Supply chain organizations and practitioners can have a considerable positive impact on the environment.  Firms providing transportation and supply chain solutions can offer the benefits of their environmental expertise, practices and infrastructure to customers who might not otherwise have access to these resource levels.

Business environmental commitments go beyond laws and regulations. In the supply chain vocation, we have the opportunity to demonstrate environmental leadership through our efforts to reduce waste, recycle, use non-toxic materials, conserve energy and manage emissions. Due to the nature of our business, environmental programs can be integrated into our operations and the services we offer customers, who can then benefit from programs like preventative fleet maintenance, waste reduction and recycling, storage tank management, emergency spill response and extensive facility audits.

There is a growing consensus among corporate leaders that taking action to reduce climate change is a business responsibility. Influencing present public perceptions and meeting the pending regulatory constraints involves several key strategic elements, including a “roadmap” of steps to reduce carbon emissions while also boosting productivity and profit. The energy savings can actually help business reduce costs. 

One approach is to use an external utility specialist to track energy use and measure greenhouse gas (GHG) emissions from owned/operated stationary sources in the U.S. and Canada. Firms can improve energy efficiency when purchasing new equipment and designing or renovating facilities. As a U.S. example, buildings designed and constructed to meet the ENERGY STAR energy efficiency ratings save money.  ENERGY STAR, a performance rating tool established by the Environmental Protection Agency (EPA) and the U.S. Department of Energy, estimates that an average office building without efficiency improvements is rated 50. The minimum target score to obtain an ENERGY STAR certification is 75, and some buildings can be designed to achieve a target rating of 85.

For a 150,000-square-foot, three-storey office building, an ENERGY STAR rating will result in the following annualized reductions:

• Consume 6.7 million fewer kBTUs per year for heating and cooling;
• Cost $139,800 less to operate; and
• Result in 1,450 fewer tons of CO2 when compared to an average unimproved office building.

Another large impact on greening the supply chain involves both onsite and offsite recycle and reuse technologies. Wastes in the supply chain are numerous, and each requires different treatment and management. For example, packaging, cardboard, paper and product wrapping is often associated with production and inventory. For transportation and distribution, wastes associated with vehicle maintenance and fueling include used oils, batteries, automotive filters, engine and vehicle parts and coolants. All represent opportunities to reduce and recycle.  Vendor partnerships, and the implementation of technologies designed to better manage and maintain vehicles, can reduce waste generation from the start.

Greening includes the reduction of vehicle and facility spills and releases. As an example, Ryder has emergency response procedures and uses an emergency spill response center operating 24 hours a day to expedite the dispatch of emergency response teams to spill sites.  Ryder has also developed a Vehicle Spill Kit that is placed onboard Ryder trucks. This kit contains everything a driver needs for fast, effective spill response—and has become so popular and effective that specialized kits are now made available for customer needs. In addition to mobile spills and releases, Ryder performs remote 24-hour-a-day monitoring of over 400 locations and compliance management for over 1,800 fuel storage tanks, through a wholly owned subsidiary, Ryder Fuel Compliance Services. 

Firms are emphasizing compliance to standards, and some, like Ryder, already have a dedicated Environmental Services program that includes designated coordinators at every field location with environmental oversight, and a field-based environmental awareness training program to make sure they have the resources necessary to perform.

The supply chain industry can further enhance its greening direction by adopting government initiatives. In the U.S., the EPA has a SmartWay® Vehicle program promoting GHG reductions through selection and operation of energy-efficient vehicles. Shippers, for-hire carriers, and private fleet firms that operate trucks can become SmartWay® Logistics Partners, under which the partner firms can access technical assistance and carrier strategies. Canada also has several fuel efficiency programs in place: SmartDriver, which supports training for drivers and workshops, and ecoFreight, a Freight Technology Demonstration Fund, with freight technology incentives.

Also worth considering are the standards for ISO 19001 and 14001 Certification. ISO offers the supply chain industry the opportunity to qualify for Certified Quality Management Systems and Certified Environmental Management Systems. Often, it will take the supply chain provider and the customer to agree on certification, which can then provide a measurable benefit.

Air quality has improved as fuels become greener—the use of Ultra Low Sulfur Diesel for transportation users allows for cleaner-burning engines with fewer exhaust pollutants, as a further step in the trend to lower emissions. Bio-diesel fuel is more available, further supporting the greening trend.

