Being environmentally friendly has often been associated with increased costs. But today, greener solutions are becoming important ways of helping wholesalers to maintain a healthy bottom line, writes Lindsay Sharman
Once just a buzz word for environmentalists, ‘sustainability’ has evolved to incorporate not only green concerns, but a more efficient overall approach to business. Indeed, for wholesalers, initiatives such as saving energy and reducing waste have become as essential to the bottom line as to the environment.
By now, most will be aware of the ways in which they can improve their green credentials, whether it’s by using solar panels for electricity or by reducing the number of vehicles on the road. But what might not be quite so clear are the financial implications of investing in sustainability or the ways in which it can manifest in a business without necessarily coming under the umbrella of corporate social responsibility.
One wholesaler that is very clear on its approach to the issue is JW Filshill in Glasgow. Shortlisted for the Federation of Wholesale Distributors’ Green Wholesaler of the Year Award for 2013, Filshill has implemented a number of changes to further its green credentials and save a significant amount of money.
Managing director Simon Hannah explains his motivations. “As far as sustainability is concerned, there are two parts: social and commercial.”
An example of this is the types of lighting the company uses. Energy-efficient lighting has been introduced to the warehouse, resulting in a 30% reduction in electricity-use. Not only is this an environmentally sound move, the £40,000 per year that the company saves as a result of the investment also makes sense commercially.
“The savings are just as important and go straight onto the bottom line,” says Hannah.
It’s a similar story at wholesalers across the country, with projects both big and small implemented to save energy and cash. North Devon wholesaler Philip Dennis is at the larger end of the scale, having built a wind turbine that provides 60% of its electricity.
CASE STUDY: JJ Food Service reduces inventory range by 15%
With high turnover, huge product ranges and large numbers of people working for them, the concept of streamlining can be daunting for wholesale businesses.
JJ Food Service, a wholesaler that prides itself on being ahead of the game when it comes to technology, last year embarked on a process of analysis and change to make its supply chain more efficient and cost-effective – no mean feat, considering it has 800 members of staff at eight depots and a turnover of £185m per annum.
There were several motivations for the overhaul. The company wanted to manage fresh produce better as well as to handle stock transfer between branches. It also wanted to reduce inventory levels, identify non-performing areas and free up its buying team from repetitive replenishment tasks so they could focus on sourcing, negotiation, and supplier and customers relationships.
Working with Relex, a technology company specialising in retail planning and supply-chain optimisation, in April 2013, the company started a period of analysis that built a picture of what was happening and where things could be improved.
“The analysis highlighted the inefficiencies in our operations and showed us where the biggest gains could be made, such as in the area of promotions,” says JJ Food Service chief operating officer Mushtaque Ahmed. “That made the business case and set out our priorities for the implementation, which went very smoothly.”
Next came a three-month pilot, beginning in July, which saw a new system implemented. One feature of this was a database optimised for supply chain and logistics, enabling information to be handled very quickly.
The trial was so successful that by September, the end of the planned pilot, all the buying team were able to use the new system effectively.
“The first, critical achievement was that the whole team was wholeheartedly using the system,” says Ahmed. “They found the system very effective yet simple to use – basic training only took about 30 minutes.”
Not only that, the new system produced impressive results, including a 25% reduction in order processing time and a 15% reduction in overall inventory range for non‑performing items.
Managing director Stephen Carr says: “It’s been well-reported that energy prices are rising pretty fast and having a turbine puts us in a bit more control of our energy use and costs.”
East End Foods also has ambitious ideas plans underway. The company is setting up a food academy that will educate students on all areas of the food industry, from hospitality to retailing.
As part of the academy, an urban garden will be built at the Aston depot. East End Foods managing director Jason Wouhra explains: “We want to show students that even in a city with a small amount of space, it’s still possible to grow all the food we need and that as demand rises, costs will come down.”
Wouhra believes that taking steps towards becoming greener can also benefit business by improving customer loyalty: “It’s good for them to see you doing the right thing and it has a subliminal effect on them,” he says.
Sharing the concept of sustainability with customers is something that has become increasingly important to delivered wholesaler 3663. The company provides its customers with ideas they can use to create healthier, greener menu options for caterers.
Shirley Duncalf, head of sustainability at 3663, says wholesalers must work hard to meet the sustainability requirements of its customers.
Certain groups have an obligation to be sustainable. “The public, healthcare and education sectors have a set of sustainability requirements, so they can adhere to government legislation, policies and guidelines.”
By contrast, others have more commercial motivations. “Independent hotels, restaurants and pubs may focus on specific sustainability aspects, to create a point of difference and tap into their consumers’ emotional needs.”
As a result, she explains, “wholesale suppliers must identify each specific customer’s need, then work closely in partnership with that customer to make it easier for them achieve their goals.”
Those areas include healthy eating and waste management. 3663 has a number of initiatives to support its customers in both of these. Its Positive Steps product range contains items that are no more than 3% fat – at least 30% less fat than comparable products. The company also has a couple of waste management schemes.
“We are now collecting around two million litres of waste oil a year for recycling into biodiesel and we were the first to launch a recycling and waste management service – 3663 Zero – for our customers at the end of 2012,” says Duncalf.
Helping customers manage their waste has a number of advantages for wholesalers. It’s good for the environment, it’s a good way to maintain good relations and, in some cases, it can even be another income stream.
JW Filshill, for example, collects from its customers any cardboard and polystyrene they have and recycles it, saving the customers time and effort.
“It would cost a customer something like £800 per year for the council to pick it up so it’s cost-efficient for us to do it,” says Simon Hannah. The company then recycles it and generates additional income by selling it.
However, approaches such as this do need some planning. “We charge customers a nominal sum of £3 per cage, otherwise, they’ll leave out several half-full cages, which isn’t efficient,” he says.
3663 collects two million litres of waste oil a year for recycling
Along with the bigger ideas come smaller changes that can be made within a business to make it more efficient, and therefore more sustainable. Adjusting processes to do with food wastage or time taken to complete tasks can make a business more streamlined.
JJ Food Service wanted to improve how it worked in a number of areas, including better management of fresh produce and more efficient replenishment. It used new technology to improve the efficiency of its supply chain, making its business more sustainable commercially [see case study below for more details].
The short-term challenge of investing in anything from new technology to energy-efficient equipment is, of course, the cost. But, in the long-term, being green makes your business more sustainable – or as East End Foods’ Jason Wouhra puts it, “future proof”.
“Sustainability will be increasingly more important as time goes by,” he adds. “The wholesalers that are proactive and strategic will look at that fact and see it as an opportunity to examine the efficiency of their businesses.”