Supply chain sustainability projects are often sold on the argument that going green makes good business sense. Here are three case studies that offer clear, irrefutable evidence that sustainability and profitability can be compatible in the supply chain domain.

Logistics is a leading source of carbon. Nearly 6 percent of the greenhouse gases generated by humans come from the flow of products to consumers. Reducing these emissions takes more than setting goals; it requires clear, measurable initiatives that hit sustainability targets while delivering lower costs and higher service levels.
Sponsored by Environmental Defense Fund (EDF), MIT CTL worked alongside three US companies to help them quantify the carbon footprint of some of their logistics initiatives. The goal was to document the projects, and illustrate to other companies that it is possible to reduce cost and become more environmentally friendly. Here is a summary of each project.

Ocean Spray: Leveraging Distribution Network Redesign

In this case study we present two Ocean Spray initiatives – distribution network redesign and intermodal shift from road to rail – that in combination led to a 20% reduction in transportation CO2 emissions, while achieving comparable cost savings across the transportation network.
Ocean Spray, CSX (the rail operator), and fruit shipping companies partnered in order to enable Ocean Spray to ship more products intermodally from its New Jersey distribution center to the company’s Florida facility. Prior to the collaboration, these boxcars were returning empty to the Florida region. Shipments that shifted to intermodal generated 65% less emissions while saving over 40% of transportation costs.

Ocean Spray added new manufacturing and distribution capabilities in Florida to support the company’s growing customer base. To fully and effectively utilize these additions, Ocean Spray conducted a national network re-design project to determine which customers will receive product from the new location. Ocean Spray projected that over 17% of the total shipments will be served from the new facility.

Caterpillar: Light-Weighting and Inbound Consolidation

In this case study, we analyzed the inbound shipping operations of Caterpillar’s North American large mining truck facility to determine – based on weight, packaging, routing, and scheduling – opportunities to streamline shipping protocols, and thus reduce carbon emissions associated with the supply chain. When combined, the streamlined shipping and packaging efforts could reduce Caterpillar’s overall carbon emissions by 340-730 tonnes of CO2 per year.

Caterpillar uses steel containers to transport parts, and the company has been working for the past four years to phase out these steel containers and replace them with plastic containers, which weigh considerably less.
To construct the very large vehicles used in the mining industry, parts are shipped from all over the globe for assembly at Caterpillar’s manufacturing facility in Decatur, Illinois. We analyzed historical shipment data to identify areas where shipments could be consolidated to save fuel and reduce vehicle CO2 emissions.

Boise: Leveraging Rail Direct Service

Boise Inc. has launched two initiatives to improve its logistics operations and environmental performance. The Carload Direct Initiative is shifting product transport to rail, and the Three-Tier Pallet Initiative is increasing railcar utilization. Both initiatives have resulted in a combined 62-72% reduction in the company’s CO2 emissions, as well as cost savings on those shipments.

Traditionally, manufacturers use trucks, or a mix of trucks and rail, to transport their products to customers. As trucks produce greater emissions than trains, a logical way to reduce emissions is to minimize the use of trucks and maximize the use of rail. Boise coordinated with its customers to promote rail transport so that product could be sent directly from the manufacturing plant to the customer’s warehouse. The transition from using a mix of truck and rail to exclusively rail eliminated more than 2,600 tons of C02; the equivalent of saving over 264,000 gallons of fuel consumed by road vehicles.

Prior to this project, railcars were loaded two pallets high, leaving a space from the top of the second pallet to the roof of the railcar, thus under-utilizing the full capacity of the railcar. Boise redesigned its pallets and loading structure by creating a half-pallet, which allowed the company to rethink pallet stacking and maximize shipping capacities for its loads. These redesigns maximized carloads by reducing the number of shipments required to deliver product. Using just 930 railcars in 2011 reduced the company’s C02 emissions by 190 tons, which is equal to the C02 emissions from 21,637 gallons of fuel consumed by road vehicles.

Results like these can persuade even the most skeptical executives that a greener supply chain delivers green.

