Engineering Green DNA
Sustainability and green are two words often used interchangeably. In truth, one is a subset of the other. Sustainability is inclusive, an ethical umbrella that covers a gamut of social, economic, environmental, and business issues.
But the idea of sustainment is integral to any green effort. Shippers often run into problems pushing environmental programs because they can't distill value and/or don't have leadership support. Unless the CFO is committed to green, assessing a green investment's internal rate of return, other than buzz, can be a pointless exercise.
Therein lies the problem. Organizations need to rethink how they measure ROI. Do they account for qualitative value? How do they benchmark that?
Inbound Logistics' annual Lean and Green issue offers some context. As supply chain management commands greater C-level attention, it creates opportunities for organizations to break through functional silos and initiate sweeping sustainability mandates.
Ford Motor Company, for example, made such a commitment in 1999 when it created an internal sustainability organization—feeding off the Lean legacy paved by its forebear. You can read more about Ford's journey in Growing a Culture of Sustainability.
Asset-based 3PLs are proficient at engineering solutions that reduce both waste and cost. They often don't differentiate green reductions from cash savings. They're one in the same. For example, when Kenco was negotiating fleet lease terms with its vendor, Deni Albrecht, leader of sustainability, worked directly with the 3PL's transportation director to identify requirements. But he went one step further. A gearhead by nature, Albrecht specified truck transmissions, tire treads, and axles, among other things.
The savings were appreciable. Kenco's fleet increased fuel economy from 5.5 MPG to 6.5 MPG, approaching 20-percent savings.
DSC Logistics has delivered similar results. The 3PL was working with a customer to provide corrugate on demand and optimize shipment packaging. "With the way that parcel companies are structuring rates, having the smallest box creates transportation savings in addition to reducing material waste," explains Jim Chamberlain, senior director of industrial engineering and continual improvement for the 3PL.
Chamberlain points to another instance when DSC Logistics replaced pallets with slip-sheets on cross-country truckload moves. They sacrificed a slight bump in labor cost at the dock, but increased asset utilization by 10 percent.
As you consider your own sustainability efforts, it's worth asking whether green is part of your corporate DNA. If it is, ask value chain partners the same question: Why?
Green is a dialog that partners notice. Just ask Albrecht.
"People starch their shirts and stand up straight when you meet with them," he says. "They know you're not messing around—in a positive way. It's all for the general good of the economy, the environment, and our respective businesses."