Migros brings sustainability to Swiss supermarket supply chains
“We are a cooperative with over two million members so nearly every household in Switzerland is an owner of Migros. Our core business is to sell food in our supermarkets but then we also have a wide range of non-food products,” remarks Sandro Glanzmann, Sustainability Specialist for Non-Food Products.
“What’s also special is that the Migros Group has its own industry [M-Industry] in which we produce a large portion of our food assortment. Also, we have our own industry, which produces cosmetics and washing detergents for Migros. We have our own factories which produce these products.”
Migros was founded in 1925 in Zürich as a private enterprise by Gottlieb Duttweiler, who had the idea of selling just six basic foodstuffs at low prices to householders. At first, he sold only coffee, rice, sugar, pasta, coconut fat and soap from five lorries that went from one village to another. His strategy to cut the intermediate trade and their margins was met by broad resistance from his competitors, who goaded the producers to boycott him. As a reaction to this threat, Migros started creating its own line of goods beginning with meat, milk and chocolate.
Today, as one of the 40 largest retailers in the world, Migros has greatly expanded the number of goods it creates for itself. “Our own industry delivers about 80% of the food products that the Migros Retail company sells,” reveals Manfred Bötsch, Head of Sustainability at Migros Retail. With its 25 Swiss companies and seven foreign businesses, M-Industry produces over 20,000 high-quality food and non-food products, making it one of the biggest own-brand producers in the world.
As such a large producer, Migros has committed to reducing energy consumption within its supply chain. “Two years ago, we adopted a new sustainability strategy. In this strategy, we designed the main topics we thought Migros needed to take action on in terms of sustainability. Unsurprisingly, one area of action was that we wanted to reduce our impact was regarding the use of natural resources. We decided that we want to continually increase resource efficiency, to minimise the use of non-renewable resources, reduce total resource consumption and avoid creating waste,” Glanzmann comments.
“We’re therefore setting goals to take action to reduce energy and water use, and emissions in this area. In the meantime, we realised that our main environmental footprint is not at Migros itself. In many cases it lies in the production of our products – they are much more relevant in terms of energy use or water use than the stores. I think a core point of the strategy is that we look at the whole value chain of products and see then where the biggest impacts are in terms of energy or water use or emissions.”
The setting of strategic goals is key to the plans at Migros for measuring energy consumption – they give the company something to work towards. “In the end, strategies are one thing, the other is having concrete measures to really reduce it and we have a goal,” continues Marcus Dredge, Head of Energy Efficiency and Climate Change.
“There’s a lot of detailed work going in there because in the end, the reduction on the energy consumption and climate gas emissions is done within all different little pieces at each individual plant. Of course, it’s also in the retail stores and we try to do the same thing there and emphasise energy efficiency as much as possible.”
Least possible energy consumption
To many people, the idea of production conjures up images of factories with plastic, metal and wooden objects being manufactured. Yet of course, all of our food is produced. “At the end of the day we want to sell to our consumers a chicken or fish with the least possible energy consumption along the value chain,” explains Bötsch. “So, we work on the agricultural level, we work on industrial levels and we work also on the logistics in between. Of course, there is the topic of packing materials, which is also an energy topic, so we also work on that issue.”
Dredge, too, notes the importance of looking along the whole value chain. “The energy efficiency or greenhouse gas potential is not always just an issue about doing it in your own plant - it’s also about the whole supply chain. If you use a little bit less material, this is a big lever in the whole supply chain,” he comments.
Food production is water and energy-intensive, accounting for 70% of global water use and 6% of global energy use, according to the IHE Delft Institute for Water Education. “On the farm level, we have developed a barn to produce chickens and this is also a barn which has a self-sufficiency in energy consumption,” reveals Bötsch.
Many in the industry have been positive about working with Migros on its goals. “We were very surprised that at least one of our main suppliers were themselves eager to know where they are compared to others,” explains Bötsch. “For example, in certain value chains we have calculated, fully integrated and undertaken life cycle analyses for those products and they actually want us to create a differentiation potential for those raw materials.”
Such positivity is not confined only to the food sector, as Domenico D’Angelo, CEO at Sofidel, illustrates: “Sofidel wanted not only to fulfil the growing requests from markets and regulators, but be recognised as a leader in social responsibility and environmental sustainability. These topics have been completely integrated in the corporate strategies, with actions, investments and supplies carefully selected, taking into account every environmental and social aspect related to them.”
Within the non-food sector, the business has launched a scheme to reduce energy usage. “We analysed our assortment to see what are the resources or the raw materials that we’re using the most. In the non-food assortment, we’re using a lot of wood, cotton, metal and we’re using plastics,” Glanzmann notes. “For these raw materials, we analysed the whole supply chain to see where we have the biggest impact in terms of environment or social issues and then asked how we can minimise those hotspots.”