This article was written by Dr. Edgar, Research Director, Carbon Efficient Supply Chains Research Project, MIT CTL, and co-founder of the LEAP consortium, [email protected] The case studies described in this post are available here.

The article was also published on the MIT Supply Chain blog.

Posted in Warehousing & Distribution by patrick

There are many events that bring together logistics professionals from all over the world. However, some are more useful, some are less useful. To find your way through the jungle of trade fairs, conferences, shows etc., we want to introduce you to this year’s most interesting and promising events. The list is based on international reception, the variety of both participants and exhibitors, offered programmes, as well as our own experiences.

1. Supply Chain & Logistics 2013

Senior-level Decision Makers – SCM Workshops – Logistics Case Studies

2. Transport Logistic 2013

International logistics – World’s largest logistics trade fair

3. Logitrans

European Cargo – Charter Inquiries – Growing Market

4. Transport Logistics Brazil

Supply Chain South America – Logistics Europe & South America

5. Supply Chain Event 2013

Integrated Logistics Expertise – Meeting Place European Supply Chain Mgmt

6. ICT and Logistiek

Information Communication Technology in Logistics – IT – Warehouse Mgmt Systems

7. Wold Of Industry (WIN) India

Indian Market – Industrial Supply – Materials Handling

8. CSCMP Annual Logistics Conference

Roundtables – Education Sessions – Exhibitions

9. China (Shenzhen) International Logistics and Transportation Fair

Logistics Industry China –  International Exhibition

10. International Conference on Logistics and Sustainable Transport

Academic Logistics Event – Sustainability Issues – Conference

Posted in Warehousing & Distribution by patrick

With budget constraints and economies struggling, firms have to look for new ways to make business work better. We look at some examples of how companies are doing this by bringing new logistics solutions to existing market places, specifically in the EU.

Further expansion for Menlo

Peugeot to handle GM Europe logistics

Posted in Warehousing & Distribution by patrick

How can freight transportation add value to modern supply chains when globally – and especially in Asia – the function tends to be only loosely linked to shippers’ supply chain strategies?

In Asia, companies are often divided into multiple business units, with each unit operating independently. This fragmentation makes it difficult to incorporate transportation into the company’s operations.

Companies in the west are starting to realize that transportation has a key role to play in the design of supply chains. They understand that including factors relating to the movement of goods in the initial design stages can significantly improve supply chain efficiency.

Here are three examples of how companies are integrating transportation into supply chain strategy.

Volvo Cars

Volvo Transport is the distribution subsidiary of the Gothenburg, Sweden-based car manufacturer, Volvo Group. The United States is a major market for Volvo cars. In the 1990s, the manufacturer shipped vehicles via direct ocean services to American ports and road/rail links to customer showrooms. Overall transit time was 30 days to the East Coast and 36 days to the West Coast.

At any given time, Volvo had some $500 million worth of vehicles in transit. The high value of this inventory, and other factors, such as the risk of cargo damage and late delivery, persuaded the company to look at other transportation options.

Two alternative configurations were considered and used. A high-speed feeder service between Gothenburg; Zeebrugge, Belgium; and US ports reduced door-to-door transit time from 8 to 10 days. The second alternative route was a high-speed direct service from Gothenburg to the United States that cut lead times to four days. Sea transportation is more expensive in both cases, but the extra cost is offset by inventory savings of 60% to 85%; shorter and more reliable delivery times; and less cargo loss or damage.

Motorola-UPS

In the late 1980s and early 1990s, semiconductor company Motorola set itself a target of 168 hours for delivery lead time. In other words, from the time an order was received by Motorola, it should be delivered to its customers within seven days. Motorola had factories in 7 locations in Asia (Japan, the Philippines, Malaysia, Hong Kong, Taiwan, South Korea, and China) and downstream plants in the United States, Canada, and Europe. Even though Motorola had managed to shrink the production cycle to four days, transportation to the United States was around 4.6 days.

