Parkersell Case Study

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Added value through innovative product-service offers:

the Parkersell case study

Project funded with the support from the European Commission under the GROWTH

Programme in the Fifth Framework Programme


Acknowledgements

This case study enabled Parkersell to better put forward the economic and environmental advantages of integrated offers for their customers. These offers include both design and maintenance of lighting solutions.

This case study was conducted within the MEPSS (Methodology for Product Services Systems) project[1] with financial support from the European Commission, under the GROWTH programme in the fifth framework programme.

The project team was composed of:

§ Stephanie Adda, Manager, Ecobilan, UK;

§ Rick Holmes, Senior Manager, Parkersell, UK;

§ Jochen Krimphoff, Project coordinator on the Parkersell case, Senior Manager, Ecobilan, France;

§ Dominique Laurent, Manager, Ecobilan, UK;

§ Teresa Morton, Parkersell project coordinator, Marketing Director, Parkersell, UK;

§ Miles Pinniger, Founder of consultancy Pinniger & Partners, UK;

§ Capucine Vayn, Consultant, Ecobilan, France.

The project team would like to acknowledge important contributions to this report made by other Parkersell and Ecobilan staff.

The Parkersell case study was presented at the joint Suspronet / MEPSS final conference. The proceedings of the conference can be found on the following website: http://www.suspronet.org/

For more information on the MEPSS project, please:

§ Visit the following websites: http://www.pss-info.com/ or http://www.ecobilan.com/uk_mepss.php or

§ Contact us at info@ecobilan.com or at the following address:
Ecobilan
32, rue Guersant
75017
Paris, France
Tel: +33 1 56 57 60 16
Fax: +33 1 56 57 16 36

Paris, 1st of November 2004


Presentation of the context

PricewaterhouseCoopers and Ecobilan took part in a European project on eco-efficient innovations via integrated product-service offers. The aim of the project was to devise a modular methodology or ‘toolkit’ to guide companies through the innovation process to develop integrated product-service offers or ‘Product Service Systems’ (PSS). The methodology highlights the key factors of success for innovative PSS and provides a systematic framework for innovation so as to ensure that all issues are considered.

The MEPSS project, a ‘Methodology for Product Service Systems’ brought together a consortium of experts from all across Europe and was funded under the GROWTH programme of the Fifth European Community Framework Programme.

Brief outline of the MEPSS methodology

The MEPSS toolkit gathers a number of tools that enable industry to develop and analyse integrated product-services with regard to design and implementation aspects; micro-, meso- and macro-economic impacts; social and environmental impacts and issues related to consumer acceptance, culture and ethics. The tools enable participants to successfully develop and implement new product-services in line with business goals, offer optimal quality for their individual customers and minimise negative impacts on the environment, thus resulting in sustainable growth.

The tools developed for MEPSS to assist in the development of product-service system aim at addressing three main questions:

§ How can industry conceive and implement PSS in a systematic and efficient manner?

§ How can industry analyse and assess economic, social and environmental impacts of PSS?

§ What are the key factors of success or failure of a PSS?


The methodology is organised in five phases that each have:

§ Specific objectives;

§ A list of key questions to be addressed and;

§ A selection of tools to assist the process.

Presentation of the case studies carried out by Ecobilan

Ecobilan was entrusted with the task of testing the methodology through real business cases. The present case study is one of the two case studies developed in the course of the project by Ecobilan. The objective of the projects was to test the tools developed within MEPSS to ensure their effectiveness, and to provide feedback to the consortium in order to further improve the methodology and the tools.


Introduction to Parkersell’s case study on product-service systems (PSS)

Purpose of the document

In the context of the European-funded research project on the development of a methodology to design and assess integrated product services offers, known as MEPSS (Methodology for Product Services Systems), Ecobilan worked with Parkersell, a UK-based company (part of Dalkia Group), providing “cradle-to-rebirth” lighting solutions, including design, installation, maintenance and recycling. The purpose of this document is to present a case study of Sainsbury’s to which the MEPSS tools and methodology were applied.

History

Sainsbury’s is the UK’s third largest supermarket chain with more than five hundred outlets. Originally a family grocer, in addition to food, they now sell clothes, home furnishings, domestic appliances, health and beauty products and vehicle fuels, through stores which range in sizes from 200 m2 to 12,000 m2.

Sainsbury’s annual energy consumption is about 1.5 GWh per year – equivalent in the UK to more than 645 tonnes of carbon dioxide (CO2) per year. The cost for Sainsbury is about 75 million (£50 million) per year. About 28 % of this is due to lighting, which has been recently increased in the stores to support non-food retailing.

An integrated product-service offering developed by Parkersell

Sainsbury’s lighting maintenance provider, Parkersell – part of the Dalkia group – has been providing maintenance contracts for the past seven years to Sainsbury’s. Maintenance offer is by nature a typical example of an integrated product service offer (PSS), in the sense that it offers a service of renewal and repairs of the luminaires and not merely a purchase of new lamps. In terms of the MEPSS methodology, it corresponds to the first level of Product-Service-System (PSS) known as “Product-oriented” PSS (see diagram below).