Bötsch continues: “In the paper sector, with towels and tissue paper, we have created a pilot project alongside one of the biggest producers for us. With them we have really tried to have a benchmark on the energy consumption of paper and cellulose products. This is just an example and we’ll actually roll this out to all our topmost energy consuming industries. Logically, in our own industry it’s easier to do with farmers but we are quite far along in this respect. It’s even more complicated to go in the value chains where we don’t have our own industry – for example paper and cellulose – but it’s important for us that we really also champion these topics.”
The pulp and paper industry is one of the most energy-intensive sectors of the EU, with average energy costs around 16% of production costs, and in some cases up to 30%, according to the European Commission.
“We chose the paper sector because we wanted to start with a well-developed supplier and to learn from them and then spread the findings over to maybe less-advanced industries. We analysed,” explains Glanzmann. With this in mind, Migros chose to partner with Sofidel on this project, having shared a commercial relationship for over 15 years.
“Sofidel is delivering to Migros paper produced with a lower energy consumption than in the past and with a higher content in renewable energy,” advises D’Angelo. “Sofidel believes that in the coming years product innovation will be necessarily linked to sustainability. In the period 2013-2016 Sofidel invested €52mn for energy efficiency, combined generation of heat and power, and renewables. Our average specific water consumption for paper manufacturing is the lowest in the paper sector.”
Understanding the situation
Migros asked them what they have to measure to benchmark the environmental performance of its suppliers. We then adopted 10 key performance indicators, which we asked the suppliers to give us the data on. Then we“We want to understand first the actual situation with respect to the environment-relevant points in the processing and the production of the products, and then afterwards we want to collect data from the processing stage for these paper products to find out if it is feasible to get those data from suppliers” explains Glanzmann.
“We wanted not only to collect environmental data for our direct suppliers, but we also asked what are the relevant steps in the whole supply chain in terms of this environmental data. We go even further back in the supply chain than only our direct suppliers.”
Migros intends to expand this pilot scheme to other industries – such as metal production – in spring 2018. “We really have a programme to improve resource efficiency because we not only talk about energy, but also water, for example. We are impressed with these companies in cellulose and paper and were surprised that they already had some KPIs. Most surprising for us was that they also had KPIs from their pre-produce,” Bötsch observes. “That gives us the impression that, in certain areas at least, the management is very caring about it and we can really work together to bring all these advantages, improvements and innovations to the front and to the consumers.”
Producing more efficient products
While Migros is working on the paper pilot with Sofidel, one of its main suppliers, M-Industry, also has non-food producers within it that are looking to reduce energy consumption. One such producer is Mifa, which creates homecare products for Migros. “We’re working on reducing the energy consumption during the washing cycle. Our focus is on the washing temperature not in production,” comments Michael Lang, Head of R&D at Mifa.
“If you look at the lifecycle of detergents, the biggest chunk of the energy consumption is during the use of our products. Previously, you had to produce them by mixing one hot substance with one cold substance. Today you are able to mix those substances at low temperatures so you are more efficient in producing those detergents. The second step is then the use of this detergent in the washing cycle – you can wash your clothes at a lower temperature than before and have them as clean as you had them years before where you had to really heat them up. Producing more efficient products can help the customers wash their clothes more efficiently. There are various ways we can help customers to be more efficient.”
Looking ahead, Migros remains focused on sustainability. “It’s a long walk and we are not doing it on our own,” observes Dredge. “We’re doing it together with a lot of other companies and individuals that try to go in the same direction. I think that climate change is one of the most pressing issues worldwide so we have to do it.”
And he is not alone in this view: “I agree with Marcus because sustainability is a journey, it’s not a destination. You also have a vision of where you want to go,” Bötsch observes. “I have this vision that on a scientific level but also from a production level, Migros is one of the top players in recycling and sustainability.”
Indeed, Migros is looking to play to its strengths in order to increase sustainability throughout its operations. “We have a train connection on our site and Migros has to maximise the transport of goods by train. We’re looking for international customers or warehouses with a connection where we can use our advantage also their advantage,” explains Lang.
Sofidel is one company that has already taken advantage of this. “For most of the products shipped to Migros, Sofidel has chosen the railway as the preferred means of transport, which gives an additional energy saving if compared with the traditional transport made with lorries,” D’Angelo observes.
Migros is the largest rail transporter of goods in Switzerland. “It’s only a small part but now we are looking at putting a good focus on that – we try to avoid road transport,” Lang concludes.