Tesco has made substantial reductions to the number of miles its UK distribution fleet travels through a strategy of consolidation, improving vehicle utilisation and introducing new delivery methods and trailers.
The 'F Plan'
Tesco UK has reduced the overall number of miles travelled by its fleet by 33% from 652.3m km in 2010 to 438.1m km in 2012.
In part this reduction has been driven by streamlining Tesco's UK distribution centre (DC) network. Over the past few years the company has reduced the number of DCs it operates around the UK from 36 to 26.
However, other strategies are also used. Tesco describes these as the 'F Plan'. The plan has four goals:
- Fuller cages and pallets
- Fuller trucks and containers
- Fewer miles
- Fuel economy
Consolidation delivers benefits
In order to cut road miles Tesco aims to optimise deliveries into its UK food DC network, and consolidation is an important part of the strategy. By asking suppliers to deliver into a network of 16 third party run consolidation centres rather than direct to DC, stock for Tesco is held outside the network and the retailer orders stock in full trucks as needed.
Not only does this create efficiencies for Tesco but suppliers also benefit as they are required to deliver to fewer locations. As a result, Tesco has been able to reduce the number of journeys made between manufacturers and its DCs from 55.7m in 2010 to 40.7m in 2012. In mileage terms, this represents a reduction from 331.8m km to 194.4m km.
Larger trucks and larger fleet
Road miles have also been cut through using increased numbers of double deck trailers. Tesco UK now operates 768 of these, having only had 505 in 2010. These help drive efficiencies into the retailer's long haul trunking routes and cut CO2 emissions by 10%.
However, Tesco's total UK fleet has grown from 4,028 trailers in 2010 to 4,683. Reflecting the increasing number of Express convenience stores in its estate, the number of smaller urban artic trailers has grown from 852 in 2010 to 1,092. For similar reasons, the number of multi-temperature trailers, which enable smaller stores to receive deliveries of temperature controlled and ambient products on one vehicle, has risen from 1,382 to 1,431.
Achieves emission reduction targets
Tesco's stated aim is to become a zero carbon business by 2050. Within distribution, the business plans to reduce the CO2 emitted per case of goods delivered through its supply chain by 10% per annum, and the retailer achieved this goal in its last financial year. UK performance is critical to the strategy since Tesco's home market accounts for 65% of cases delivered.
In order to find ways to work more efficiently with suppliers to further cut road miles and emissions, Tesco uses a Knowledge Hub, on which the retailer's Top 1,000 suppliers can contribute ideas and solutions and work together to deliver them.
Using multi-modal solutions
Tesco UK is also looking to reduce road journeys by using other forms of transport. For example, the retailer's newest national DC in Daventry is able to make and accept deliveries by rail as well as road. For more about the new DC read our case study here.
For an overview of Tesco's global supply chain operations please clickhere.