Sustainability across supply chain – ASDA’s way

© ASDA, Wikipedia. Retrieved from Wikimedia on June 17, 2018

Supply chain is where 80% or more of any company’s costs and risks lie. It also presents a window of opportunity that can produce great results when right sort of interventions are geared towards it. This can help the companies to stay competitive and focused.

British supermarket retailer ASDA is one of the examples that revolutionized its supply chain management and saved £11 Million along with reduction of CO2 by 35,000 tons so far.

About ASDA

ASDA Stores Ltd is a British supermarket retailer with its headquarter located in Leeds, West Yorkshire. The company was found in 1965 and since then have become a subsidiary of the American retail giant Walmart. It was estimated to be the second largest supermarket chain in Britain between 2003 and 2014 by market share and is currently third behind Tesco and Sainsbury’s.

The vision

ASDA was not naive to the fact that as one of the largest retailers in Britain, whatever they do will have an impact on the sector. They take this responsibility very seriously therefore they devised three aspirational goals that guides all their work,

1. To be supplied by 100% renewable energy
2. To create zero waste
3. To sell products that sustain people and the environment.

Julian Walker-Palin, head of corporate sustainability at Asda, said:

“At Asda, our approach to sustainability is based on the belief that protecting the environment and saving people money go hand in hand. After all, wasting resources means wasting money – and we hate waste of any kind.”

Challenge:

Since 2005, ASDA has worked towards minimizing environmental impact of their operations. This saved them £80m that was invested into delivering lower prices to their customers. They saw great benefits from adopting sustainable measures with cost savings of 101-126Million Euros and a sizable resource efficiency.  Being aware of the influence they had across their supply chain and with the knowledge that 90% of their environmental impact lies within their supply base, ASDA thought of devising a mechanism that would help their over 300 suppliers find efficiencies in resource management and build resilience.

Solution:

“Part of the job of a great trader is to build a great supply base. The way you build a great supply base is to make sure they are efficient and sustainable.”

Barry Williams, Chief Merchandising Officer for Food, Asda

“Asda-Walmart‟s leadership in creating the Exchange represents an important step for the retailer, enabling it to increase the resilience of its supply chains against the growing risks, including resource scarcity. The Asda Sustain & Save Exchange represents a shift from the more traditional model of transactional activity with suppliers to a more collaborative way of working – a trend that we are seeing right across the retail sector.”

Martin Chilcott, founder and CEO of 2degrees said:

The Exchange offers me great value: The resources cover a vast range and depth of subjects, from simple summaries to in-depth detail. And the non-competitive forum means experiences and new developments are openly shared amongst different suppliers – even competitors.”

Keston Williams, Technical Director, Barfoots of Botley

• There are currently over 1250 suppliers registered on SSE exchange and it’s already tracking around 11million Euros of savings and 35,000 tonnes of CO2.
• Millions of Euros of cost savings for suppliers, from resource efficiency projects implemented as a result of the SSE.
• Carbon emissions at ASDA have fallen by over 4% taking the total reduction to 17.7% since 2007.
• Waste to landfill was also reduced, with 99.7% of the remaining waste – including all unsold food-now recycled through various projects, including energy conversion programs.
• While previously SSE was only available to firms providing fresh, chilled and frozen products, it has now been extended to all ASDA’s food and drinks suppliers, with the aim for the program to save suppliers a total of £50m by 2020.
• Reuse/recycling including Anaerobic digestion increase by 87%
• As a result of their corporate social responsibility, ASDA also donated enough food to make 1.8million meals.
• Energy recovery by 13%.
• In addition, the introduction of 130 new double decker trailers, depot store re-alignment and fleet reductions have helped eliminate over 18m miles from the supply chain since 2005– the same as going to the moon and back 75 times.

Lessons for Others

“The Exchange is really good for sharing best practice; it’s a good networking opportunity. We talk about our learnings in sustainability – we’re all learning and we don’t necessarily know all the answers, so it’s good to hear from other people in the group.”

Sarah Miskell, external affairs director of Warburtons, said:

• ASDA have made it clear that any savings generated by their suppliers through participating in the program are theirs to keep and reinvest as they deem fit. This kind of freedom to control encourages trust and collaboration.
• Having a private online platform that is 100% free and has a world class base that sets the standards in terms of sustainability is always an asset.
• Atmosphere of trust: Trust among the businesses is essential to achieve such goals and it is important to create this environment. ASDA has successfully created that by helping businesses to not only become efficient and reduce costs but also to use it freely. Many suppliers voluntarily disclose their savings.
• Recognition: ASDA also has awards program to recognize the incredible work that their suppliers have done to drive sustainability in their own operations and within the supply chain.

Mostly businesses are very protective of their supply chains as they do not want their competitors to get hold of the important information that can put them at disadvantage. However the benefits of collaborating and sharing the information outweighs the risks involved. With some measures one can work towards creating an efficient supply chain that can save money in the long run.

If you have concerns as to the accuracy of anything posted on this site, please send your concerns to Peter Carr, Program Director, Social Media for Business Performance.

References