Asda aims to offer suppliers carrots not sticks

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ASDA could help its food suppliers club together to fund new investment in making factories more environmentally friendly.

Julian Walker-Palin, head of corporate sustainability, said the supermarket group’s fast-growing information exchange has the potential to help suppliers save money when they want to finance new production processes.

The online Sustain and Save platform has signed up more than 300 firms to date, representing £10bn worth of sales.

It helps suppliers become more sustainable, save money and become closer to the US-owned retailer by sharing knowledge and insight into manufacturing and engineering challenges.

Mr Walker-Palin told the Yorkshire Post how the exchange could be developed.

He said: “We could bring groups of suppliers together with common needs to, for example, drive down the cost of technology for those suppliers.”

Mr Walker-Palin added: “It’s not necessarily an attractive opportunity for a financial institution to fund small amounts to a large number of companies.

“But if you can bring them together with a common need and that’s one larger sum of funding, I think it’s much easier to attract that kind of funding to help make this activity work from an engineering perspective. I could see it (the exchange) going into those areas.”

To date, Leeds-based Asda has signed up suppliers covering bakery, meat, fish, poultry, chilled, frozen and ethnic foods. Next, it plans to bring on board suppliers of drink, ambient food and beauty products.

Mr Walker-Palin described how the exchange works.

“The premise is really simple. You encourage suppliers to work together to share what’s worked for them in as much detail as possible so others can learn and the whole supply chain becomes more sustainable.

“We are using the lens of sustainability to identify resource efficiency opportunities that save our suppliers money as well.

“We have a golden rule: we fund it 100 per cent and suppliers get to keep all the savings they make directly out of the tool.”

Mr Walker-Palin said the exchange has so far identified £1m worth of savings for suppliers, of which two thirds have been banked.

He said the exchange, which launched in January 2012, hosts businesses from across Europe, including many from Yorkshire, including Arla and Greencore, which have shared details of their energy-saving products with other members.

Other Yorkshire companies taking part include Maple Leaf Bakery in Rotherham and Chiquita UK in Dewsbury.

Asked if suppliers have to sign up if they want to do business with Asda, Mr Walker-Palin said: “We prefer carrots to sticks.

“Utilising the Sustain and Save Exchange is a part of doing business with Asda for the reasons that it will help them become a stronger business and closer partner with us.

“Sticks may have a place in the future but not at this stage.”

He said the exchange is the most active supplier engagement tool “anywhere in retail”.

“I can’t find anything internationally better than this,” he added.

“In terms of the principle and scalability of the principle we know we are absolutely onto something here.”

Mr Walker-Palin sees his biggest challenge in helping users access the most relevant information.

He is piloting a questionnaire tool called Resource Saver, which allows Asda to get a better understanding of a supplier’s production facilities. It can then direct the most relevant information.

He explained: “We ask a series of questions around what technology have you got in your factory? How much electricity do you use? What are you looking at installing?

“We get a picture of what’s going on and then from that, the IT system behind will look at the biggest benefits we can pull out straight away.

“We will split them into quick wins; some wins that would require some investment and then the more structural investment. Short, medium and long-term.”

Asda executive Barry Williams challenged Mr Walker-Palin to get the group’s suppliers more involved in sustainability in 2010. In response, he came up with the idea for the exchange.

Asda itself has saved £100m through sustainability since 2005.

The exchange is run in partnership with 2 Degrees, which operates managed programmes for corporations to work efficiently with unlimited suppliers, customers or employees in private online spaces.