According to the Environmental Protection Agency, freight movement accounts for 20 percent of all energy expended in the world, and our field’s diesel fuel demands are expected to increase 25 percent by 2012. 

Most logistics professionals are understandably concerned about these statistics—especially since they’re usually followed by a strong call to corrective action. How, we wonder, can we possibly minimize our fuel use at a time when most companies’ supply chains are getting longer rather than shorter? Just as important, how can we hope to afford the sustainability initiatives we’d like to pursue when finances are tighter than ever?

I had similar concerns when my company began ramping up its own sustainability initiatives. I envisioned an instant emphasis on hybrid vehicles, retrofitted equipment and solar-powered facilities, all of which promise immediate environmental benefits but require a more significant financial outlay up-front. And, I foresaw many potential scenarios where we’d be compelled to make difficult choices between economy and eco-friendliness. 

But thankfully, I was mistaken, because as my engineering team has begun addressing green issues, we’ve discovered a strong correlation between environmental sensitivity and cost-efficiency. And we’ve been pleasantly surprised to find that two of our field’s most common engineering tools are adept at improving both.

Optimization

Nowhere is this more evident than in the area of supply chain optimization. 

Loosely defined, supply chain optimization is the process of finding the best solution for a particular logistics challenge—with the help of some highly sophisticated systems, models and complicated linear, non-linear and integer mathematical models

You’ll often hear it mentioned in conjunction with site selection, because network optimization is an important first step for many companies looking to expand, establish or improve upon their DC network. It’s also frequently used to determine ideal inventory levels, which is beneficial for both transportation reduction and waste minimization. 

However, it’s also used for tactical functions such as warehouse layout and design, modal selection, load building, route selection and more. And, each is laden with green possibilities.

For example, forklifts may not log as many miles per year as trucks, trains, planes or ships. However, they still use considerable energy and contribute to a company’s carbon footprint. By running layout optimizations that help shorten the distance between dock doors and your facilities’ fastest-moving products, your company could significantly reduce the miles these vehicles travel—a plus for both your pocketbook and sustainability.

On another note, it’s commonly understood that all modes aren’t created equal in terms of speed or cost. But are you aware that the differences are equally pronounced when it comes to the environment? The EPA estimates that for any land-based move of more than 1,000 miles, using intermodal transportation instead of a straight truck move can cut your fuel use and greenhouse gas production by as much as 65 percent. In the same vein, ocean is not only at least 75 percent less expensive than air, it’s up to 96 percent greener. (We engineers know this, because we’ve done the math). So if your company hasn’t optimized its modal mix recently, perhaps you should expend some internal energy to do so.

While you’re at it, consider using optimization to re-examine how you’re handling route design, too. Although many companies have the domestic portion of this down to a science, most haven’t even begun to tap into the significant savings and sustainability opportunities afforded by optimizing their overseas suppliers’ shipments. Granted, some of these suppliers may have optimization tools. However, many don’t. And either way, your engineers are probably going to be able to optimize considerably tighter, more environmentally friendly routes—especially if they’re given the latitude to group all of your suppliers’ shipments together. 

Finally, don’t underestimate the incredible power there is in using optimization to shore up your company’s load-building efficiency—and not just the loads you’re shipping via train or truck. There are tremendous environmental and economic benefits that can be achieved simply by running an optimization for containerloads—and taking advantage of the chance to migrate to bigger containers. Since it’s generally possible to get the contents of three 40-foot ocean containers into two 53-foot containers the end result will be the need to use fewer containers, which should result in fewer overall moves and less energy consumption. You also can save the fuel associated with transporting containers to and from a transloading facility, because 53-footers can go straight to a truck or train. 

Simulation

Clearly, optimization has many potential applications and just as many potential benefits. Yet, it’s not an engineering panacea. 

For one thing, there are some supply chain challenges that don’t lend themselves to an optimization. For another, there are certain supply chain scenarios that merit further exploration once an optimization has taken place.

That’s where supply chain simulation comes in. 

Like optimization, simulation is a widely used engineering tool that can help your company determine the best possible way to address a wide variety of opportunities, challenges or mandates, including those related to sustainability. The difference is it’s far more involved and systematic—and ultimately more precise. In fact, simulations are the closest thing our business has to a crystal ball, because they can determine with near perfect accuracy how a proposed solution will actually play out once it’s deployed. For example, let’s say you’re thinking about moving more of your production to Asia and want to know exactly how it will affect your carbon footprint and fuel cost. Or, perhaps you’ve decided to install equipment on every truck in your fleet to ensure your drivers don’t exceed certain speeds and you want to know how this will affect the maximum number of deliveries each can make. A simulation can deliver your answers with painstaking accuracy. It also can help you verify the wisdom of transitioning to a more environmentally friendly form of international transportation by proving how you can make it work without disrupting customer service. Or, it may reveal that what appears to be a highly green move—constructing a 100 percent solar powered warehouse in Fargo, North Dakota, for example—is actually going to be less-than-kind to the environment (and your bottom line) in the long run because it will require your delivery vehicles to be on the road longer.

In short, a simulation is the ultimate reality check. And, we need such checks at a time when supply chain managers are being asked to tackle so many formidable (and sometimes counter-intuitive) tasks at once.

So what can’t a simulation do—and why wouldn’t you use it for every economic or environmental improvement initiative?

First of all, it can’t provide you with a quick answer. Simulations are dependent upon computer generated processes and are much more data- and effort-intensive than optimizations. In addition, they typically take longer to build run and analyze than optimization models, and unfortunately not every company can afford that luxury. Simulations are also pricier than optimizations, which probably explains why you hear about them less often.  

However, as any engineer will tell you, a simulation is the best way to go anytime the stakes of an initiative are high. And in this day and age, are there many stakes higher than environmental health or economic survival? 

How can you engineer a leaner and greener supply chain?

Whether your company engages in simulation, optimization or both, one thing is certain: either one is a wise, potentially green use of your company’s resources, especially when you consider the win-win possibilities.

Other engineering practices also can yield significant financial and environmental rewards for your company, and not all of them require a large engineering department, large systems investment or advanced degree.

For example, my company has had a Lean logistics initiative in place for two years that often uses on process engineering. It’s spearheaded by a longtime warehousing professional rather than a career engineer, and thus far it has saved us nearly $8 million. While not all of those Lean savings can be tied to carbon footprint reductions, many can. 

Another option is to have your company work with outside engineering professionals to make small but positive improvements at your distribution centers. For example, a landscape engineer can help your company deploy water saving landscape irrigation techniques outside your warehouses or incorporate better stormwater retention techniques and xeriscaping principles. (After all, sustainability isn’t just about saving fuel. The EPA estimates that landscape irrigation wastes 1.5 billion gallons of water each year).    

Granted, these things may not be quite as dramatic as a 1.3 billion pound reduction in CO2 gas emissions or a multi-million pound reduction in diesel fuel use. But the important thing is to make the effort everywhere you can, because every little bit truly does help. wt



Rajiv Saxena is vice president, supply chain solutions, for APL Logistics.