At the time, Motorola was using a number of transportation companies based on their availability and price, and was incurring delivery delays and cargo damage. The company decided to partner with United Parcel Service (UPS) and integrate the logistics service provider into its supply chain design. The strategic partnership delivered a number of improvements, including almost $20 million in savings and a 98.4% on-time delivery rate.

HP-COSCO

Hewlett-Packard (HP) operated a European hub in the Dutch port of Rotterdam for distributing product to Central and Eastern Europe. Demand changes, coupled with the introduction of slow steaming by ocean carriers, resulted in longer transit times. Although freight rates declined, slow steaming also increased logistics and inventory costs.

In response, HP entered into an agreement with ocean carrier COSCO to relocate its European hub to Piraeus, Greece, in early 2013. The new hub will distribute product to Central Europe, the Middle East, North Africa, the Mediterranean region, and the former Soviet republics. An intermodal corridor will be created for shipping containers from Piraeus to the north. The new configuration is designed to take advantage of the slow-steaming era and will speed up product delivery.

Other carriers in the rail, maritime, truck, and air modes are engaged in similar efforts to involve transportation in the supply chain design process. There are ongoing challenges in the form of unexpected disruptions, such as the recent labor actions on the US East and West coasts. Also, the freight industry must continuously reinvent itself to remain competitive in the many markets it serves, and to stay ahead of new regulations and operational issues, such as rising fuel costs.

But these challenges are an intrinsic part of the logistics business. In the future, transportation players will create value and deliver innovations by marrying their services with customers’ business models and the many categories of products they move.

Demographic changes and political developments, particularly in Asia, and increases in transportation costs stemming from rising fuel prices, will require new supply chain designs. In addition, over the next 15 years, some 1.8 billion people are expected to enter the global consuming classes. Worldwide consumption is forecasted to nearly double to $64 trillion during that time, with half of the extra buying power residing in emerging markets.

Asia will require supply chains capable of supporting these markets efficiently and responsively, and transportation must be part of the region’s response. This is already happening. Alternative routes that connect Asia with Europe are being tested. An example is a new 11,000 km railway connection between China and Germany that crosses Kazakhstan, Russia, Belarus, and Poland in just 18 days. The Arctic route that links Asia with Europe and North America is another example.

As Asian companies continue to drive economic growth, both regionally and globally, they must not overlook transportation planning as a critical component of the supply chains that will facilitate that growth.

This article was written by Dr. Ioannis N. Lagoudis, Director of Applied Research, Malaysia Institute for Supply Chain Innovation. For more information, please contact Dr. Ioannis N. Lagoudis at: [email protected]

The article was also published in the winter 2013 issue of Supply Chain Frontiers, the publication of the MIT Global SCALE Network. To access Frontiers go to: http://ctl.mit.edu/frontiers

Posted in Warehousing & Distribution by patrick

LogisticsDegree.net is a website that focuses on the educational aspects of logistics. As logistics can be seen as a business field with great perspectives, such as „exciting job opportunities, high salaries, and an upward career mobility“, it is only smart to earn a corresponding degree.

However contrary to that, it is not that easy to find your way through the jungle of degree programmes. Almost every university nowadays offers degrees in logistics, not to mention private schools and in-house traineeships. To help interested people find the right programme in the US, Logistics Degree is the first contact point.

In addition, many general informations about all logistics degree related topics can be found there. Just recently a list of the Top 100 Elite Resources For Logistics was published. This list encompasses „a huge network of cargo companies, freight forwarders, security and tracking operations, warehouse managers, truck drivers, and dozens of other players“. The idea is actually to provide people with sources that are highly relevant to professionals in the field of logistics.

Social Networking in Logistics

The first place is typically for the Zeitgeist, as BlogsInLogistics.com (#1) is a social networking site especially for professionals. The growing website offers links to Facebook, Twitter, job boards, forums, and outside blog links. A very specific alternative to LinkedIn without any advertisements or suspect business inquiries.

