Leading Change

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.

The company is also partnering with HCR Inc., a division of Jamison Door Co. to use air-curtain doors that prevent air exchange between different temperature zones within the facility.

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.