However, it is not clear whether the importance of having a robust supply chain in place to facilitate and ensure the success of this ambitious project is fully understood.
Undertaking so many home makeovers will entail the biggest change programme of the past 30 years, because existing supply chains for green activities will need to be overhauled or built from scratch.
The Green Deal supply chain must be capable of moving retrofit materials from the point of manufacture to, ultimately, service armies of installation engineers, and then manage the disposal of waste products that might have been in the property for years – all the while, ensuring the operation itself is low carbon.
Put simply, the challenge is getting the right retrofit materials to the right place at the right time. Every stage of the process, from design to distribution, needs to be perfectly managed. Any weak link in the chain could cause delays and cost overruns.
The supply chain requirement behind the Green Deal is phenomenal, yet with just months until the proposed rollout date, its profile continues to be somewhat understated.
Managed effectively, the rollout, returns and recycling requirements of the Green Deal present an opportunity for a more efficient, more environmentally friendly operation.
If a typical Green Deal job, which includes a range of energy efficiency measures, costs £6,500, by improving the supply chain through better procurement, reducing stock holding and reducing engineer downtime – where engineers are either waiting for materials to complete a job or have to travel to collect materials – DHL’s research (based on similar operations where ‘time on tool’ is key) suggests a 15 per cent cost saving on labour and materials, equating to £975 per job. Coupled with scrap revenues generated from old materials being removed from properties, this could deliver in excess of a £1,000 saving on each Green Deal job.
So, an integrated, lean supply chain from point of manufacture to installation would not only reduce duplication and complexity, allowing Green Deal providers to be more competitive, but deliver real benefits to the end customer too, with the right services and materials being delivered to the homeowner at the right time, first time.
Critically, though, the cost of the retrofit and its payback period would be reduced, ultimately reducing dependency on the Energy Company Obligation and increasing take-up of the Green Deal as more properties hit the “golden rule”.
With the launch of the Green Deal just months away, providers and government must work closely to ensure a supply chain is implemented that is capable of meeting the requirements of such a vast retrofitting project.
Adam Franklin, managing director – Industrial UK, DHL Supply Chain
This article first appeared in Utility Week’s print edition of 22 June 2012.
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