Ace Hardware, the big nationwide hardware cooperative, introduced sustainable practices to its distribution centers long before the term took on its current cachet. "We've always been doing recycling," says Dirk DeYoung, the company's facilities engineering manager.
In recent years, Ace has sharpened its focus on sustainable practices, formally adopting a sustainability program about five years ago. The company has achieved marked success in several areas—reducing waste from its distribution centers, cutting its overall energy use in those buildings, shifting to cleaner fuels for its lift truck fleet, and reducing the carbon footprint of both its private fleet and its for-hire truckers.
Earlier this year, Ace announced that one of its major import DCs had achieved "zero landfill status," and another is at 95 percent zero landfill. That means that materials flowing through the facilities are reused or recycled, and that little or no trash is sent to landfills or incinerators. Tim Duvall, Ace's supply chain director, says he first learned about the concept at a Council of Supply Chain Management Professionals (CSCMP) seminar. "I presented it as a goal [to senior management]," he says. "I felt like it was the right thing to do."
GETTING TO ZERO
The first Ace Hardware facility to earn zero landfill status was the company's 336,000-square-foot import redistribution center in Suffolk, Va. An analysis performed with Waste Management, Ace's waste and recycling contractor, determined that up to 90 percent of the facility's waste could be recycled. The process they implemented allows the facility to mix recyclables into a single stream, which is later sorted by Waste Management for sale and reuse. As a result of that effort, the facility was able to switch from a 30-cubic-yard waste container to two eight-yard containers. "We've now reduced that even further," Duvall reports.
The remaining solid waste is sent to a Wheelabrator waste-to-energy incinerator in Portsmouth, Va. That plant produces steam for the Norfolk Naval Shipyard as well as electricity that it sells to the local utility.
Ace operates another import redistribution center in Kent, Wash., that has reached the 95 percent reuse or recycle mark. That effort began subsequent to the effort in Suffolk. "Once we formulated the process, we rolled it out [in Kent]," Duvall says. It has proved a bit more difficult, he says—a surprise to Ace given the Seattle area's reputation for environmental awareness. But he says that the project "has been no less embraced by the people there."
The next step will be to roll out the zero landfill effort at Ace's 14 retail support centers (RSCs)—a step that Duvall predicts will be "a much more involved process." But even without the support centers' participation in that effort, the company's success at recycling has been notable, Duvall says. "In 2013 alone, across our entire retail support network, Ace recycled more than 38 million pounds or 19,000 tons of pallets, plastic, and corrugate," he says.
What the company's managers understand—as do other managers throughout industry who have adopted sustainable practices—is that it not only makes the business a good neighbor, but it also makes good business sense. "At the end of the day, costs are in play," says Duvall. "We are saving thousands of dollars a year in waste disposal costs."
SEEING THE LIGHT
Ace has also worked to reduce energy use in its DCs. For example, the company has swapped out its existing lighting for high-efficiency light-emitting diode (LED) lighting in two of its RSCs. Ace projects that in its Sacramento, Calif., operation, it will cut consumption by 1.2 million kilowatt hours and save $200,000 in electricity costs per year. The Sacramento facility has reduced its demands for power by more than a third in less than three years, the company says.
Ace has enjoyed even greater success at its RSC in Princeton, Ill., a 1.1 million-square-foot facility. That building switched from 400-watt metal halide lighting to LEDs, resulting in $300,000 in annual cost savings at current electrical rates.
Furthermore, the company says, the LED lights, which emit little heat, will mean lower temperatures in the DC during the summer, further reducing energy costs. Lighting accounts for about 60 percent of a typical DC's electrical costs, DeYoung says.
For all its efficiencies, LED lighting has one significant drawback: Its high installation costs make it unlikely that Ace, or other companies, will adopt it universally. DeYoung says the conversion only makes sense in places where electrical utilities or governments offer subsidies or incentives for the installation. Installation costs for a large DC can run $800,000 or more, but incentives can offset up to half of that, making the investment more attractive. With incentives, DeYoung expects about a 2.5-year return on investment (ROI) for the installations in Illinois and California. If the company had to foot the bill on its own, the return could take five years or more.
Ace is incorporating most of its sustainability practices at its new facilities. The company this year has opened RSCs in Wilmer, Texas, and West Jefferson, Ohio. Both have energy-efficient motion detection lighting. Their lift and reach trucks operate on GenDrive hydrogen fuel cell units from provider PlugPower. The facilities create the hydrogen, leaving only super-pure deionized water as a byproduct. The technology also saves energy by eliminating the need for a battery charging operation. Ace management is crunching the numbers to see if it can roll out the technology to other DCs.
TRANSPORTATION YIELDS SAVINGS
Transportation is another area where Ace has focused substantial attention on sustainable practices. The company participates in the Environmental Protection Agency's SmartWay program, which encourages shippers and carriers to operate in an environmentally responsible manner. Ace became certified as a SmartWay shipper in 2009. The company's private fleet, about 400 tractors and 1,200 trailers, earned SmartWay certification in 2013.
To reduce the fleet's carbon footprint, Ace made a number of adjustments to its operating practices, according to Scott McLean, director of transportation. For instance, its onboard systems track a driver's hours of service and monitor driver behavior like hard braking and excess speed. The trucks' governors limit vehicle speed to 65 miles per hour. Technology installed in tractors limits idling to five minutes. Side skirts on a large portion of the trailers improve operating efficiency. The company has installed auxiliary power units in its sleeper tractors so drivers can sleep comfortably without running the engines. At each RSC, tractor-trailer drivers get a weekly scorecard showing miles per gallon driven and fuel consumption.
The company has deployed route optimization software to manage delivery routes to retail stores, a step that McLean said has cut overall miles driven by 7 percent. The company re-optimizes its routes once a year, except in the Northern states, where it's done twice annually, he says. The company, like many shippers, is making an ongoing effort to consolidate less-than-truckload (LTL) shipments into more efficient truckload and intermodal consignments.
As for how it's all working out, Duvall reiterates his point that these efforts make sense from a pure business perspective. "It is good for the company and it is good for the environment," he says.
Gartner, Inc.
