Supply Chain

AB InBev:
Lessons Learned from Scaling Up a Sustainable Logistics Operation

Moving goods from raw ingredients to finished products is complex and requires a significant amount of energy. A bottle of Budweiser, for example, starts with transporting barley and other materials to the brewery and then shipping our finished product to millions of sales points around the world. This flow is what we call transportation logistics, and the sector contributes to 5.5 percent of all global carbon emissions, according to the World Economic Forum (WEF).

By Claudio Braz | Published 10 years ago | About a 6 minute read

Anheuser-Busch InBev is the world’s leading brewer and our supply chain spans 25 countries. While we’ve been steadily reducing our environmental impact within our breweries for decades, we recognize the need to do more to improve our performance across our supply chain, where a large part of our impacts take place. But this also brings bigger challenges because we have less control over processes that are outsourced, such as transportation activities.

With challenge comes opportunity, and as we aspire to become a leading brewer in sustainable logistics operations, we have now put our measurement systems and a baseline in place. We just set a new goal to reduce carbon emissions in our logistics operations globally by 15 percent by the end of 2017 — a first for the brewing industry. This effort will produce financial benefits for our business and partners, saving an estimated US$200 million over four years and will allow us to reduce 230,000 tons — the equivalent to the annual energy used to power about 21,000 homes in the US. This builds on our other recent commitments outside of our brewery walls — packaging reductions, agriculture development, watershed protection, and eco-fridges. This latest effort is the next step we’re taking to advance our dream to be the Best Beer Company Bringing People Together for a Better World.

Our model for the new global logistics program comes from our colleagues’ pilot work in Europe called Lean and Green, which showed the significant impact that we could achieve in reducing emissions. In 2010, working together with our supply chain partners, including retailers, we joined the Lean and Green program sponsored in the Netherlands by Connekt, an environmental institution, and in Belgium, by the Flemish Institute for Logistics.

At the time, we had already committed to reducing carbon emissions in our breweries, but through this program, we expanded our impact into our supply chain. We are proud that it has helped us to reduce emissions by 20 percent in the Netherlands (baseline of 2010) and 16 percent in Belgium (baseline of 2011), for a total of 3,112 tons of emissions. In the meantime, other collaborative initiatives in Brazil and the US provided great insight and results on fleet-sharing to build upon. But along the way, we’ve also faced some challenges and learned valuable lessons. For instance, building the carbon emission baseline for 25 countries, across different types of transport operations, from rail, to truck and ocean vessels, required a significant effort and challenged us to develop a common model to apply across AB InBev globally.

As we implement our global logistics program and reflect on our work to date, we wanted to share our experience and learnings:

Provide flexible options for local implementation: At the global level, it is important to provide a framework that can be leveraged and adapted by countries to contribute to the global goal. Our operations span 25 countries and face different local conditions, transportation infrastructure, regulations, and different supply chain partners. For example, in Belgium, the distribution distances are shorter than in some other countries, but the roads can be congested. To reduce our environmental impacts and work more efficiently within these local conditions, we are piloting the beer boat, transporting our empty bottles by boat through the Belgian rivers. One beer boat transports the equivalent of 11 trucks for a distance of 80 km.
Focus on internal communication and alignment: As with any big initiative, internal communication and alignment was critical. It was important to align procurement, logistics, the breweries and even IT to help with ongoing measurement of results and to develop efficiency measures specific to each region and market.
Lead partner collaboration: Share your sustainability vision with your supply chain partners, including customers, so you can work together to set, measure and achieve goals. For instance, we are sharing fleets to reduce empty mileage with Walmart and Unilever in some regions, which helps us take advantage of our complementary supply chain and customer footprint.
Build and leverage an ownership culture: Employees who have the opportunity to make a direct social and environmental impact through their job report higher satisfaction levels than those who don’t, by a 2:1 ratio, according to Net Impact. At the heart of our sustainability efforts are our 150,000 colleagues who embrace our ownership culture that values accountability, integrity, continuous improvement, and a mindset of doing the right things for the long term. We focus on achieving targets by uncovering new ways to operate our business more efficiently and more sustainably. We also drive this ownership mindset through a range of activities: monthly reporting, benchmarking, best-practice sharing, technical workshops, global rally days and internal contests. The level of enthusiasm for achieving this new goal and all of our environmental goals is truly incredible.
Set targets, measure regularly: Support this mindset with performance targets and a compensation model that reinforces that same accountability. Setting stretch — but achievable — targets can ensure that all team members understand how they can make an impact and help our company achieve our targets. In 2014, emissions targets were cascaded at individual levels across our six geographical Zones and across the relevant operational functions such as logistics, procurement and IT. The results are analyzed monthly by our operations team and shared with the logistics leadership team.

We are able to leverage our size and global operations to share best practices, and to drive new initiatives across the supply chain — such as alternative fuels, smart driving tools, and trucks designed to maximize efficiency. Optimizing the routes of trucks, for instance, will help reduce traffic congestion. Switching to alternative fuel, which we plan to pilot in markets across the world, will reduce our exposure to the volatile price of fossil fuels, save fuel costs and reduce greenhouse gas emissions.

Working together with our customers, suppliers, regulatory bodies and communities, these efforts will make our logistics operations more efficient, which in turn will have significant environmental and financial benefits, both for us and our partners.