Tesco is continuing to prove the benefits of adopting a group-wide data strategy, way beyond just marketing, by using sophisticated business intelligence technology to slash its energy bills by nearly £17m a year.
These savings are on top of the £100m the supermarket giant has clawed back by overhauling its stock control and delivery strategies, revealed earlier this month.
A research project between Tesco and IBM in Dublin has shown the retailer can save a significant part of its total energy costs by optimising the performance of its in-store refrigerators.
The project, which used the scheme to analyse gigabytes of refrigeration data, revealed that many Tesco stores were running their fridges at a lower temperature than necessary.
Tesco’s energy and carbon manager John Walsh said: “Ideally, we keep our refrigerators at between -21°C and -23°C, but in reality we found were keeping them colder. That came as a surprise to us.”
The supermarket giant started working with its refrigerator manufacturers three years ago, to feed data from in-store controllers over the Internet to a dedicated data warehouse.
The system takes readings every three seconds from in-store systems, processes the data in realtime, and displays the results on a Google map, showing the performance of refrigerators in more than 120 Irish stores. It is also able to monitor and control the performance of its heating and lighting systems. Tesco was able to identify the potential savings in its refrigeration costs after it teamed up with IBM last year to look at the data in more depth.
Researchers collected and analysed refrigerator data from a single store over the course of a year – equivalent to 70 million data points. They were able to analyse the data using standard servers running IBM’s SPSS statistical software package.
The six-month project helped the company make immediate savings in the trial store by identifying refrigerators that were operating at a lower temperature than they should, Walsh revealed.
It is now expanding the trial with a larger number of stores. If successful, Tesco plans to roll out the project across more than 3,000 Tesco outlets in the UK and Ireland within 18 months. “There is a potential saving of €20m (£17m) if we deliver the same savings that we’ve seen in the trial stores across our full estate,” said Walsh.
But even Tesco is having issues with the volume of data it is collecting. Walsh said the company’s data systems have reached the limit of their capacity for now.
“We have got so much data. It’s way too much to handle. So we are a victim of our own success,” he said.
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