One year ago, the topic of green supply chains was found more in fringe discussions than on front pages. Sure, a number of companies were doing their part to be environmentally friendly, but it was largely a groundswell of consumer awareness in tandem with savvy marketing campaigns that has really pushed the issue to the forefront. 

A recent survey by UK-based eyefortransport (www.eyefortransport.com) finds that 94 percent of supply chain professionals polled rate green issues as a business priority. 

“With up to 75 percent of a company’s carbon footprint coming from transportation and logistics, the focus of supply chain greening is beginning to shift towards this area, where the opportunity to make the biggest difference exists,” according to eyefortransport. As to the steps that companies are taking to get greener, eyefortransport’s Katharine O’Reilly explains that greening is “fundamentally a cooperative process, with a majority of successful green initiatives being based on changing relationships with suppliers, partners, and logistics providers.” 

Like so many other supply chain strategies today, collaboration is again at the top of the ladder. Twenty-eight percent of the supply chain executives polled in the survey said they have (or plan to) partnered with a logistics provider to help them green their processes. Their efforts range from focusing on improving energy efficiency (59 percent), redesigning warehousing and distribution center networks (42 percent), and measuring and/or reducing emissions (39 percent). And, despite concerns that environmental initiatives are detrimental to supply chain efficiency, 66 percent reported that their green initiatives are not affecting their supply chain efficiency, while 27 percent said the changes are actually making their supply chains more efficient.  

Rising energy costs alone are pushing companies to explore ways to reduce overall consumption, and it’s not just limited to oil. Electrical power consumption is at “the tip of a melting iceberg for an IT industry that is currently unsustainable,” warns research firm Gartner (www.gartner.com). Large organizations spend between 4 and 8 percent, and sometimes as much as 10 percent, of their IT budget on energy and it’s expected to increase fourfold within the next five years. 

Rakesh Kumar, research vice president at Gartner, notes: “Organizations are increasingly deploying more computing power. These systems require considerably more power and cooling than the last generation of hardware. Because global energy prices are rising, there is a significant increase in data center operational budgets.” Furthermore, data centers waste nearly two-thirds of their energy consumption on cooling equipment, and 75 percent of the 512 million PCs that will be disposed of in the next five years with end up in landfills rather than being recycled. Kumar believes this kind of consumption and waste is not sustainable. “This is bad for the environment and bad for business. Enlightened consumers and enterprise buyers will increasingly vote with their wallets, choosing more sustainable products and services from suppliers with environmentally conscious corporate social responsibility programs.”

Fortunately, there’s been movement from the talking stage to the ‘doing’ stage. A newly released study by data center operator Digital Realty Trust shows that 55 percent of companies have formed detailed strategies for making their data centers more energy efficient. For example, some companies are consolidating servers to reduce energy consumption, along with making better use of open space between server racks and making sure data center temperatures aren’t calibrated too cold. Many of these small steps are easy to make and can save a lot of money. For instance, simply raising the temperature in data centers by three or four degrees can lower cooling costs by 10 percent or more.

Green initiatives are also sprouting up on the software side. In August, RedPrairie (www.redprairie.com), a leading consumer-driven optimization company, announced a green initiative to create programs and provide education to companies in order to help them reduce the environmental impact of their supply chains. It’s worth noting that RedPrairie is also the first supply chain technology provider to be accepted as an Affiliate member of the Environmental Protection Agency’s SmartWaySM Transport Partnership, which was established to promote the reduction of greenhouse gas emissions and improve the efficiency of ground freight transportation. John Jazwiec, president and CEO of RedPrairie, said: “We are committed to our green strategy, including delivering solutions that are conscientious of the environment and programs to educate and enable employees. Through more efficient transportation, storage and packaging of goods, companies can significantly reduce dioxide emissions, wasted packaging, paper, and energy consumption.” 

RedPrairie’s whitepaper entitled “Greenlighting Efficiency: 7 Easy Steps to Reduce the Environmental Impact of Today’s Supply Chains,” offers some practical tips that are fairly easy to implement.

Optimize Routing and Consolidation. Optimized routing and consolidation provides the ‘best possible path’ through a series of stops and ensures that drivers spend as little time as possible at each stop. Fleet clients can save an average of 10 to 15 percent in miles driven from improvements in this area, resulting in a reduction of carbon dioxide emissions.

Improve Fleet Management. Some of the biggest benefits in this area come from a reduction in idling time and improved equipment use. In addition, more states and county governments have proposed laws to restrict the amount of time a vehicle can idle its main engine. 

