The competition among retailers and manufacturers is intensifying as brand reputation and consumer loyalty have become a valuable by-product. But what are the true costs of “going green” and does this mean that profits have to take a dip into the red to reach this status?
A recent survey by Boston-based AMR Research found that reducing energy consumption had two clear benefits; significant reduction in operating costs and simultaneous lowering of carbon dioxide emissions. Reducing a company’s carbon footprint at the same time as improving the bottom line is certainly an achievable goal and the supply chain is one area that should be a core focus for every organisation. Here are ten tips on getting the most out of a greener supply chain:
1. Get hands off stock: integrating material handling and warehouse management systems allows manufacturers and distributors to move and touch products fewer times, and reduce the use of forklift trucks. This leads to lower handling costs and helps to cut energy consumption and emissions.
2. De-stock the DC: advanced warehouse management systems help companies to make their warehouse processes more efficient. Goods received in can be distributed out to stores without the need to hold stock in the distribution centre. Supplying to demand helps minimise inventory and increase product turns. With more stock flowing through the warehouse, companies can manage their business with smaller distribution centres – which require less space and consume less energy.
3. Know where stock is: a good distributed order management system allows companies to route orders to the closest fulfilment location. This reduces overall mileage and helps cut down on the number of empty hauls in the movement of goods, while also requiring less fuel.
The level of visibility that such a system provides across an entire supply chain also enables a business to ship incoming products directly to their destination, allowing them to bypass the distribution centre altogether. A good distributed order management system typically produces a ten per cent reduction in miles travelled. According to United Parcel Service, for a company that ships 100 million parcels, that ten per cent improvement would reduce the company’s carbon emissions by 210 tonnes.
4. Choose the right transport: the rise in fuel costs and constant scrutiny of carbon emissions is applying more pressure to UK companies. Sophisticated transport management systems are being used to find the best way to ship goods, whether it is by road, train, boat or plane – or a mixture.
A typical five-axle, European specification, 40 tonne truck, doing 80,000 miles a year will use around 55,000 litres of fuel, costing about £60,000. Over a generous ten year life that 40 tonne truck will deliver goods worth some £100 million and cost nearly £850,000 to run. For a fleet of 50 trucks, the annual fuel bill will probably be around £3 million, making transport management a top priority.
5. Synchronise supply and demand: best-of-breed planning, forecasting, and replenishment helps to drive efficiency in manufacturing and distribution operations by reducing the amount of inventory required in a given supply chain network to support fluctuating customer demand. This results in reduced energy and materials consumption and improved operational efficiency.
6. Size up the packages: a good warehouse management system will allocate the right units to pick and then select the correct size and type of container for the order and advise the workers how to use the space in each box most efficiently. Getting the packaging right can reduce cardboard use in a warehouse by more than 20 per cent. Once all the manufacturing, shipping and disposal processes are included, taking one pound of paper out of the supply chain reduces a company’s carbon emissions by a pound, too.
7. Cut paper use: replacing manual, paper-based processes with technology, such as radio frequency identification, bar codes and voice-picking, improves warehouse efficiency and reduces paper consumption.
8. Reduce idling: much of the fuel consumed and emissions produced by trucks come from drivers idling their trucks to keep the heat and air conditioning going at shipping and receiving docks. Comfort stations can substantially reduce idling, lower maintenance costs and enhance driver safety. Combined with “No Idling” policies at the dock, companies can quickly achieve an improvement in costs, emissions and community relations.
9. Improve fleet aerodynamics: companies can further reduce their fuel consumption and environmental impact by selecting more streamlined tractor profiles, employing automatic tyre inflation systems, implementing wide-base tyres, incorporating hybrid power-train technology and instituting comprehensive driver training.
10. Take care of WEEE: with landfill sites full to bursting, the WEEE directive came into force for UK companies on 1st July 2007 forcing producers, distributors and retailers of electronic goods to take their share of responsibility for the recycling of household electronic equipment. As a result, the ability to manage the reverse logistics process efficiently has become a critical factor for business success. Companies need to manage the physical process of collecting products, and also record which product has been taken where.
