and puts out a lot of heat.  Many businesses are lowering environmental impact by reducing IT system fragmentation in their offices, while an increasing number of businesses are outsourcing their datacenters to cloud-based services.  Using centralised datacenters reduces the power usage at smaller offices, while using cloud based services means the datacenters can be based in a more environmentally friendly location.  For example, Facebook is opening a massive datacentre in Sweden – close to the Arctic Circle – to reduce the need for artificial cooling methods.  In addition, moving to a cloud-based solution makes IT services more easily scaleable, reducing redundant IT systems that would still use energy. 

In store, the UK’s Carbon Trust reports that on average, lighting accounts for 25% of a retailer’s electricity costs, and for grocery retailers, up to 50% of their electricity bill comes from refrigeration units. 

On a smaller scale, retailers can invest in greener technologies in store and in their offices.  The report concludes that widely shared objectives of energy security, reduced emissions and continued economic growth are dependent on the development of a smart grid capable of delivering energy efficiency and demand response, as well as integrating renewable and variable sources of energy.

The report is available to download from http://emeapressoffice.oracle.com/imagelibrary/detail.aspx?MediaDetailsID=1766

I’d be interested to hear your thoughts on the report.   

About

Everything Retail.


Principal contributors:

Sarah Taylor, Senior Industry Director, Oracle Retail.


Marie-Christin Hansen, Senior Industry Campaigns Manager, Oracle Retail.


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