In order to stay ahead of the competition, Parkersell is constantly innovating and developing more integrated product-service offers to bring about environmental improvements whilst delivering cost savings.

Parkersell’s aspiration is to become a provider of a complete range of lighting services from design, equipment installation, to maintenance and equipment recycling. To this end Parkersell recently acquired Pinniger & Partners, a lighting design consultancy already working for Sainsbury’s. Parkersell has also set up an in-house installation service; the maintenance and recycling services being the core historical services of Parkersell. At present, most Sainsbury’s lighting installations are installed by other contractors.

Last year, Sainsbury’s expanded their non-food retailing activity by setting up dedicated General Merchandise (GM) departments within approximately seventy major stores. This gave the opportunity for Sainsbury’s and Pinniger & Partners’ design team to develop and evaluate different integrated product-service options combining design and maintenance services. The principal of those options was to reduce energy consumption and service costs whilst maintaining the perceived ‘brightness’ of the stores.

The financial and environmental impact of different scenarios has been assessed by using several tools from the MEPSS methodology, in particular simplified life cycle costing and environmental life cycle assessment. The site chosen to illustrate the assessment results was Sainsbury’s Croydon store (Purley Way), which underwent refurbishment.


The Croydon store: an illustration of the benefits brought about by the integrated product-service offering or PSS

Work achieved

The work was carried out within six weeks by Sainsbury’s regular contractors and aimed both at:

§ Investigating the benefits derived from this Parkersell/Pinniger & Partner’s current integrated offering and;

§ Gaining a good understanding of the current business model of Parkersell/Pinniger & Partners.

The MEPSS tools tested are illustrated below:

This case study focuses on the last two tools that were applied to the Sainsbury’s case.

Definition of functional unit for the Sainsbury’s case study

In order to be able to draw comparisons between integrated and non-integrated offers, the functional unit was defined as “the illumination of one store of a given sales floor area with a given illuminance over one year”.

The overall illuminance of the store, and its impact on sales results from several factors:

§ The type and number of ambient and accent lamps;

§ The ratio between the peak illuminance from accent lamps and horizontal illuminance on sales floor.

It is recognised that the greater the ratio is, the better the impact on sales is, provided that the level of horizontal illuminance is equivalent (e.g. 800 lux to 1000 lux). It must be noted that the difference between 800 lux and 1000 lux cannot be perceived by the eye.

In this case study, the functional unit was defined as one store of 5161 m2 sales floor lit during one year with an average peak illuminance of 2500/3000 lux from accent lighting and a horizontal illuminance of 800/1000 lux.


Definition of scenarios for Sainsbury’s case study

Three scenarios have been considered for the Croydon store:

§ Scenario A (real case): This scenario corresponds to the situation prior to refurbishment, when Parkersell’s role was solely providing a maintenance service. Technically the lighting solution was based on fluorescent tubes for ambient lighting (model “T8 – 58W”) and discharge lamps for accent lighting (model “CDMT – 70W”).

§ Scenario B (real case): This scenario corresponds to the situation after refurbishment, where Pinniger & Partners and Parkersell have developed an integrated offer, with Pinniger & Partners in charge of the design of new lighting solutions and Parkersell in charge of the maintenance contract. The goal of the design team was to use lower wattage lamps than in scenario A and to increase the number of accent lights while maintaining the same level of brightness in the store. Ambient lighting 58W T8 lamps were replaced by a more modern type (“T5 – 35W”) and accent lamps CDMT-70W were replaced by a larger number of lamps “CDMT-35W”.

§ Scenario C (fictitious case): This scenario corresponds to a fictitious case where a designer other than Pinniger & Partners would have redesigned the lighting solution. As the offer design/maintenance is not integrated, it has been assumed that in this case, no change would have been made to the ambient lighting (T8) but the type of lamp for accent lighting would have been a smaller and more commonly used lamp (CDMTC). This smaller lamp is quite popular among designers because its size allows more creative lighting solutions. However; it has a shorter lifespan and lower performance than its larger counterpart (CDMT). The number of lamps is identical to that of Scenario B.


LCC & LCA: Scenario definition for Sainsbury’s case study

The illuminance function of each scenario is similar, which implies that they fulfill the same function. Each scenario can therefore be compared to one another.


Description of system boundaries

The following diagram describes the system boundaries considered for this assessment. The latter include the steps and processes for which environmental impacts and costs have been quantified.

LCC & LCA: System boundaries

Those steps are:

§ Design of lighting solution;

§ Manufacture, supply and installation of the lighting solution (lamps manufacture in Belgium, delivery to the UK by road transport). Luminaires are made in UK/Italy. The refurbishment of the store and the manufacture of the luminaires are excluded;

§ Electricity use phase: the production, supply and use of electricity in the UK using the average UK fuel mix for power generation per 2003;

§ Maintenance (cleaning and relamping): a major service of replacing all the store lamps when they reached the end of their theoretical life span;

§ Maintenance (repairs, comprehensive): the repair service provided on demand when lamps fail;

§ Disposal/recycling: the logistical and recycling processes for the disposal of the used lamps. All lamps are sent back to Belgium for recycling. Tubes are crushed and recycled into other tubes (closed loop recycling). Discharge lamps are crushed into road aggregates (open loop recycling).


