Reducing Your Firm’s Environmental Footprint

How can your company develop a "green" and sustainable
approach to supply chain development?
Here are three cost-effective ways to achieve your corporate objectives.

By Robert Shaunnessey

The sustainability movement has taken the logistics industry by storm. It is receiving more hype than RFID ever did. Green technology is being developed, and metrics and certification are being introduced at a hurried pace. Green is a new arrival as a logistics concern, only making the top ten trend lists in the last year or so. However, green has arrived with the publicity of an American presidential candidate.

On the other hand, practitioners face cost reduction as the dominant desire of senior executives for their supply chain.

The underlying fact that makes it possible to reconcile these two seemingly inconsistent orientations is that green makes sense. Sustainability programs make sense the way that lean initiatives are good if you apply them properly.

The prominent and controversial Danish Professor Bjorn Lomborg, author of the environmental book Cool It, has developed the Copenhagen Consensus as a method to evaluate and develop rational and cost effective priorities to attack global warming as well as many other problems such as hunger and disease. This consensus method recognizes that we are equipped with limited resources, but that doing nothing is not in our best interests. Therefore, priorities must be set, gains and costs measured, and a sequence of actions planned. Our supply chains mirror this situation on a much smaller scale. We certainly have limited resources in the supply chain, yet the need to address many varied issues fills our daily task list.

There are three major ways to reduce the environmental footprint of your operation. The first is with new technology like solar panel arrays. These high capital projects are difficult to justify today without a predictably sunny climate and a 50% subsidy. Sorry Toronto. However, current costliness does not rule them out forever: remember $20 per barrel oil prices? Lower cost technology, such as reduced power lighting and lightweight pellets, is also available to make green progress possible at reasonable cost.

The next way to reduce your use of resources is working to make your operation more efficient. Getting more products on a trailer through better loading techniques lowers the amount of resources used for each delivery. Using less packaging material reduces resources for the entire supply chain from manufacturing to warehousing and all the way to delivery. Such changes save cost and the environment.

Changing your operating methods can result in dramatic reductions for resources you use. Look at how the transporters deliver product to your facilities. Change can be effected by modifying pick up and delivery operations at the DC to a drop and hook scheme instead of live loading and unloading. This change will typically eliminate 20 to 40 minutes per trailer of engine idling time. The introduction of interleaving into warehouse operations has been shown to eliminate up to 20% of warehouse labor, but also 20% of the power needed to drive the equipment. These are just a couple of simple examples to illustrate the point that more efficient methods will enable you to begin a green initiative without the substantial capital expenditures that are always difficult to get in the logistics operation.

You must begin by establishing a base line of where you have been. The start is to measure the resources you have been using in real terms. Get two years of utility bills such as water, gas, electricity, etc. The invoice from the disposal company will give you the number of containers hauled from your facility, and the packaging suppliers can provide you with the volumes.

Plot each of these for a two-year period against the throughput of your facility. A simple spreadsheet will provide the base to start with. Then you just divide by the volume of product that goes through your supply chain. The most common measurement of throughput used is cases in and cases out divided by two. Pounds, cwt and cases are other popular measures of the throughput of your operation. This simple process can be applied to an entire supply chain or to an individual facility. The use of real measures such as pounds and cases will give you a measure that will have validity over time

Once you have measured your progress you can evaluate which changes you made are material improvements and which have taken you backwards using the environment as a benchmark. You also have a vehicle to communicate to your management and employees your cost and environmental progress. Then just Cool It!