Increase Global Transport Efficiency. Delays due to port clearance documentation, poor duty payment coordination, or general lack of visibility into the global supply chain are costly not only in terms of lost sales but for the environment too. 

Create System-generated Tasks and Communications. Many warehouses are still paper intensive when it comes to communications. However, electronic interfaces, RFID, voice-based technologies, and electronic Advanced Ship Notices (ASNs) can significantly reduce paper waste.

Take Full Advantage of Improved Packaging Strategies. Many companies are already taking steps to reduce packaging materials, but not everyone is reconfiguring their shelving to take full advantage of those gains. A sophisticated warehouse management solution can help streamline storage and accurately track crates and pallets so transportation materials can be more easily recycled and reused.

Deliver on Energy Conservation Strategies in the Warehouse. Energy-saving motion sensors for lights, solar power, and reusable pallets are a few ways to save money in the warehouse. In the U.S., more than 2 billion wooden pallets are used each year, which is equivalent to approximately 1 million acres of hardwood forest.

Improve Labor Management. Essentially, it’s about working smarter, not harder, and includes analyzing how a job should be performed in order to avoid wasted efforts. It also extends to optimizing work schedules to cut down on excessive commuting and unnecessary overtime. 

Seeing signs of green in the supply chain

A number of companies in the broader transportation and logistics sector have already embarked on various green initiatives, including ports; ocean carriers; rail, truck, tugboat, and terminal equipment manufacturers; 3PLs; industrial real estate developers and warehouse operators; and manufacturers of reusable packaging and pallets.

Tay Yoshitani, the new CEO for the Port of Seattle (www.portseattle.org) has emphasized environmental leadership as the number one priority for the port, both as a way to differentiate the port from others as well as a competitive advantage in the marketplace. “The Port of Seattle should be the greenest, cleanest, and most energy efficient in the U.S.,” Yoshitani said in a recent interview. Although the specifics of his plan are still being rolled out, one aspect includes a major staff reorganization. 

To the south, the ports of Los Angeles (www.portoflosangeles.org) and Long Beach (www.polb.com) are well on their way to pursuing green initiatives, partly because surrounding communities have long resisted expansion at the ports due to concerns over air quality. The San Pedro Bay Ports Clean Air Action Plan aims to reduce emissions from port operations by at least 45 percent by implementing a number of measures, including using low-sulfur fuels and emulsified fuels in container ships, adding more hybrid and alternative-fuel equipment to the terminal yards, and moving forward on plans to require cold-ironing for vessels (which means the ship uses electrical power while at berth instead of running its diesel engines).   

Earlier this year, ocean carrier APL (www.apl.com) began testing a revolutionary fuel emulsification system aboard its container ship the APL Singapore. The test involves injecting water into the ship’s bunker fuel in order to reduce harmful emissions. Furthermore, APL has converted to cleaner burning, low sulfur fuel on all 23 of its vessels that call California ports.

At the same time, Foss Maritime (www.foss.com), the Seattle-based tug services company, has received funds from the San Pedro Bay Ports Clean Air Action Plan to build the world’s first hybrid tugboat. The tug’s engine will work somewhat like Toyota’s hybrid Prius car, and shut down its diesel engine and switch to an electric motor during idling. It’s estimated that the tug will reduce particulate matter and nitrogen oxide emissions by 44 percent. Foss will begin production of the tug this year and it will go into operation in Southern California in 2008.

Green technology is evident elsewhere. Evergreen’s (www.evergreen-marine.com) new S-type “Greenships” feature double-skinned hulls to minimize the risk of oil pollution or fire in case of grounding or collision. Matson (www.matson.com) has maintained a zero waste discharge program for all of its vessels since 1993, and is currently working on an innovative ballast water treatment system on one of its vessels. In addition, Crowley Maritime (www.crowley.com) recently announced that its newly christened 650-3 is the first tank barge to be issued Green Passport certification. The Green Passport program is basically an inventory of materials present in a ship’s structure, systems, and equipment that may be hazardous to human health or the environment. It is regularly updated and is eventually passed from the ship’s owner to the recycling yard at the end of the ship’s life to help the yard to come up with a safe and environmentally sound way of breaking the ship.