Results from Life Cycle Costing (LCC) of different lighting solutions – Sainsbury’s Croydon store

A simplified life cycle costing was conducted to assess the impacts of the different scenarios, in terms of financial costs for Sainsbury’s. The results of this assessment are presented below.

Life Cycle Costing: Financial results for Sainsbury’s case study

The integrated offer (Scenario B) results in 4,500 (£3,000) savings per annum for Sainsbury’s Croydon store, when compared to the situation prior to refurbishment (Scenario A). Essentially it is due to the optimised design both for ambient lighting and accent lighting. The overall cost reduction is due to cost savings from reduced electricity consumption, despite the increase in manufacture and maintenance costs (as scenario B is based on a higher number of lamps).

Should the same solution be implemented in the other 70 stores that have expanded their non-food retailing activity, the savings over 6 years (duration of the maintenance contract) on the life cycle costing as compared to the situation pre-refurbishment (scenario A) would amount to 2 million (£1.3 million) for Sainsbury’s.

The benefits of the integrated offer are even greater when compared to the fictitious scenario (Scenario C), in which the design would have been done independently of the maintenance contractor. The extrapolated overall additional costs for Sainsbury’s across 70 stores could have amounted to 11 million (£7.5 million), should Sainsbury’s had chosen a non integrated offer instead of the offer proposed by Pinniger & Partners. In developing their design options, Pinniger & Partners were able to access information on maintenance costs per lamp type that other designers cannot access.


Results from Environmental Life Cycle Assessment (LCA) – Sainsbury’s Croydon store

This simplified life cycle assessment focused on the energy consumption and the greenhouse gases emitted at each step of the lighting solution’s life cycle (please refer to page 10 for the definition of the system’s boundaries).

This includes the energy and raw materials needed to manufacture light bulbs, their transport to the store, the electricity generation and supply to the lamps, the mileage of Parkersell’s staff for site intervention and for relamping the complete store when lamps had reached their expected end of life.

The use of electricity overwhelmingly dominates the emissions of greenhouse gases during the complete life cycle of the lighting solutions.

Life Cycle Assessment results: CO2 emissions


Life Cycle Assessment Results: Energy consumption

The integrated offer (scenario B) results in 32% lower greenhouse gas emissions and energy consumption than the scenario before implementation of the solution (scenario A) and it is also 25% better than the non integrated scenario (scenario C). This is thanks to the significant reduction in electricity consumption due to the choice of lower wattage lamps, despite maintaining similar brightness of the stores and increasing the number of accent lamps.


Conclusions and outlook

Parkersell and Pinniger & Partners currently offer a product-service system that generates a more efficient system, both in terms of life cycle costing for the end-user and in terms of environmental improvement. The integrated offer means lowered costs for Sainsbury’s and it also decreases environmental impacts as compared to a non-integrated offer.

The main findings from the study are:

1. There is scope to save significant amounts of energy used for lighting in Sainsbury’s stores. The Croydon project achieved 32% electricity consumption reduction;

2. Modest reduction in ambient lighting level (from 1000 lux to 800 lux (-20%) enables a much bigger reduction in accent lighting energy (- 55% per point) and the introduction of more accent lighting (45% increase);

3. Reduction of ambient lighting by 20% (from 1000 lux to 800 lux) and accent lighting from 3000 lux to 2500 lux while maintaining the same perceived brightness in the store achieves 32% CO2 reduction;

4. Should the same design be implemented in the other 70 stores that have expanded their non-food retailing activity, the savings over 6 years (duration of the maintenance contract) on the life cycle costing as compared to the situation pre-refurbishment (scenario A) would amount to 2 million (£1.3 million) for Sainsbury’s;

5. In developing their design options, Pinniger & Partners were able to access information on maintenance costs per lamp types that other designers do not have access to. This design potentially saved Sainsbury’s 11 million (£7.5 million), the extra cost had they had chosen a non integrated offer instead of the offer proposed by Pinniger & Partners and Parkersell.


Outlook and perspectives

Following the work performed for the case study, a preliminary workshop helped identify further opportunities for Parkersell to develop more integrated offers, in particular relating to new legislation and new technologies related to building regulations and EU Directives on energy efficiency, to move towards even more integrated PSS (see figure below).

One of the ideas that emerged was that Parkersell and Pinniger & Partners could rely on a digital control system that enables total control of the lamps remotely. The customers could then subscribe to a ‘result-oriented PSS’, based on the lumen/m2 of stores lit. This technology might enable both cost savings and a reduction in environmental impacts for Sainsbury’s.

Indeed, the remote control device could optimise light levels according to time of day, incoming natural light and the switching off of accent lights outside working hours.


Example of new Product Service Offer for Office buildings

There is scope for the development of more integrated PSS that would help Parkersell move towards a use-oriented PSS or a result-oriented PSS. These opportunities should be further explored with the support of the next phases of the MEPSS methodology. This has not been possible in this exercise due to time constraints.



[1] Contract G1RD – CT 2001-00585