Efficient logistics support sustainability
In Kesko’s view, there is still a growing need for maritime transport. Vuosaari Harbour will play an essential role in this development.
Jyrki Tomminen, Vice President, GT Supply Chain Management and Logistics at Kesko, says that the Port of Helsinki is by far the most significant port for Kesko’s imports.
“Finland is like an island, and almost all import and export traffic must travel at least part of the way by sea. Undisrupted operations at the Port of Helsinki are therefore vital for us. Kesko’s maritime traffic volumes are going to increase,” says Tomminen.
Tomminen says that the volumes passing through Vuosaari are large and particularly important.
“Import volumes in general have been growing in recent years.”
The K Group’s importance to security of supply in Finland was measured during the COVID-19 pandemic. It was, according to Tomminen, significant.
“The COVID-19 crisis has shown how important it is to safeguard movement of goods across borders and by sea, even during exceptional circumstances.”
However, Tomminen also notes that Finland is highly self-sufficient in terms of food and drink products, which means that imports are less significant for security of supply in this respect.
According to Kesko, the COVID-19 pandemic has affected demand for domestic products in particular. Appreciation for local food and localness in general has clearly grown.
“People want to support the Finnish economy and local entrepreneurs,” says Tomminen.
Curbing climate change with tough measures
Jyrki Tomminen admits that both climate change targets and the changes needed to support them are considerable, and cannot be achieved overnight.
Kesko’s target is to be carbon neutral as an operator by 2025, and for its own operations to be emission-free by 2030.
Tomminen sincerely believes that these goals will be reached.
“Through a variety of means, they can be achieved. Of course, you have cost-effectiveness on one side of the scale and environmental friendliness on the other. But they’re not mutually exclusive. Effective solutions are often environmentally friendly as well. Carbon-neutral alternatives are naturally slightly more costly over the shorter term.”
Kesko cannot – and doesn’t intend to – disregard sustainability in its business. Sustainability requirements are growing and are being reflected in customer choices.
Kesko appeared – for the sixteenth time – on the World Economic Forum’s Global 100 list of the most responsible companies in the world; and as the only retail company dealing in food and drink. Kesko was one of five Finnish companies on the list.
“Sustainability has been defined as an integral aspect of our strategy and we’re engaging in long-term efforts to promote it.”
Tomminen says that logistics account for about a third of Kesko’s carbon dioxide emissions, and the majority of these emissions are generated by transport. He notes that maritime transport is increasingly switching to more environmentally friendly fleets and fuels.
“Maritime transport is clearly more carbon-neutral than road transport, and thus its share is being increased whenever possible. In concrete terms, this means things such as increasing the proportion of direct maritime connections used for goods flows from the Mediterranean region, whenever urgency and product shelf lives allow.”
Domestic deliveries are made by road, and several measures have been planned to reduce carbon dioxide emissions.
“CO2 emissions will be gradually reduced in a number of ways, such as using renewable fuels and long trucks; regularly upgrading our fleet with new, low-emission vehicles; and utilising efficient load planning and return logistics.
Kesko has invested in two electronic trucks as a trial. One is transporting products for the grocery trade and the other construction materials. As the trucks have a limited range, they are mainly suitable for distribution in the Helsinki region.
Tomminen says that the trucks’ suitability is being assessed. He believes that vehicles powered by fuel cells will gain ground in the near future. Rechargeable electric vehicles are, in his opinion, only a stop-gap solution.
“Automotive technology is currently in a development phase. Within ten years, we’ll be able to determine which environmentally friendly solution will become the established one.”
Working to enhance traceability
Tomminen describes the logistics playing field as “versatile” in terms of transparency.
“Put simply, ethics are important in long-distance procurement and environmental issues in procurement closer to home.”
He says that traceability requires cooperation between various actors. To date, the challenge has been a lack of common standards. In Finland, traceability issues are being resolved in a joint project between the Finnish Food and Drink Industries’ Federation, the Finnish Grocery Trade Association, and GS1 (a community that develops global standards). Tomminen says that communicating with consumers also plays a key role in traceability.
“The K-Group has just launched a website called Jäljillä, which promotes transparency and keeps customers informed about the origin of products.”
A need to further digitalise data transfer
In Tomminen’s opinion, Finland is a world leader in logistics – in many respects.
“When it comes to digitalisation, Finland is not far behind other countries. Due to Finland’s location and the long geographical distances involved, there has been a greater need to optimise transport than in Central Europe, where distances are shorter.”
However, Tomminen still sees room for improvement. The level of digitalisation in logistics could still be raised, thereby boosting both the efficiency and environmental friendliness of operations. There is still potential to digitalise data transfer in foreign transport.
“This would remove the need to send original documents by courier, thereby improving both quality and efficiency.”
This perspective is also highlighted in the Ministry of Transport and Communications’ recently published logistics digitalisation strategy. Kesko has been closely following developments and commenting on this strategy.
“As a whole, the strategy corresponds with Kesko’s vision and requirements. It’s easy to commit to.”
Entering the digital world changes competence needs, which will increase the significance of expertise in logistical information systems.
“It means that traditional office tasks will decrease, but developmental roles will increase.”
Digitalisation will make both logistics management and decision-making much easier.
“When more information is available, you can make more accurate and timely decisions.”
e-commerce exploded during the pandemic
In 2020, the greatest relative growth in the K Group was seen in online food shopping. During the peak weeks in the spring, growth soared to almost a thousand per cent. Even full-year growth figures will reach about 400 per cent. The COVID-19 pandemic was a significant driver of this growth in e-commerce. During the spring, K Group very quickly opened about 200 new supermarkets offering online grocery shopping. Just over 450 K-Group supermarkets now offer online shopping services across Finland.
Tomminen does not consider global e-commerce giants to be a problem for Kesko.
“The K Group is focusing its strategy on the grocery trade, construction, technical building systems, and the automotive trade. Global giants, such as Amazon, are estimated to have a minor impact in these areas.”
In general, the K Group has strengthened its market share in both retail sales to consumers and food service for professional kitchens. According to Kesko, improved selections and services have contributed to this.
Kespro, the K Group’s wholesaler for hotels, restaurants and catering, has been hardest hit by the COVID-19. Its business and result have been significantly affected by both the restrictions placed on restaurants and changes in consumer behaviour.