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Supply Chain & Logistics: A Supply Chain Fit to Eat

June 6, 2013
General Mills and Ocean Spray are two food companies that have reduced their carbon footprint by improving upon some core logistics processes.

Over the past decade or so, many manufacturers have been dragged, for want of a better word, into the world of corporate social responsibility (CSR), detailing their progress toward reducing their carbon footprints while improving the lives not only of their employees but of every person throughout their supply chain. 

See Also: Lean Supply Chain Logistics Best Practices

Don't count General Mills Inc. (IW 500/79) as one of those reluctant reporters, though. General Mills, a $16 billion food manufacturer best known for its packaged cereal brands (Cheerios, Lucky Charms, Trix, Wheaties), has prepared an annual responsibility report for the past 43 years, dating back to the Nixon Administration.

In its 2013 Global Responsibility Report, General Mills offers details on various sustainable sourcing programs under way. For instance, the company has a goal of reducing its transportation fuel usage rate by 35% by 2015 (using 2009 as the baseline year), and is about halfway to that goal, having reached 17% in 2012. Strategies include shifting some freight to less-impactful transportation modes (e.g., truck to rail), increased regional distribution and pallet reduction.

"A significant portion of the environmental footprint of our products occurs upstream of our supply chain, primarily in agriculture." -- Jerry Lynch, chief sustainability officer, General Mills

Other initiatives include reducing sodium content by 20% in its top 10 product categories; reducing its solid waste generation by 50% by 2015; and committing to sourcing 100% of its palm oil from sustainable sources.

Working with data analysis firm Trucost to study its extended supply chain's impact on the environment, General Mills identified that two-thirds of the carbon emissions and 99% of the water use occurs either on farms or in the preparation of ingredients used to manufacture its products. 

"We recognize that a significant portion of the environmental footprint of our products occurs upstream of our supply chain, primarily in agriculture," says Jerry Lynch, General Mills' chief sustainability officer. "While we are working within our supply chain, we believe we can also impact those inputs by sourcing responsibly."

Like General Mills, Ocean Spray Cranberries Inc., a $2 billion vertically integrated agricultural cooperative, has achieved significant reductions in its transportation carbon emissions through a modal shift to rail and a redesign of its distribution network. In a 2009 study, Ocean Spray determined that 17% of its carbon emissions were due to the movement of goods through transportation and distribution, which was the largest single-source emissions segment within its value chain, notes Kristine Young, sustainability manager. "There's a good business case for addressing transportation because it directly equates to cost savings," Young says. 

The initial motivation for the modal shift was for business reasons alone, Young explains. It evolved through a collaborative partnership involving rail carrier CSX, third-party logistics provider Wheels Clipper and one of Ocean Spray's competitors, a rival fruit company. The project involved an intermodal shift on one of Ocean Spray's key transportation lanes, from New Jersey to Florida, utilizing rail cars that were returning to Florida empty. 

While it's always going to be less expensive using rail than trucks for transportation, most companies nevertheless ship by truckload because it's faster and generally more efficient. What Ocean Spray and its competitor/collaborator did to get maximum savings from rail was to coordinate load pickups and deliveries within the required time windows, a level of collaboration that's often recommended in conference presentations by transportation consultants but rarely seen in the real world. Roughly 80% of Ocean Spray's freight traffic on the New Jersey-Florida lane was shifted to intermodal, representing a 40% savings in transportation costs. Though each shipment took one to two days longer to reach its destination, Ocean Spray was able to adjust its inventory so that the additional transit time had no impact on service levels to customers.

An additional benefit was that this modal shift also reduced carbon emissions by 65% per load, which is the equivalent of saving 100,000 gallons of fuel per year. 

"It's a truly sustainable solution, both for the environment and for the business," Young says.

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