We are happy to announce that EULogisticsHub.com took the 10th place, right after popular sources such as InboundLogistics and GlobalLogistics Media:

„The European Logistics hub blog is a central news source for all logistics news in Europe. Major acquisitions, mergers, takeovers, jobs, technology, investments, and green news are all reported on, making it a crucial information source for any European logistics company.“

Green logistics

Specific attention should also be paid to the uprising topics of green logistics, which is represented by the ranks 95 – 100. Sources such as GreenLogistics.org focus on environmental issues in terms of logistics, and offer many examples of how to reduce the carbon footprint. Other companies on this list already include more sustainable services in their portfolio and regularly inform readers about their latest innovations.

In conclusion, we can definitely recommend you to check the top 100. There are many useful sources which you might not have known up to now.

Top 100 Elite Resources For Logistics: http://logisticsdegree.net/logistics-resources/

Posted in Warehousing & Distribution by patrick

According to Thomas Friedman and his internationally acclaimed work “The World Is Flat: A Brief History of the Twenty-First Century”, globalization in the context of 21st century signifies a “global, web-enabled environment that allows for multiple forms of collaboration in real time, without regard to geographic distance, or, in the near future, even language.” This, as well, holds very true for the modern-day operations of logistics, manoeuvering at a level where geographical boundaries and lingual distinctness do not matter anymore.

However, in an economically challenging time, when businesses are going down, and even logistics industry is undergoing rising expenditures and fierce competition from within the sector, the need to cut costs and improve efficiency is paramount and requires urgent measures as logistics alone bills for 10-15% for the cost of a finished product. Some of the variables and factors that require tweaking, to enhance cost-efficiency, are discussed below:

Routine Checkups

By routinely conducting reviews and analyses of their supply chain procedures and deliveries, companies can spot problem areas and deal with issues before they turn debilitating. This strategy not only entails learning from past and current mistakes, but also focuses on continuous process improvement by devising better planning. Systematic planning enlists a robust coordination between different departments, an informed understanding of import and export regulations, and abidance with rules. It also encompasses a detailed and fair documentation of all stages of procurement, to establish the highest degree of transparency, leading to the formation of a solid, successful business relationship with both suppliers and customers.

Domestic or International?

What is more feasible in the long run? Buying cheap from international market and running the item through a long supply chain, or making a quick purchase near the point of final destination? To make this crucial calculation, various factors, such as inventory costs, freight, duty, and brokerage, need to be weighed in. In the end, domestic option might look more cost-effective, compared to sourcing from overseas. Estimate how much will it cost in terms of money and time, to get a shipment of paper from China to Heidelberg as compared to buying the same from Berlin or any other nearby European country.

Insurance and Premiums

Instead of paying a lump sum on insurance premiums, the companies can communicate with their insurance providers, to reduce the premium frequency, and issuing monthly, quarterly, bi-quarterly or yearly plans to accommodate them. Opting for different installments for vehicle and truck insurance, or utilizing various discounts some insurance companies offer, may, therefore, greatly minimize the impact on the cash flow of the logistic company. Another way to reduce the insurance costs and to keep the amount of cash going into premiums under control is to remain informed about the lowest quotes available in the market. Informing the current insurance company about the lowest bids can also act as a leverage, to reduce insurance costs. This may not always work, but in some situations, still offers a viable option. Furthermore, to reduce incurring insurance costs, the deductibles should be carefully reviewed, and discussed with the insurance company, before making any decision about the insurance policy; lower deductibles generally translate into higher premiums.

Logistics Automation

Outfitting with cutting-edge technology and updating software can greatly enhance a company’s productivity while reducing the costs which would otherwise be generated by reliance on human input and output. Automation entails employing information technology, machines and control systems, to increase productivity beyond what human labor can offer in service and goods delivery. The higher productivity linked with automation systems causes a drop in labor costs. It helps to minimize recruitment and training costs, reduces the lost time because of injuries and illnesses, improves capacity to meet future goals and demands, leads to higher staff retention, and, ultimately, leads to better customer care.

