Tesco has claimed massive reductions in its supply chain energy footprint following a radical initiative in which it used its procurement power to negotiate slashed costs for a group of anonymous companies.
The six-month trial, which ended this month, involved bulk buying of LED lighting equipment for four fmcg suppliers with warehouses covering 570,000 sq ft. It led to an energy reduction of 1,000,000 kWh per year - enough to light 1,500 houses. Suppliers in the trial saved up to 25% of the cost of the LED equipment, which also resulted in savings of up to 80% on energy bills.
Typhoo took part and has agreed to waive its anonymity. It said the procurement move would enable it to cut emissions at its factory by nearly 900 tonnes.
Martin Chilcott, founder of supply chain consultants 2degrees, which Tesco used to develop the strategy in collaboration with the Carbon Trust, said the biggest breakthrough was Tesco’s willingness to allow suppliers to withhold their names.
“This is Tesco starting to make a real effort to live up to its promise to use its scale for good,” he said. “Allowing this blind collaboration overcameone of the main barriers to reduced costs, in that otherwise companies would have been reluctant to take part for fear that they would simply have to pass the savings back to Tesco. It would have just killed it.”
Next month, Tesco plans to roll the scheme out to others in its 700-strong Tesco Knowledge Hub.Proposals involve LED lighting in refrigeration equipment and anaerobic digestion pooling, Chilcott added.
“We are committed to using our scale for good and this is just one way we can do that, helping our suppliers make energy savings,” said Tesco climate change and sustainable sourcing manager Chloe Meacher.
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