Shipping: Six Steps to Achieving Manufacturing's Holy Green Grail

Manufacturers who incorporate environmentally conscious shipping choices will reduce the costs of bringing a product to market while gaining significant competitive advantage.

The urgency to "go green" has permeated the manufacturing industry from shipping to packaging. For instance, Tesco is already working with manufacturers on carbon labeling to record the amount of carbon dioxide emitted during the production, transport and consumption of the 70,000 products it sells.

Still, manufacturing's elusive Holy Green Grail remains shipping. The idea of manufacturers offering green shipping options may seem to be anathema to the traditional view of customer service. And it may even scare the wits out of inventory and transportation managers who have to make it happen.

In today's ultra-competitive economy, the ability to leverage green shipping can help to not only gain the trust and loyalty of green-focused companies and partners -- it can also significantly impact the P&L ledger. However, it also presents uncharted waters for inventory and transportation managers at companies that decide to take on a green shipping initiative.

The first manufacturers who incorporate environmentally conscious shipping choices will not only reduce the costs of bringing a product to market butwill in fact differentiate themselves to customers, strategic partners, and yes, even investors, and gain a significant competitive advantage.

Here are six key factors to take into account when considering green shipping:

Metrics Rule

Both customers and partners will want to understand the environmental impact of all available shipping options at the time an order is placed.CEOs and CFOs are focused on metrics, so the person responsible for driving a green shipping strategy will need to provide rigorous measurements for carbon emissions. This data will put a manufacturer far ahead of competitors who do not track carbon emissions by shipment.

Disciplined Load Planning

Because green shipping options require a disciplined approach to load planning, manufacturers can significantly reduce capacity excess. The norm today is for trucks to hit the road with 50% or more capacity to meet projected delivery timeframes. Often, these half-full trucks go out because of customer or business delivery demands.

A balance needs to be struck on meeting service levels and on-time orders, but there is still room for order flexibility for environmentally conscious customers.Sure, many businesses could not afford to run with broad delivery timeframes.But others would probably consider alternatives that extend delivery options by as little as several hours if presented with the cost benefits of doing so.

Visibility Into Idle Waste

Government regulations that aim to reduce engine idle time during the pickup and delivery process are all the rage across the country.Our research has found that companies that implement software that provides visibility into idling time, such as that found in fleet management software, can reduce idling time by up to 30%.

Making the Right Turns

One of the biggest hidden costs comes from inefficient route planning, where trucks sit in traffic with profits leaking out of the gas tank.Routes designed to avoid left turns reduce idling, and thus fuel, costs.Right turns at intersections also are faster than left turns, due to "right on red" laws and because drivers only have to turn into one lane of traffic.

Manufacturers and their transportation partners also can:

  • Preload vehicles in the morning
  • Route drivers according to volume
  • Consider alternate pickup and delivery times to avoid congestion
  • Use communication tools available in fleet management solutions to reroute drivers stuck in congested areas.

Alternate Modes

Truck deliveries are the most expensive form of transportation and distribution, and that cost continues to spiral out of control due to fuel prices. Consider alternate modes of transportation and distribution, such as rail or ocean, to substantially reduce the environmental impact, and incorporate those savings into the green shipping option for customers.

Flex Those Schedules

It has already been proven by the likes of Fedex, UPS, Amazon and others that customers are willing to examine cost tradeoffs when it comes to delivery times.The visionary manufacturer that figures out the vast amount of brand capital it could generate by offering green tradeoffs for flexible delivery times will be hailed as a conquering hero.

This may involve bundling deliveries in the same area at the same time, or making deliveries during off-peak traffic hours.Either way, the cost savings -- to the customer, the transportation company making the delivery, and the manufacturer -- will benefit everyone involved.

Getting Started

Here are some concluding thoughts on steps manufacturers can take to go green:

  1. Use a transportation management system (TMS) with load optimization capabilities linking directly with a fleet management system. Think of load optimization as the Tetris of transportation.It takes pieces of different shapes and sizes and fills them in a truck with no leftover space.TMS is critical because it helps maximize fuel usage and shipments.
  2. Outfit the TMS with a carbon emission dashboard to calculate carbon output by measuring several factors, including, but not limited to, the type of truck executing the delivery, the number of miles traveled, and the type of fuel used.Companies want to give the consumer visibility into the carbon emitted to create the product. That means they need enterprise-wide visibility into the environmental cost of producing and transporting the goods, and they have to be able to segment those costs out on a per purchase basis.
  3. Finally, it's important for manufacturers to work with every delivery partner throughout the supply chain - whether it is a third party logistics (3PL) company or a parcel delivery service.These partners need to not only be able to measure carbon output, but also have to work hand-in-hand with the manufacturer to make the green shipping option viable and desirable.

Todd Mallett has been providing technology-based solutions for complex distribution networks for the past 10 years at RedPrairie (www.redprairie.com), where he is the Director of Transportation Management Solutions. He can be reached at [email protected].


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