Information Systems for Environmental Sustainability

IT, Resource Productivity, Environmental Preservation, and the Fourth Industrial Revolution

Can’t Manage What You Don’t Measure: Exhibit B – Tesco

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Information Age reports on “How data analysis is helping Tesco to achieve its carbon reduction targets.” The article describes an array of practices enabled by innovative use of information systems. The belief-action-outcome framework is a useful conceptual lens for understanding the transformation at the third largest retailer in the world.

Beliefs of senior management about importance of carbon emission reduction

Tesco, the UK’s biggest supermarket retailer, has set itself some rather ambitious targets for reducing its carbon footprint. It aims to be a “zero carbon” business by 2050, and to have halved the carbon footprint of its buildings by 2020.

IT to implement this strategy to inform beliefs and understanding of employees about energy reduction in grocery stores

“What we’ve done at these stores is to put a touch-screen PC in a high staff-traffic area in back-of-house,” explains Lee. “The screen can display whatever message we choose, but what we’ve found particularly effective is to display consumption data for that store.”

The system displays the energy consumption of the store’s various components, comparing it to the store’s own performance in the previous year and that of other comparable stores within the company.

“There’s an image of a rev counter, and if they are consuming more than average it goes red, if less it goes green,” Lee explains. Comparing consumption to other stores gives energy management a competitive element that engages employees, he explains.

Actions enabled by information systems to capture and analyze energy data and inform decision making

Tesco measures its consumption in some detail. “Over 70% of our load – the important bit that we can control – is metered,” he explains. “In our larger stores, all the power-consuming parts like the fridges, the heating and ventilation and the bakery are sub-metered.”

It is not just the raw electricity consumption data that Tesco collects, but also supplementary information about the performance of certain equipment, such as the temperature and airflow in fridge compartments.

All this data is collated and statistically analysed by a dedicated team at Tesco’s corporate headquarters. “We have some very clever analysts pulling this information together and looking for opportunities to increase efficiencies,” explains Lee. “For instance, if a store is overloading a fridge, we can see an increase in energy consumption, and a change in the operational parameters of the mechanical aspects of the fridge such as the air flow and the suction pressure. You can correlate that all together, and find ways to improve that one fridge unit.”

IT for predictive energy analytics

Metering electricity in such detail allows Tesco to predict how fluctuations in business volume will affect its consumption. “We have a very good understanding of how much we’ll use on any given week, because we’ve got the data,” says Lee. “We understand what the impact of Christmas, half-term or bank holidays will be on our consumption.”

The ability to predict energy consumption based on historical patterns allows Tesco to assess the carbon output and energy costs associated with management decisions, Lee explains. “If we decide to bake more bread, for instance, my team provides the insight into what the energy cost will be,” he says.

”Until quite recently, it would have been taken for granted.”

Those predictions are also used by the procurement department when negotiating with energy suppliers, he adds.

Social media for collaborating with suppliers to develop energy and carbon emission reduction solutions

Launched the Tesco Knowledge Hub, an online community enabling collaboration to develop solutions to sustainability problems

Outcomes

For the Knowledge Hub:

Overall, “In one year alone Tesco reduced its emissions by 20% and saved £150 million.”

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Author: nigelpm

Associate Professor of Information Systems, Stephen M. Ross School of Business, University of Michigan - Helping organizations to navigate digital transformation.

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