When it comes to wielding power over suppliers, few retailers can match Wal-Mart. From its 2003 RFID mandate to its 2006 packaging scorecard and its more recent sustainable product index, the retail behemoth is known for supplier directives. In its latest move, however, the Canadian arm of Wal-Mart is attempting to set an example for suppliers through its own actions.
In February, at the Wal-Mart Canada Green Business Summit in Vancouver, British Columbia, the retailer announced plans to construct a $115 million refrigerated distribution center (DC) in Balzac, Alberta.
Andy Ellis, senior vice president of supply chain for Wal-Mart Canada, told 350 attendees from government, industry and academia that the new DC will be “a living lab that demonstrates sustainable operations, products and technologies, while showing that environmental sustainability can go hand-in-hand with business sustainability.”
Set to open this fall, the 450,000-square foot facility will be about 60% more energy efficient than Wal-Mart’s traditional DCs and one of the most energy-efficient facilities of its kind in North America, according to Wal-Mart. “We’re looking at every corner of our business,” says Karin Campbell, manager of corporate affairs at Wal- Mart Canada. “We started with sustainable stores,” she says. “Now, we’re focusing on building the greenest DC on the block.”
In an exclusive interview with MHM, Virginia Garbutt, director of strategic network planning and improvement at Wal-Mart Canada, shared details of the project.The Business Case Garbutt’s team, along with the company’s vendor partners, spent two years analyzing the business case for the new DC. In addition to using energy from renewable sources and producing zero waste, the facility also had to deliver solid return on investment.
“We were pursuing a lower environmental impact and cost reduction at the same time,” explains Garbutt. Her team started by analyzing energy use in the company’s existing DCs. “We did an infrared scan of one of our existing buildings to find places where energy loss occurs,” Garbutt explains. “That highlighted opportunities on the loading docks.”
Wal-Mart is working with Dock Products Canada Inc., a subsidiary of 4Front Engineered Solutions, on an integrated system of dock seals and insulated dock plates, automatic truck locks and sensors at each of the future facility’s more than 100 dock areas.
According to Garbutt, the retailer wants to maximize energy use in the new facility as well as look for ways to “get off the grid when possible.”
One of the ways Wal-Mart is getting off the grid is by working with Crown Equipment, Plug Power and Ballard Power Systems to equip the new DC’s 75 lift trucks with fuel cells. Garbutt says the lift truck fleet in the Balzac DC will be the first in Canada to be powered entirely by fuel cells.
Hydrogen from one storage tank outside of the building will be pumped underground and then into the DC. Hydro-Quebec, a government-owned corporation that produces hydrogen using hydroelectric dams, will supply the hydrogen. The retailer chose Hydro-Quebec because local sources of hydrogen were produced from coal, and Wal-Mart wanted its fuel supply to come from renewable sources.
Although the hydrogen will have to be trucked from Quebec to Alberta approximately every two weeks, Wal-Mart managers concluded the savings would outweigh the transportation costs. “With fuel cells, we won’t need a battery area and can eliminate the associated electrical wiring,” says Garbutt. She estimates the fuel cells will reduce greenhouse gas emissions by 1.2 million pounds and save the DC $2 million in operating costs over seven years.
Lighting the Way
Lit entirely by LEDs, the Balzac DC will have no light bulbs, explains Garbutt. Wal-Mart expects to save 1.4 million kilowatt-hours annually, an amount that could power 121 average-size Canadian households for a year. All overhead, exterior and dock lighting will be LED powered. Even emergency lighting and lift trucks will be equipped with LED lights, which are 50% more efficient than T5 fluorescent lights and 75% more efficient than metal halide lamps, according to Garbutt. LED lights operate at low temperatures, have long life spans and strike instantly, making them excellent candidates for motion sensor control. Importantly, they don’t produce heat that can compromise the facility’s cold-storage environment.
“LEDs are very efficient in freezer environments because you don’t have to use energy to re-cool the air,” Garbutt explains. The LEDs, to be supplied by Ruud Lighting Canada, have a 10-year life span, which will eliminate the need to change light bulbs in the freezer. Wal-Mart estimates the LEDs will save the DC about $1 million in operating costs over seven years. The new Wal-Mart DC will also tap solar power to heat the water used in the facility. The retailer plans to install 16 solar thermal panels on the side of the facility. Although solar power is typically associated with more southern latitudes, Garbutt explains that the angle of the panels will be optimized to take advantage of the northern sunlight.
In addition, a white roof membrane will deflect an estimated 85% of sunlight to reduce heat gain and demand on the electrical grid, and a 225-kilowatt wind turbine will supply extra energy for general operations. Low-flow sinks, toilets and urinals in the washrooms will conserve water, and a sedimentation pond next to the facility will collect storm water and channel it into local water systems.
The DC will also use a refrigeration system that requires less power than conventional systems and uses ammonia instead of refrigerants. Waste heat from the refrigeration system will heat the facility during the winter months.
And, concrete flooring throughout the facility will contain fly ash—a byproduct of coal burning at electric utility plants—to reduce the use of cement and replace chemical-intensive tiling.
Finally, Wal-Mart says it will divert 50% of the waste produced during construction away from landfills. The construction process itself will be powered by renewable energy through Bullfrog Power, a Canadian provider of renewable electricity. By “walking the talk” with its new DC, Wal-Mart Canada hopes to convince companies around the globe that sustainability is not just a feel-good, public-relations effort. The retailer wants to show, through example, that going green is good for business.
“The Balzac distribution center is not only about reducing our own environmental footprint and making strides to achieve our long-term sustainability goals,” says Ellis. “It’s about leading change across an industry and the business world at large.”