How Helsinki cut food transport emissions leveraging sustainable procurement
The Helsinki Service Center “Palvelukeskus Helsinki”, part of the City of Helsinki, provides food for over 100,000 people every day, including for example schools, daycare centres and nursing homes in different parts of the city. The Service Center is responsible for both producing and delivering food. The largest food production unit is its own production plant in Pakkala, Vantaa, which delivers approximately 15,000 kg of daily food to about 60 000 customers. The food delivery logistics encompass transportation to and from the Pakkala plant, transportation between other production plants and the delivery of meals itself.
In 2018, the Service Center went out with a courageous tender that included all of the three aspects of food delivery logistics with a contract value of 8 200 000 €.
The purpose behind combining the three competitions was to build leverage towards
- improving customer-oriented operations and their reliability,
- preventing gray markets,
- achieving cost savings,
- and above all reaping significant environmental improvements.
The competition was implemented in 2018 as an EU-wide procurement and as an open procedure:
1) Transportations of home meals
- Contract as of October 1, 2018, contract period 2 years including the possibility of 1 + 1 option years
- Estimated value of € 2,200,000.00
- Approximately 1400 delivery points
- Full-time for 9 cars
2) Transportations from the Pakkala plant
- Contract as of October 1, 2018, contract period 2 years including the possibility of 1 + 1 option years)
- Estimated value of € 3,500,000.00
- Approximately 460 delivery points
- Full-time for 14 cars
3) Transportations between the other manufacturing places
- Contract as of October 1, 2018, contract period 2 years including the possibility of 1 + 1 option years. The contract combined the transportation of the food centres, as well as the on-site transport between the outlets so that the transport of the food centres entered into the contract 1.1.2019.
- Estimated value of € 3,500,000.00
- Approximately 150 delivery points
- Full-time for 28 cars
The Service Center received bids from two different suppliers, both of which met the terms of the demanding invitations to tender.
New transportation contracts have led to a significant reduction in emissions from transport ie. 51 daily-driven vehicles:
- 22% carbon monoxide emissions,
- 67% nitrogen oxide emissions and
- up to -92% particulate emissions compared to previous contracts and previous vehicles,
- and at the same time, cost savings of up to 25% were achieved compared to the previous contracts.
How did the procurers achieve the changes?
To the calls for tenders, contracts and its annexes, as well as the preparation for the general activities, the following issues among all were taken into account:
Suppliers and markets were examined very carefully before tenders and especially to what extent suppliers are able to meet the food law requirements in transportations, emission requirements and other criteria set for transport equipment and suppliers.
Detailed information for route planning and general activity management was collected for each of the approximate 2000 delivery points, which required a very extensive investigation by the contracting entity. Exemplary data points included the drop-off route, office name, office address, delivery time, start times for meals, packing and quantity information.
Various pricing changes for all three different entities were studied in defining the tender request and in a market survey. Based on the results the pricing structure for invitations to tender was revised:
- Food transport and home deliveries of the Pakkala plant: Previously, the metropolitan area was divided into 7 zip code areas based on different locations with different pricing. And hourly pricing was applied. Now, in the invitation to tender, the whole metropolitan area has one drop price.
- Transportations between the other manufacturing places: Formerly internal transport or food centre transport had drop or hourly rates. Now the whole package is based on drop prices, according to destination specifications.
Due to the very critical nature of the operations, the exchange of contract partners was prepared not only for the induction plan and takeover plan of the supplier but also for own induction plan and takeover plan, which managed to achieve a controlled change of all logistics operators.
Compared to previous contracts, the criteria for invitations to tender were tightened in several different areas. These included for example changes to the entire transportation vehicles at one time from EURO 4 to the latest EURO 6, a supplier's delay and error penalty through tightened sanctions, the reporting required by the supplier was tightened.
The tenders made a significant contribution to emission reductions, which are also linked to the City of Helsinki's Strategy and the Helsinki City Operational Program Carbon Neutral Helsinki 2035. In addition, competitive bidding was able to clearly improve operational reliability, continuity and the fight against the gray markets under the most demanding terms. The rate of successful supply has been 99.9% after contract award.
“We feel that the competitions were so successful for example in terms of cost savings and tightening of environmental criteria so that we can continue to serve as a model for others. The procurement also reached the finals of the Municipal Association's Public Procurement Advisory Unit in the year's most skilful acquisition in 2018.” – Antti Virtanen, Purchasing and Logistics Manager, Helsinki Service Center
By conducting accurate market research, investing in definition work - which took over two years, and courageous and open-minded new practices and solutions, this procurement practice had a significant impact on the desired outcomes, with the prospect of exceeding the set goals.
Learn more about Helsinki's sustainable procurement practices here.