 In the terminal yards, manufacturers such as Kalmar (www.kalmarind.com) are introducing a new generation of container handling equipment that’s more energy efficient, environmentally friendly, and quieter. Last year, Kalmar embarked on a two-year project in conjunction with the West Coast Collaborative of the U.S. Environmental Protection Agency and the ports of Los Angeles and Long Beach to reduce pollution in ports by integrating three of its terminal tractors with hybrid technology. The green hybrid equipment is expected to reduce air emissions by 93 percent, which equates to 19 tons of nitrogen oxide and 200 pounds of particulate matter.

Likewise, BNSF Railway (www.bnsf.com) is hoping that a proposed plan to own and operate its own fleet of trucks to move freight from marine terminals in LA-LB to a proposed intermodal yard four miles from the port complex will convince local residents and port officials that the new operation won’t negatively impact the environment. Specifically, the railroad says it will use 2007 model-year trucks to meet emission standards contained in the Clean Air Action Plan. The trucks will also be outfitted with global positioning tracking systems to allow BNSF to optimize a routing plan and lessen the impact on residential communities. Meanwhile, railroads are already using electric cranes, low emission switching locomotives, and alternative fuel yard tractors. 

The U.S. Environmental Protection Agency’s proposed rules for locomotives and diesel marine engines are also helping to drive changes. The agency’s proposed rules, which could take effect as early as next year, intend to reduce emissions by 90 percent for particulate matter and 80 percent for nitrogen oxides. 

Some of the biggest opportunities for greening the supply chain are the most obvious, like reducing paper and packaging waste and choosing reusable shipping containers. ALEX Pallet Systems (www.alexpallet.com) manufacturers a lightweight aluminum pallet that is superior to conventional wooden pallets in a variety of areas. The pallets are 100 percent reusable and recyclable and have a life-span of at least 20 years, and exceed industry standards for impact and static-loading performance. And, due to their composition, the pallets are exempt from government regulations requiring chemical- and heat-treatment to kill harmful bark beetles and other insects.

Companies are also turning to alternative packaging materials. Last year, Wal-Mart Canada switched some of its shipping crates from cardboard to plastic, which allowed the crates to be used approximately 60 times instead of once. The company estimates it saved $4.5 million from the switch and reduced waste by 1,400 tons. Furthermore, in a show of corporate goodwill, the Wal-Mart Foundation announced in late August that it would donate $1.5 million to create a sustainability research center at the University of Arkansas in Fayetteville as part of the company’s efforts to improve the environment. The Applied Sustainability Center will work to develop green business practices for the retail and consumer goods industries. Over the next year, the center plans to study ways to reduce carbon in products and identify key sustainability issues in agriculture. 

Meanwhile, reusable packages are also a part of Pelican Products’ (www.pelican.com) strategy. The company’s Repeat Use Packaging program was initially developed to protect shipments of electronics and other sensitive equipment for companies such as Apple and Gateway. The advantages of using high-quality, durable cases for other types of shipments became apparent immediately—there’s less impact on the environment, the container is reusable, and the risk of damaging goods in transit is dramatically minimized. According to the company, a recent study showed that a mere 5 pounds of waste was generated by 250 shipments inside a repeat use Pelican Protector Case (two cubic feet). This was in stark contrast to the 375 pounds of waste generated by the equivalent amount of cardboard boxes necessary for the same number of shipments.

 

Clean, energy efficient DCs get the green light

Now that public awareness has heightened over the impact of transportation and logistics on the environment, warehouses are getting as much scrutiny as seaports and trucks, especially in high-profile regions such as Southern California. 

Tejon Ranch (www.tejonranch.com), located approximately 60 miles north of Los Angeles on Interstate 5, is a multi-use master-planned community. It is also the location for a 1.7 million square foot distribution center for furniture manufacturer Ikea. Given the Ranch’s history in farming and ranching, the focus on environmental stewardship is high on the minds of the company’s executives. 

According to Barry Hibbard, vice president of commercial industrial development at Tejon Ranch, truckers spend roughly $2.90 per hour in fuel costs when idling. To minimize that cost, the Ranch installed electrical power at the truck stop and charges truckers $1.95 per hour. Not only is it cheaper for truckers, but it’s quieter and cleaner for the surrounding community too.

Within a warehouse’s four walls, other changes are taking place. Lighting is one area that warehouse operators can reduce costs. For instance, skylights and fluorescent lighting can improve energy efficiency by as much as 75 percent, while recycled building materials and asphalt, better use of landscaping, and reusing rainwater can all contribute to the bottom line. 