For the 2010 model year, new diesel engine emissions will need to be reduced further. Even before then, operators and manufacturers have cooperated in re-engineering their vehicle designs and specifications to further limit emissions and conserve fuel. As one of its corporate initiatives, Ryder introduced its RydeGreen™ vehicles, a line of tractors and trailers designed to reduce fuel consumption and GHG emissions.  The tractors are built to meet the demands of long-haul trucking and come equipped with special features that have earned them the EPA’s SmartWay® designation. Re-engineered trailer packages can also offer aerodynamic features and weight-saving options to enhance fuel efficiency. Some customers are also now testing hybrid vehicles.

So where will you start and continue the greening of the supply chain?  Often the challenge is to untangle a complex inbound and outbound transportation network, contain and reduce spiraling costs and reduce the carbon footprint of the supply chain. Solutions can be found throughout that are sensitive to the firm’s sustainability mission and supply chain growth plans. Working with one customer, Ryder was able to improve customer service, create a 40-percent drop in the supply chain carbon footprint, and achieve an eight-percent reduction in transportation cost.

At the November 2008 Logistics Quarterly Symposium, Guy Toksoy, Ryder’s vice-president of supply chain operations, provided some insight into the practical steps available to green the operation. The following is a synopsis of the initiatives, which are based on three dimensions: Corporate Initiatives and Partnerships (mentioned previously), Internal Change, and Resources for Customers.

Internal Change to green the business goes beyond laws and regulations to emphasize proactive reductions in waste, increase recycling, use non-toxic materials, conserve energy and reduce emissions, all of which provide measurable results.  Some initiatives include Carbon Disclosure, Energy Conservation Management, Emission Reduction Strategy, Lighting Upgrades, Fuel Management, Solid Waste Management, Vehicle-Related Waste, and Electronics Recycling.  Ryder saw an annual GHG reduction, just from recycling, of 2,828 tons.

Since more than 27 percent of all GHG emissions in Canada are produced through highway transportation, with heavy-duty vehicles accounting for 19 percent, one obvious opportunity is reduced fuel consumption.  To address that opportunity, in August 2008 Ryder initiated a Driver Fuel Efficiency incentive program. The goal was to achieve a five-percent improvement in fuel efficiency and GHG decrease across the fleet. The plan measures driving performance and fuel usage of each driver or group of drivers, and compares results to a target benchmark. The drivers were trained to achieve the goals and rewarded with a financial incentive for fuel-efficient driving. Preparation time before program launch was four months. Table 1 shows the factors facilitating fuel conservation.

The Ryder Fuel Efficiency Challenge program was implemented on a pilot basis with 234 trucks, over 280 drivers, and 37 customers across Canada. Phase 1 focused on driver training and documentation, since more efficient vehicle operation has a larger payback than equipment modifications and technical improvements. This is supported by The Maintenance Council, which considers that the most skillful drivers can use up to 35 percent less fuel than the least skilled, by:

• Controlling speed                Every 1 mph above 55 mph increases fuel usage by 2 percent
• Minimizing idling                 1 gallon of fuel per hour of idling
• Shifting progressively          max 1700 / 2100 rpm for tractors / straight trucks
• Proper tire inflation 1 percent change in mpg per 20 percent change in psi
• Managing the road ahead    Avoiding hard braking and acceleration

Technologies and tracking captured accurate data, with the ability to mine data and look for trends, and enabled objective measurement. Results were captured in a Driver Fuel Usage Scorecard, covering Speed, RPM, and Idle time.

The program launched with town hall meetings and mailers, the incentive program presentation, monthly metric reporting, quarterly payouts, ongoing training and focus, and the goal of saving five percent in fuel usage across the fleet.

The initial program results are very encouraging. In the first two months, after traveling 7.9 million kilometers, the fuel reduction was 6,139 litres for the short-haul fleets and 17,730 litres for the long-haul fleets, with a total reduction in greenhouse gas emissions of 64 metric tons. Table 2 illustrates an example of a recent scorecard.

Many firms can now see greening their supply chains as both a corporate responsibility and an economic advantage, rather than a forbidding challenge. The business efficiency improvement opportunities are incentives for firms to identify goals for reduced fuel consumption and lower  GHG emissions, and then to develop action plans to achieve specific measurable goals, and report progress. The executive challenge is to start now.

TABLE 1:
 FACTORS Affecting Fuel Economy in the Real World

TABLE 2