Better Energy Management Via Supply Chain Optimization

Sept. 12, 2008
Improving fleet management can help

A key aspect of optimizing the use of energy is optimization of the need to use it, observes Erv Bluemner, vice president of product marketing, transportation solutions, with RedPrairie Corp. The following is RedPrairie's guide to optimizing the need in the supply chain, focusing on energy management:

Start with routing and consolidation. Bluemner says RedPrairie's fleet optimization clients save an average of 10% to 15% in miles driven from improved routing and consolidation. Big improvements can be made in companies that have a lot of less-than-truckload (LTL) activity, he adds. Carbon dioxide emissions are also reduced. The Environmental Protection Agency (EPA) estimates that every gallon of diesel consumed creates 22.2 pounds of carbon dioxide emissions. If every driver in a fleet of 50 trucks drove five fewer miles a day from optimized routing and planning, the annual reduction of carbon dioxide entering the atmosphere would total 1.5 million pounds. In addition, optimized routing reduces fuel consumption and idling time while better consolidation of shipments reduces load and unload times.

Improve fleet management. Fleet tracking helps monitor fleet movement and performance while reducing fuel consumption, adds Bluemner. Some of the greatest environmental benefits from fleet tracking come from the reduction in idling time and improved equipment use. The company reports its Fleet Visibility customers are typically able to reduce idling by 30%.

In addition fleet tracking can help with the strategies of equipment planning and usage. RedPrairie cites one grocer that was able to cut annual diesel consumption by 83,000 gallons (and a half million miles) by switching from single trailers to tandem trailers at its distribution center.

Increase global transport efficiency. Delays due to port clearance documentation, poor duty payment coordination or general lack of visibility into your global supply chain can create significant inefficiencies across an organization.

Create system-generated tasks and communications. Most warehouses still rely on paper-based methods of communication. However, electronic interfaces, RFID, voice-based technologies and electronic advanced ship notices (ASNs) can significantly reduce the need for paper in the warehouse. In addition to reducing paper consumption, system-generated tasks and specifically ASNs make receiving more efficient -- which in turn impacts the overall efficiency of trucks and warehouse personnel.

Take full advantage of improved packaging strategies. Warehouse management systems, for instance, can help streamline storage and accurately track crates and pallets so transportation material can be more easily recycled and reused. In Europe, under the European Union's Packaging Waste Directive, manufacturers already pay for collection and recycling of packaging waste based on the material and weight of their packages.

In the United States, many retailers and some states have established packaging material mandates. Retail giant Wal-Mart is an example. Its "packaging scorecard" is a measurement tool that allows suppliers to evaluate their packaging against all the other packaging in a product segment. Packages that score well on one criteria may not rate as high in another, indicating an area of potential improvement. Since each package is compared with its peers, a ranking can change if another supplier improves its packaging.

Deliver on warehouse energy conservation strategies. Based on EPA estimates, the average energy cost per square foot for a nonrefrigerated warehouse is approximately $1 versus $1.40 for a refrigerated warehouse.

Improve labor management. Improved labor automation and training tools can make employees more efficient, requiring less overtime. Also improved labor efficiency opens the opportunity for paid time off for training or volunteering. RedPrairie, for instance, offers its employees two days of paid time off for volunteering.

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