For retailers with vast global supply chains, managing hundreds of disparate sites from manufacturing, and warehousing, to stores and customer delivery, and having to deal with geo-political and economic issues disrupting the entire chain of events, the prospect of getting an overview of their sustainability impact is, to put it mildly, a challenge.
Ush Shukla, Distinguished Engineer at Solace explores how retailers can link essential data at speed and scale throughout their ecosystems near and far, to get to grips with the now essential Environmental, Social and Governance (ESG) reporting.
Data from the Deloitte Global Powers of Retailing 2023 report estimates that the retail supply chain currently contributes up to 25% of greenhouse gas emissions (GHG) globally. “This staggering number cements the need for retailers to embed sustainable initiatives into supply chain operations”, states the report, and cites other major focal points that need to be addressed including “eliminating waste from the value chain.”
Retailers, from grocers to sellers of fast-moving consumer goods, fashion, specialty stores and more, are getting the message. An estimated 73% of Consumer Industry CxOs have increased investments in sustainability over the last year, according to the Deloitte 2023 CxO Sustainability Report.
IT has long held the promise of being an ESG enabler. But there is a major hurdle for these larger retail companies to reach any ESG goals. Their supply chains, manufacturing, stores and deliveries are hugely complex, vulnerable to disruption and as in so many industries, data silos cause lost productivity, inefficiencies, and missed insights.
Traditional systems are not designed to support the open, transparent flow of information, resulting in data being inaccessible across the organization.
The retail industry needs to re-set its approach to data gathering and movement.
Back-end IT architecture can put retail ESG on the front foot
Retailers need an IT architecture that is as event-driven as the external events disrupting their business, so that they can collect, analyze and action the data in real time.
Every retail transaction creates data – the product purchased, price, customer name, or what items are out for delivery and on what truck. Software developers call that transaction an “event”. Real-time streaming of these events across an organization is a fundamental tenet to sustainable success – ensuring the continuous processing of real-time data directly as it is produced, to give retail organizations complete visibility over all stages of the value chain and to cut wastage, make sustainability decisions, and not compromise their bottom line.
In retail terms, this could apply to stores, IoT applications, eCommerce platforms, warehouses, HQ – regardless of the system, cloud or protocols involved. The result is a business-wide web of event brokers – or “event mesh” – that is dynamic, open, simple and available everywhere, ready to cope with disruptions, and ready to ensure ESG commitments are tracked and attained.
By becoming more event-driven, leveraging event-driven architecture (EDA) as the underlying platform, retailers can take major strides forward to proactively address their ESG impact particularly in three key areas of their business.
- The power of with dead heading to reduce emissions on every journey
In the fresh retail sector for example, there are ample opportunities to better leverage real-time data to improve transportation emissions and route efficiency. Think cold storage trucks crisscrossing the continent, generating emissions from fuel, even A/C to keep food fresh. What’s more, it’s estimated that one in three trucks on the road are empty, a startling figure of both major financial and environmental cost.
Fresh food aside, any type of truck returning to base from scheduled delivery drop-offs either empty or partially full making low-stock journeys contributes to eco inefficiency. These “deadhead” journeys have been recorded to clock up distances of around 34 billion kilometers (21 billion miles), according to European Commission data. North American Data from Uber Freight estimates as many as 3.5 billion hours of U.S. trucking could be unproductive, with between 20% and 35% of hours likely to be driven empty.
From an immediate perspective: sensors on a truck can monitor fuel and A/C emissions, which then gets uploaded to the Cloud. Applications connected through EDA will then monitor and analyze the data to deliver the “greenest route” to drivers in real-time. This lessens emissions but also mitigates the need to shut down the A/C, which has contributed to food waste.
But a fleet-wide approach for stocking and route planning – coupled with a siloed approach to data streaming – makes it difficult for retailers to get a holistic understanding of their eco output across their supply chain.
Gain back the control: schedule and restock
Now here’s the alternative scenario. By event-enabling their entire delivery operation, the retailer can view in real-time every truck, see the distribution of a global supply chain such as stock availability in other regions, and model alternative scenarios to fulfill orders via other viable routes or delivery mechanisms.
This ability to re-route on-the-fly is a key missing ingredient to both fulfilling ESG and customer expectations. In other words, with event-driven architecture underpinning operations, retailers can capitalize on up-to-date data to make meaningful scheduling decisions and react much faster to any changes in supply/demand.
- Keep food waste to a minimum with e-price tags
On the topic of keeping wastage under control, perishable products are on the clock the moment they enter the retail value chain, right down to the final hours they spend on shelf. The introduction of e-price tags has helped set the stage for grocers to monitor inventory and adjust prices of batches of inventory on-the-fly to optimize sales and reduce the likelihood of goods wasting away on shelves or counters.
But monitoring stock in “batch” limits actionability – what if we could monitor at the precise item level? Radio Frequency Identification (RFID) has evolved in recent years where today these chips can feed more granular data about the item – when it was shipped, received, put to the shelf, how long it’s been under the heat lamps etc. This data grants grocers a goldmine of real-time information that, if harvested properly, can best mitigate stock going to waste, using measures like timed price reductions. This perpetual “state of freshness” applied at the item level goes a long way to not only eliminating food waste but helping safeguard store profitability.
Analyze patterns to avoid overstocking
From a broader supply chain and inventory management perspective, access to real-time, granular details can also help to analyze sales and inventory patterns to optimize when and how much to order, ensuring the right amount is in the store to meet the consumers’ needs. For example, sales of apples may skyrocket in Fall, but drop in early Winter; adjusting order patterns accordingly will help mitigate stock going to waste in store. This also works upstream in the supply chain, with these insights pushed back to suppliers to help optimize production – for instance, helping farmers better plan how much to grow, and when, so they aren’t stuck with oversupply.
- Reducing emission footprint within the store
Given their large physical store footprint, there are direct opportunities to reduce in-store emissions from an energy and utilities perspective. According to McKinsey, to lower these emissions, retailers could seek to improve the energy efficiency of stores with LEDs; more efficient heating, ventilation, and air-conditioning (HVAC) motors; heat pumps; on-site solar-power generation; and battery energy storage.
For grocers, refrigeration in stores is a particular emissions concern and will require efforts to identify and manage refrigerant leaks and, in extreme cases, the complete overhaul of store systems. So, there are clearly big gains for large scale physical retailers to monitor cooling/heating/electricity levels in store and adjusting according to optimal usage.
What’s next for the sustainability of retail?
But today, stores can’t do this at a granular level. In the future, we see a world where you can pre-emptively adjust a store’s “climate” based on weather, customer traffic flows and other factors to help keep emissions low and minimize carbon footprint.
Longer-term, information insights can help to monitor the overall health of a building and score real-time emissions against goals/projections, enabling retailers to adjust and take action based on data-driven insights. EDA will play a significant role here in linking key events to deliver the required data insights needed to track this granular performance.
Acting in real-time is a non-negotiable – ensure the architecture is there to make it happen
Turning the tide on ESG in retail means linking applications and devices across environments and geographies.
This is where an IT foundation underpinned by event-driven architecture is critical to capture and stream events in real-time across all channels—from the macro supply chain right down to the store level.
