Guest Column | November 22, 2017

The Drive To Improve Supply Chain Productivity And Efficiency

Supply Chain Transparency: How Food Makers Help Empower Consumers

By Andy Marsh, President and CEO, Plug Power

Holiday shopping season is upon us, which means retailers are ramping up their supply chain operations to prepare for shopper demands throughout the United States. During the months of November and December, Americans everywhere rush to make last minute holiday purchases for close friends and relatives and, according to the National Retail Federation, during these months retail stores can make as much as 30 percent of their annual sales. In fact, this past year, holiday retail sales reached a high of $630.5 billion, increasing 4 percent over the 2015 holiday period — a trend that’s expected to continue in 2018.

With holiday sales only continuing to rise, the arms race for efficient and effective supply chain operations is amplified and, as a result, major retailers are looking to new technologies to gain competitive advantages in their operations. In the drive to improve productivity and efficiency in their supply chains, retailers who face heavy asset utilization, like Walmart and Amazon, are looking to advanced energy solutions to help their cause.

Notably, this includes hydrogen fuel cell technology (HFC), which is starting to show potential as an on-road technology but has proliferated rapidly in the past few years in warehouses across the country to help provide a logistical advantage. Improving productivity and reducing downtime in the warehouse and on the road will have a significant impact during the holiday season, with the National Retail Federation reporting as recently as 2015 that as much as 40 percent of the season’s sales, and thus deliveries, happen in the 10 days before Christmas.

Mobility technology for retailers — forklifts, delivery vans, etc. — is becoming increasingly electrified as retailers look for ways to increase their supply chain productivity while improving efficiency and sustainability. In the case of HFC technology, one of the primary use cases that has taken off in recent years has been with material handling equipment — fuel cell forklifts due to the advantages fuel cells hold over traditional lead-acid batteries.

For industrial mobility applications, fuel cells make a lot of sense when you consider how often operators run the equipment within a relatively small range. For example, lead-acid batteries can take as much as 20 minutes to swap during each shift and a full shift to recharge, requiring significant physical space within a distribution center to house the charging stations and replacement batteries. But with HFC technology, operators can refuel in less than three minutes, no longer than it would take one to refill their car at the gas station.

Additionally, unlike lead-acid batteries which lose power, negatively impacting performance as an operator works through a shift, fuel cells maintain constant performance whether it’s the beginning or the end of the day. This increases hourly productivity for operators and boosts overall movement at distribution centers. During a season where shipment demand spikes significantly, this improved uptime can make a huge impact on a retailer’s on-time delivery performance and sales figures when all is said and done.

But beyond the operational advantages HFC technology provides retailers, there are several sustainability benefits to shifting to this electric technology. The removal of lead-acid batteries from warehouses removes environmental issues such as operator exposure to sulfuric acid and lead coupled with end of life disposal requirements.

However, warehouse mobility applications aren’t the only areas where HFC technology is making improvements in sustainability and productivity. This year, my company partnered with major delivery service provider FedEx to deploy our first shipment of fuel cell engines for their on-road electric delivery vehicles. The program is still young, but the fuel cells inside the FedEx electric vans are anticipated to more than double their range, from 60 to 160 miles on a single charge. According to the United States Environmental Protection Agency, transportation is one of the largest contributors of greenhouse gas emissions at 27 percent in the United States, driving global warming in a significant way. HFC technology is a sustainable, zero-emission energy solution, helping to reduce users’ environmental carbon footprint.

I have witnessed first-hand a spike in the adoption of HFC technology in recent years as the electrification of vehicles is becoming common and remain very optimistic about the role hydrogen fuel cells will play in America’s electrified future. As the benefits of HFC are increasingly being felt by retailers, including Amazon, Walmart and so many more, the market is beginning to understand how the great potential of HFC technology can be applied at a larger scale.

During the holiday season, we are all too familiar with the importance of reducing the time between online holiday shopping and gift delivery. Beyond the holiday season, however, hydrogen fuel cells offer businesses competitive advantages by enabling long term capital savings in 24x7 operations, specifically through increasing the efficiency of their operations — helping them do more without spending more. And notably, these benefits come while providing clean, sustainable power to our increasingly electrified world.