In an increasingly competitive environment and recession hitting all sectors of the global economy, it has never been more important to cutcosts and maximize efficiency. Who makes the most of the business opportunities, depends greatly on how shrewdly they maintain an uninterrupted supply line while outwitting the opponents in their own game, by making a crucial yet decisive move: cutting costs. Success in the modern age is not a game of chance but a game of wits and meticulous planning.

by Jennifer Lewis

Posted in Warehousing & Distribution by patrick

As a result of its continued growth in other European countries, the Dutch discount chain  Action is to build a distribution centre in Echt-Susteren. It will be the concern’s second distribution centre. This will be – for Limburg – a particularly large building, expected to be around 80,000 square metres, to be built in twophases. The first phase will comprise 50,000 m2 and it is expected that it will be operational in the fourth quarter of this year. In the first phase the distribution centre will provide employment for 230 people, growing within two years to 600. Construction will require an investment of almost €40 million. The decision by Action to locate in Limburg is the result of their cooperation  with the municipality of Echt-Susteren, LIOF, the Province of Limburg, the Netherlands Foreign Investment Agency, landowner OML and real estate advisor CBRE.

The new distribution centre will serve Action shops in the south of the Netherlands, as  well as those in  Belgium, Northern France and Germany. The second phase of building work is planned for the end of next year, when another 30,000m2 distribution area will be added.

Mayor Jos Hessels of the Municipality of Echt-Susteren:“In addition to all the understandable attention to the development of the campuses in Limburg, it is good that a company such as Action is able to provide employment within the logistics top sector to that category of employees with more difficult access to the labour market, but with sufficient abilities to function excellently in a distribution environment. Werkplein will play a major role in guiding potential employees towards Action”.

Limburg’s Provincial Deputy Twan Beurskens of Economic Affairs explains that regional employment in particular will get an “enormous boost”. “Action’s choice of our province is once again overwhelming proof of the logistic strengths of Limburg, also judged in international competition against locations in Belgium and Germany. It is proof that the provincial policy of concentrating on the logistics top sector is again bearing fruit”.

“This shows that the Netherlands is an attractive country in which to invest”, according to minister Kamp of Economic Affairs (EZ). “This will provides both income and jobs in the Netherlands. And we can certainly use both in these difficult economic times”.

Managing Director Jérôme Verhagen of LIOF says that the department of Foreign Investments & Business Development has been closely involved with Action’s advisors right from the first contact in the whole process of  location choice, and later on also for realisation of subsidies. “We suggested and discussed five locations with the company, and then brought in the Province and the employers servicepoint Werkplein to obtain employment subsidies and gain their cooperation in finding and training candidates for jobs at Action. It is partly as a result of this process that the establishment at Echt-Susteren has been made possible. The fact that employment opportunities clearly connect up with the supra-regional labour market is of course fantastic”, according to Verhagen.

The first Action shop was opened in July 1993 in Enkhuizen and in 1995 the first distribution centre in Zwaagdijk-Oost became operational. In subsequent years the number of shops increased quickly. At the moment the chain has around 340 outlets in the Netherlands, Belgium, France and Germany, and each week two new shops are added, mainly in Germany and France.

by Mark Koppers

Posted in Warehousing & Distribution by patrick

Are you running an efficient warehouse? Do you have an efficient workforce? Those are questions that all warehouse managers must ask themselves at some point or another because according to a recent survey by Intermec, several thousand hours are lost each year to warehouse workforce inefficiencies. The survey also refuted the common misconception that new technology will make up for lost time and improve productivity. Nearly 90 percent of the warehouses surveyed believed that to be the case.

Technology can certainly help streamline processes in the workplace, but it’s best to start with processes that are not tech-focused in order to boost efficiency. Distribution software reviewer Software Advice recently wrote an article outlining the top ways to improve processes and they suggested these simple steps.

Ask Leadership to Walk the Floor

People in senior management roles are there for a reason. Ask them to walk the floor of the warehouse. In addition to being able to offer insight, they also have a fresh set of eyes since they are not usually in that area of the facility.

Monitor Changes and Compare Against Error Rates

It’s common for a warehouse manager to use internal picker error rates to monitor warehouse operations and pinpoint inefficiencies, but this does not alway uncover the cause of error.

