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April 2, 2008 
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Cutting Logistics and Distribution Costs and Risks
When you look at your company's environmental footprint along the full value chain, you'll discover many green opportunities outside of your own operations. Designing products to reduce the footprint upstream in the supply chain, or to use less energy downstream with customers, is one key tactic. But what about the impact of distribution and logistics - all those products and supplies moving around the world?
Finding ways to reduce the footprint of distribution can save a ton of money and help bolster your green claims. Even if you're paying a vendor for distribution, you can influence the process and reduce your bills. So streamlining logistics is a good way to reduce cost, but it also cuts risk by reducing reliance on fuel (with its volatile and rising prices). And if the more extreme peak oil theorists are right, costs could be heading way up over the next decade (think $200/barrel, a number that seemed outright absurd a few years ago). So it's a good idea to start reducing distribution costs now. 
The pressure is rising by the day. Market forces such as the rising price of diesel make the business logic stronger. But business customers are also demanding a reduction in the full value chain footprint, and governments are setting stronger regs, from federal smog rules for trains and trucks to states such as California banning older trucks in ports and Pennsylvania looking hard at truck idling.
Luckily, there are some good resources on this topic. The EPA started a collaboration with the freight industry called SmartWay. Partnerships like the Coalition for Responsible Transportation (CRT) tackle other related issues like pollution in port communities. With help and some innovation, what can companies do? Some larger-scale solutions: change your sourcing strategy to reduce distances, switch modes of transport (trains are more efficient), and even redesign the products to reduce weight (like California winemaker Three Thieves, which switched from glass bottles to cartons). Those solutions might take awhile, but in the nearer term, here are four big areas companies are tackling:
~Andrew Winston, Founder, Winston Eco-Strategies, Co-author, Green to Gold (Read his "Eco-Advantage" blog here.) Getting Smarter About Packing Trucks 
One of my favorite little stories in Green to Gold talks about IKEA's efforts to cut shipping costs and emissions. An IKEA employee is credited with inventing the company's signature "flat-packaging," which allows trucks to carry much more stuff. Another way to fill trucks? Share "less than truckloads" (LTLs) with corporate partners like PC World does. As SC Johnson environmental exec Pat Penman says, "Making sure that a truck is truly 'full' is a science" - a puzzle-solving exercise that has saved the company $1.6 million.
Redesigning Routes 
If packing is a science, imagine the challenge of routing tens of thousands of vehicles. UPS has taken the creative step of eliminating left-turns. Why? No sitting in traffic waiting to make a turn. Just keep turning right, use GPS technology and good software to map your way, and save three million gallons of fuel. Smaller business like Mac-Gray, a laundry service company, are using GPS to save money, fuel, and time also.
Dealing with Truck Idling 
How bad is idling? Logistics accounts for about 20% of U.S. energy use, and 20-25% of that is idling. That's 5% of all energy. Enough said. One of Wal-Mart's tactics on fleet fuel reduction is to add auxillary power units that give truckers power for heat/cooling without keeping the engines running. IdleAire, a small company with an innovative product to provide power at truck stops, is one of the many anti-idling technologies the EPA highlights on its SmartWay Transport website.
Switching to New Vehicles 
The experimentation on changing fleets is rampant, so we can only touch on a few examples. Some companies with big fleets, including shippers (FedEx) and consumer product giants (Coke and SC Johnson) have been testing hybrids. Others are using new fuels like biodiesel (Safeway) or adding end-of-pipe technologies to clean the air emissions (Raley's). And companies are working on other logistics vehicles such as trucks at ports (Nike and liquid natural gas, or LNG) and pallet trucks in distribution centers (Wal-Mart). Service-based businesses or those with sales fleets are changing up the cars as well (Toshiba). Finally, some are just having fun as they cut emissions - PC World developed a mouse-shaped truck that carries 10% more stuff.
Case Study: Xerox 
A surprising 20% of Xerox's greenhouse gas emissions come from its fleet of distribution and service vehicles. The company cut 21 million miles from its operations through product redesign, "right-sizing" trucks for deliveries, smart metrics, and GPS technology. See Xerox's four-pronged attack on distribution emissions (halfway down the page here) and its Carbon Disclosure Project response (PDF) for a sense of where logistics initiatives fit into the company's overall greenhouse gas reduction strategy.
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This work is licensed under a CreativeCommons License. Copyright Sustainable Life Media Inc. 2008
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