Supply chain solutions provider Manhattan Associates (www.manh.com) offers other ways to trim costs and operate more efficiently in the warehouse. For starters, companies should maximize the efficiency of their conveying and handling processes, advises Manhattan Associates. By integrating material handling and warehouse management systems, the warehouse can reduce the number of times products are moved and touched as well as minimize forklift usage. In addition to reducing handling costs, these techniques help to reduce energy consumption and emissions. Secondly, using advanced warehouse management systems allows companies to streamline warehouse operations to achieve higher levels of cross docking, which in turn cuts down on inventory and increases product turns.   

 

Fostering green practices

While many companies are jumping on the green bandwagon, a handful of them have earned a reputation for “green leadership,” explains John Davies, vice president of green technology research at AMR Research (www.amrresearch.com) 

“Enterprises that want to succeed in the marketplace must integrate ‘green’ thinking into their overall approach to growth and profitability,” he states. “Early movers are reporting long-term advantages both in cost savings as well as new revenue opportunities.” 

There are many examples of green leadership, some quite novel. Seattle-based freight forwarder and 3PL TransGroup (www.transgroup.com) has unveiled the industry’s first 100 percent greenhouse gas neutral logistics solution, called TransNeutral. 

“As a leader in transport logistics, we at TransGroup feel a responsibility to our industry and to the planet,” says Ron Lee, president and co-founder of the company. “So, we formed TransNeutral as a not-for-profit program that helps our customers to offset the climate-effecting impact of their shipments in a way that works collectively to preserve the environment.”

Under the program, TransGroup customers can green their shipments with a nominal contribution (less than 1/7 of a cent per pound on domestic shipments) for every pound they ship. TransNeutral uses a weight-based calculation to determine the amount of climate-effecting greenhouse gases that a shipment emits, and then offsets those gases by contributing to greenhouse gas emission reduction programs involving reforestation, wind power, and biofuel related farm renewal projects.

Sometimes the best green initiatives are truly at our fingertips. The Port of Houston (www.portofhouston.com) recently launched a “Clean & Green” program to clean up litter and debris in and around Buffalo Bayou and the Houston Ship Channel. Five days per week, a land-based crew will collect litter and debris from the banks while a water-based crew will work from a skimmer boat to remove litter from storm drains and banks. The program aims to collect in excess of 10 cubic yards of debris per day over the next year, which is enough to fill 83 garbage trucks. wt

Sidebar: The Forklift of the Future

Earlier this year, the Raymond Corporation (www.raymondcorp.com) was awarded a contract for $750,000 from the New York State Energy Research and Development Authority (NYSERDA) to research hydrogen fuel cell applications in electric lift trucks. 

The company has turned its New York manufacturing facility into a “living lab” with hydrogen fuel cell-powered Raymond forklifts in the facility. Raymond is also working on developing the necessary infrastructure for indoor fast-fill hydrogen refueling systems, which also represents new technology (refueling systems are typically installed outdoors). The goal of the program is to study the performance of hydrogen fuel in electric forklifts and to demonstrate the safety of a hydrogen-fueled forklift environment. Exp ected outcomes include a working indoor refueling system that meets all required code and standard requirements, and documented best practices for the design and application of indoor refueling systems.

“The Raymond Corporation is committed to researching the application of hydrogen as an alternate method for storing energy on its forklift equipment,” remarked Michael Field, Raymond vice president, research and development. “The NYSERDA contract confirms the merits of our project and supports our business strategy to develop fuel cell technology for electric forklift applications. By using our own facility as a test lab, we can streamline the development process and learn firsthand the requirements for using fuel cell powered forklifts in a manufacturing environment.”

In a conventional electric lift truck, the energy used to drive the truck is stored as electricity in a lead-acid battery. In a fuel cell, energy is stored as hydrogen gas and converted into electricity as needed. There appears to be significant potential to improve warehouse productivity and lower operating costs if fuel cells are used in high throughput warehouse applications. Hydrogen fuel cells offer higher productivity because they can be rapidly refueled—in several minutes versus several hours—eliminating the need to change a battery. A battery recharging cycle is long, typically taking one shift to charge and another shift to cool down the battery. For a three-shift operation, three batteries plus a charger may be needed per lift truck, as well as room to store and maintain them. Cost savings come from eliminating the need to buy batteries and chargers, and from labor savings. Another advantage is that the voltage delivered by a fuel cell remains constant; the vehicle experiences no performance degradation until the fuel runs out. Furthermore, hydrogen is environmentally clean; the only by-products from a fuel cell are water and heat.