Niamh O’Connor, Marketing Fellow- Netherlands
Guided by consumer demands and intelligence of a lower-cost operation solution, retailers in the Netherlands are improving the supply chain through the design of distribution centres, store sizes and industry-wide collaboration. This is being done to make their respective supermarket chains more sustainable.
Following in the footsteps of the market leader, Albert Heijn, the opening of Jumbo’s new mechanised national distribution centre in Nieuwegein is the latest notable investment made in this space. Having followed BREEAM guidelines[1], and achieving a sustainability certification, the infrastructure of the mechanised centre helps to improve supply-chain efficiency, long term durability and growth prospects.
1- The central location of the building was carefully selected to reduce the distance and number of vehicles required to go between regional distribution centres and stores. Naturally, by reducing the number of vehicles and journeys required, this should minimise the amount of C02 emissions released on the road during delivery.
2- The mechanised order picking machine ensures that about 75% of items delivered to the warehouse are placed into the relevant containers and further in the correct shelving order. The accuracy of the machine’s stacking activities means there is a reduction of transport movements which reduces energy usage and the likelihood of food damage or loss.
3- By following BREEAM’s guidelines, Jumbo has created a ‘Near Zero Energy Building’. It has utilised recycled and energy-saving building materials and lighting, further by installing solar panels on the roof, the new building is equipped with a heating supply that does not require additional and traditional heating systems.
This fight for efficiency is even creating unlikely partnerships between competitors wishing to build a smarter production system. The supply chain directors of Jumbo and Albert Heijn (retail competitors) released a joint interview[2] saying that “Transport does not give us a competitive advantage” and that by “linking networks together… based on available information, we can start driving [loaded vehicles] much more efficiently” (January; 2020). Business leaders in the Netherlands are therefore realising that developing new approaches to overcome the ever-growing complexities of supply chain shall only be beneficial if there is a move towards stream-lined central management between the various retailers.
Other developments related to supply chain efficiency has been the rise of supermarket launches operating within the ‘to go’ space. Driven by high urban population and store densities, consumers in the Netherlands tend to make regular visits, often on foot or bicycle, to supermarkets two or three times a week and normally only pick up between eight and ten items per shop. Launching larger store formats would create a greater amount of food waste. Other zero-waste strategies utilized has seen the adoption of technologies such as blockchain and artificial intelligence. For example; Albert Heijn has been utilising AI technology developed by Wasteless, an Amsterdam based company that aims to fight food waste using machine learning. The initiative automatically enables a ‘dynamic discount’ for products with short shelf life and the scheme aims to guarantee that there is no end-of-sale products leftover in store.
In order for Irish suppliers to compete in this space, they shall need to have a seamless track record exporting and be able to demonstrate a similar value base with regards to how their product is manufactured. EG designing out waste and pollution. Dutch retailers will want suppliers to complement their supply chain agenda and not compromise it, which means thinking about creating products suitable in a ‘to-go’ format, being a company committed to sustainable practices and showing a willingness to explore shared economy solutions with regards to transportation. EG could multiple Irish suppliers of one Dutch retailer create a partnership for the delivery of their goods?
References
BREEAM. (n.d.). BREEAM: the world’s leading sustainability assessment method for masterplanning projects, infrastructure and buildings – BREEAM. [online] Available at: https://www.breeam.com/ [Accessed 25 Jan. 2020].
Essenburg, D. (2019). ‘Door efficiëntie Picnic 25.000 minder wagens’ – Distrifood – Distrifood. [online] Distrifood.nl. Available at: https://www.distrifood.nl/branche-bedrijf/nieuws/2019/12/door-efficientie-picnic-25-000-minder-wagens-101130450?vakmedianet-approve-cookies=1&_ga=2.184603820.449057585.1579960951-999371080.1570024605 [Accessed 25 Jan. 2020].
Essenburg, D. (2020). AH en Jumbo: ‘Transport moet efficiënter’ – Distrifood – Distrifood. [online] Distrifood.nl. Available at: https://www.distrifood.nl/branche-bedrijf/nieuws/2020/01/ahold-en-jumbo-transport-moet-efficienter-101130895?vakmedianet-approve-cookies=1&_ga=2.184491811.449057585.1579960951-999371080.1570024605 [Accessed 25 Jan. 2020].
Freshplaza.com. (2018). Albert Heijn impresses with mechanised distribution centre. [online] Available at: https://www.freshplaza.com/article/9044704/albert-heijn-impresses-with-mechanised-distribution-centre/ [Accessed 27 Jan. 2020].
Iamsterdam.com. (2019). Albert Heijn supermarket uses AI to combat food waste | I amsterdam. [online] Available at: https://www.iamsterdam.com/en/business/news-and-insights/news/2019/albert-heijn-supermarket-uses-ai-to-combat-food-waste [Accessed 25 Jan. 2020].
IGD Retail Analysis (2020). Insight on the Netherlands. What you need to know 2020 – 2024. [online] IGD. Available at: https://retailanalysis.igd.com/markets/presentation-viewer?t=netherlands-country-presentation&i=7230 [Accessed 25 Jan. 2020].
nieuws.jumbo.com. (2018). Jumbo geeft startschot bouw gemechaniseerd nationaal distributiecentrum Nieuwegein – Jumbo Persportaal. [online] Available at: https://nieuws.jumbo.com/persbericht/jumbo-geeft-startschot-bouw-gemechaniseerd-nationaal-distributiecentrum-nieuwegein/348/ [Accessed 25 Jan. 2020].
Retailanalysis.igd.com. (2020). Jumbo: +14% increase in turnover in FY2019. [online] Available at: https://retailanalysis.igd.com/news/news-article/t/jumbo-14-increase-in-turnover-in-fy2019-/i/23069 [Accessed 25 Jan. 2020].
Vier sterren BREEAM-NL certificaat voor gemechaniseerd DC Albert Heijn. (2018). Vier sterren BREEAM-NL certificaat voor gemechaniseerd DC Albert Heijn. [online] Available at: https://nieuws.ah.nl/vier-sterren-breeam-nl-certi
[1] Building Research Establishment Environmental Assessment Method- the world’s leading sustainability assessment method for masterplanning projects, infrastructure and buildings
[2] This may have been spurred on by recent research findings from Picnic (new online retailer), that adopting their Vroom distribution algorithm could remove 25,000 delivery vans from Dutch cities (announced in December 2019)
