Manufacturing News

Top tips for a greener supply chain

TAKING environmental issues into consideration when making business decisions is gaining popularity not only as a way for businesses to be more socially responsible but also as a strategy capable of producing tangible bottom-line business benefits.

Boston-based AMR Research has published survey results that indicate the motives for many corporate social responsibility initiatives extend far beyond the typical brand reputation considerations. Recently AMR noted that “reducing energy usage has a double payoff: a big operating cost reduction while also reducing carbon dioxide (CO2) emissions—two objectives that are directly correlated.”

With that in mind, we propose ten tips for helping companies achieve environmental and operational benefits by focusing on “green” initiatives in their supply chain:

1. Maximise efficiency of conveying and handling processes

Integrating material handling and warehouse management systems enables manufacturers and distributors to move and touch products fewer times and reduce forklift usage. In addition to reducing handling costs, these advances help to lower energy consumption and reduce emissions.

2. Increase flow-through

The use of advanced warehouse management systems also enables companies to streamline warehouse processes to achieve higher levels of cross- docking, which in turn helps to minimise inventory and increase product turns.

With more flow through, companies manage their business with smaller distribution centres. In addition to containing expenditure, this helps to reduce energy consumption and limit the use of construction materials, which are not needed because existing DCs have increased capacity.

3. Optimise transportation practices

Companies looking to reduce their environmental impact through streamlining their supply chains typically look closely at their transportation costs and systems as well as their warehouse practices. A number of applications can make shipping more efficient, less costly, and more environmentally conservative.

• The use of transportation management solutions to create a more efficient transportation network helps cut down on the number of empty hauls in the movement of goods. This reduces fuel consumption and extends the usefulness of trucks and trailers for reduced material usage.

• Distributed order management software can contribute to a greener bottom line by ensuring that companies route orders to the closest fulfilment location, which reduces transportation miles.

In addition, applications that provide visibility across a business’s entire supply chain can further decrease the carbon emissions associated with transporting goods by permitting incoming products to ship directly to their destination and avoid reshipping from distribution centres or other locations entirely.

For a company that ships 100 million parcels each year, the savings associated with distributed order management can add up quickly. A good distributed order management system typically produces a 10% reduction in miles travelled. That 10% improvement in routing efficiency would reduce the company’s carbon emissions by 210 tons, according to United Parcel Service.

4. Consider rail and intermodal options

Choosing the right place to ship reduces emissions substantially; choosing the right way to ship can cut them even more.

Sophisticated transportation management systems allow companies to evaluate the total costs and time involved in shipping goods by truck, train, boat or plane, enabling them to reduce carbon emissions by selecting the most efficient option that meets their delivery schedules.

Rail can be the most fuel-efficient way to reach distribution hubs, particularly over long distances. Combined with the flexibility of trucking, companies using intermodal transportation systems can get the best of both worlds while reducing emissions, costs and fuel consumption.

Choosing wisely has a huge impact on the bottom line and on the environment. The price of Australian road fuel has risen around 60% in the past 10 years and is still rising, meaning every litre consumed has an increasing impact on corporate finances.

A typical 40 tonne truck, doing 150,000km a year will use around 60,000 litres of fuel, costing about $90,000. Over a generous 10 year life that 40 tonne truck will deliver goods worth some $200 million and cost nearly $1.5 million to run.

For a fleet of 50 trucks, the annual fuel bill will probably be around $4.5 million and so fuel management is a big deal. Most operators use increasingly sophisticated tools to help them. But surprisingly, all too many still fail to measure, monitor and properly manage fuel use, though the variety of fuel management tools is huge and growing rapidly.

These vary from fuel cards through to sophisticated management systems, often linked to real-time tracking and diagnostic systems.

5. Enhance planning, forecasting and replenishment

Using best-of-breed planning, forecasting, and replenishment solutions helps retailers to drive more efficiency in manufacturing and distribution operations by reducing the amount of inventory required in a given supply chain network to support a specific service level.

This consequently reduces energy and materials consumption, and enables improved operational efficiency.

6. Improved cartonisation

Using cartonisation functionality in warehouse management systems enables companies to better allocate the right units to pick and then select the correct size and rigidity of the container to use. Optimised packing in the warehouse can reduce cardboard use by more than 20%.

Cubing algorithms used in warehouse management systems tell workers how to use the space in each box most efficiently, minimising the number of boxes needed to ship goods.

Fewer boxes mean less energy usage and lower costs by reducing the use of fossil fuels in paper production. The US’s Environmental Protection Agency (EPA) estimates that boxes and paper comprise 40% of landfill waste, which means that using fewer boxes in shipping also reduces demand for land and other disposal options.

Once all the manufacturing, shipping and disposal processes are included, taking one kilogram of paper out of the supply chain reduces a company’s carbon emissions by a kilogram, too.

7. Leverage electronic interfaces

Using radio frequency identification and voice-based technologies improves warehouse efficiency and also reduces paper consumption.

8. Reduce idling

• Driver Comfort Stations: 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.

• Appointment Scheduling: Using web-based appointment scheduling can help truckers and companies coordinate pickups and deliveries to further reduce idling, avoid rerouting or reshipping and meet delivery schedules.

9. Improve fleet aerodynamics

Businesses that have a dedicated fleet can further reduce their fuel consumption and environmental impact by selecting more streamlined tractor profile, employing automatic tire inflation systems, implementing wide-base tires, incorporating hybrid power-train technology and instituting comprehensive driver training.

10. Reduce waste

Governments around the world are introducing legislation to force companies to tackle the universal problem of waste.

A good example is in Europe where the European Union (EU) commenced an initiative in 2005 to increase the recovery of Waste Electrical and Electronic Equipment (WEEE) by 70%, thus reducing the amount of waste dumped in landfills.

The UN has estimated that the world’s annual volume of “e-waste” will soon exceed 40 million tonnes.

In the UK, “producers”; i.e. any company which manufactures, imports or re-brands electrical and electronic equipment, had to join a WEEE compliance scheme by 15th March last year. By 1st July 2007, they had full financial responsibility for recycling household equipment.

Those who simply sell electrical and electronic equipment (or “EEE” as it is known in the regulations) are not free of responsibility either; anyone selling EEE through any channel is responsible for setting up a take-back scheme, whether in-store or via a network of collection facilities.

With the rest of the world likely to follow suit before too long, the ability to manage the reverse logistics process efficiently has become a critical factor for manufacturers and retailers.

Companies not only need to manage the physical process of collecting WEEE products, but they also need to track the process and to record which product has been taken where – both for new products and to those already in the market.

*By Chris Stephenson, Managing Director ANZ, Manhattan Associates. For more information contact 02 9454 5400 or visit the website at

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