Develop New Processes to Establish Accountability

Checks and balances are a must in an efficient warehouse. Technology is a good way to recognize errors in fulfillment but human errors must also be corrected. Hold workers responsible for any mistakes that they make.

For example, if a packer finds an error made by a picker, instruct the packer to remove the rejected item. Then have the packer call the person responsible to find and replace it with the correct item. Overtime, this will lead to a more focused staff because of the inconvenience in making a mistake.

Profit sharing programs are a good way to motivate employees because it gives them a stake in the company. And this type of program also presents the perfect opportunity to show employees how much their habits impact the company.

Before rushing to implement new technology to increase efficiency, it’s a good idea to use these strategies to improve upon the processes that your warehouse already has in place. This will help to ensure a strong business framework, which will maximize the impact of new technology upon implementation.

written by Brittany Richards

Posted in Warehousing & Distribution by patrick

The Netherlands is often described as the „front door to Europe“. This is mainly due to the strategic location, latest transportation and IT infrastructure, and both lower import and export costs in comparison to its neighbours, such as Germany or France. Several Fortune 500 companies such as IBM, Coca Cola, and Cisco systems therefore chose to access Europe via the Netherlands. However there are still construction zones in the Dutch logistics structure.

The Nederland Distributieland (NDL) can best be described as the foreign department of the Dutch transport and logistics sector. Among other things, the NDL is trying to convince foreign companies to conduct their trade through the Netherlands, and engage Dutch logistics companies. But as the times are changing, the NDL needs to be overhauled and optimized.

Over time the solidarity between the players in the Dutch transport and logistics sector has given way to fragmentation. Small and medium businesses are happy because the NDL delivers and supports contracts, but great players go their own way. This also applies to the regional development institutions, which send people abroad trying to lure companies to their regions.

To counteract any adverse affects, the NDL undergoes several changes. For example, Carel Paauwe has just been appointed as the new director, and he has ambitious plans. In addition to preventing fragmentation of logistics players, Paauwe has promised that the total value of logistics services in the year 2020 will be tripled to roughly € 10 billion. This optimistic utterance is based on the flow of goods from countries like China, Vietnam or India. Therefore Paauwe plans to adjust the approaching of top sectors, such as medical, pharmaceutical, food and high-tech, as well as of companies in foreign countries.

And there is more to come. During a symposium at the LIOF Business Center about the

opportunities for rail freight in the south of the Netherlands, many parties mentioned that they have been considering to switch to rail for a long time. However they are still looking for someone who coordinates everything. Similar to the spider in the web, which syntonizes supply and demand for both terminals and companies to finally provide the cheapest way for getting loads from A to B.

The proposed solution to this problem: synergy. “Collaboration is the key,” says Judith Kleinen, Land Transportation Category Manager Supply Chain Chemicals SABIC Europe. „The companies should not do it by themselves, someone needs to arrange the terminals and coordinate the rail transport so that the whole process will be more cost effective.“

The conclusion of the symposium: cooperation is the basis for successful international freight via Limburg’s rail. To achieve this, participants of the event are currently searching for a proper manager or institution.

The Netherlands are steadily on the up concerning European logistics. The many cooperations which are in the pipeline and rising investments in the market show that the last remnants of the big economic crisis are almost overcome. However it remains to be seen how the current Eurozone crisis develops, and how it influences the economy.

Posted in Warehousing & Distribution by patrick

Transportation of goods by rail is very attractive, especially as freight wagons with products from different companies literally can be connected with each other. With the realization of the Rail Terminal Chemelot, which receives a further investment of € 13 million, this will be managed in a more efficient and safe manner.

The flow on the roads then will be of more benefit for both companies and RTC. With the realization of the Rail Terminal, approximately 35.000 fewer truck movements will occur in the first year. In 10 years, this reduction is expected to reach 100.000 truck movements per year.

For further informations, visit http://www.elc-limburg.nl/en/limburg.html

Posted in Warehousing & Distribution by patrick