Transport and Distribution Workshop John Sheehy - Supply Chain Partnership Advisor 3 October 2013 WRAP and 3663
Housekeeping and workshop conduct
Agenda 09.30 09.50 Welcome, introductions, updates 09.50 10.10 Context and definitions 10.10 10.40 Macro and micro business drivers 10.40 10.50 Task 1: Micro-level/business-specific drivers 10.50 11.20 Good practice and case studies 11.20 11.35 Task 2: Supply chain opportunities 11.35 11.50 Interactive exploration of opportunities and barriers 11.50 12.00 Task 3: Action Plan Updates and Summary
Sustainable Logistics Context and useful definitions
Sustainable Logistics What does this mean in broad terms? What does it mean in terms of your business? Let s quickly share a few ideas!!
A definition of Sustainable Logistics Sustainable Logistics is an umbrella term for a range of measures that can be used to cut CO 2 emissions within companies logistics operations. The concept centres on the storage and movement of goods in a way that supports continued economic growth while protecting the environment and delivering a better quality of life for future generations Source: Institute of Grocers and Distribution - Nov 2012
Definition examination Sustainable logistics is an umbrella term for a range of measures that can be used to cut CO 2 emissions within companies logistics operations. The concept centres on the storage and movement of goods in a way that supports continued economic growth while protecting the environment and delivering a better quality of life for future generations
Sustainability as a Business Management Approach Environmental protection and resource conservation Economic prosperity and continuity Social well-being and equity The 3 Ps
The three elements of Sustainable Logistics Performance A sustainable supply chain is one that includes measures of profit and loss as well as social and environmental dimensions. Such a conceptualisation has been referred to as the Triple Bottom Line Environmental Performance, Social Performance, Economic Performance Source: Chartered Institute of Logistics and Transport - Oct 2012
Sustainable Logistics Macro and micro drivers
Global warming Projected future temperature rise Observed temperature range for past 1000 years (white line indicates average) Under a business as usual scenario, temperatures may rise by up to 6 C by the end of the century. Pre-industrial SOURCE: IPCC, 2007; Stern Review; team analysis Industrialisation
The food and drink processing industry is the fourth highest industrial energy user in the UK. In 2010 it consumed nearly 37TWh which is enough energy to power 125,000 homes for nearly 15 years; and emitted around 11 million tonnes of carbon dioxide into the atmosphere.
Macro Drivers Climate change the correlation between CO 2 emissions and temperature Fossil fuel availability soaring demand for oil and diesel leading to higher prices Road congestion road traffic exceeding road capacity Energy use rising prices and an inherent lack of energy efficiency in the food and beverage industry Government emissions targets - reducing the UK's greenhouse gas emissions Climate Change Act 2008 (against 1990 levels).
UK carbon budgets Budget period Target reduction against 1990 levels 2008 2012 23% 2012 2017 29% 2018 2022 35% 2023 2027 50% - at least 80% below 1990 levels by 2050. http://www.decc.gov.uk/assets/decc/11/tackling-climate-change/carbon-plan/3702-the-carbon-plandelivering-our-low-carbon-future.pdf
Road Traffic Emissions DfT Statistic - In 2009, domestic transport accounted for 24% of all UK greenhouse gas emissions with the vast majority of this, at around 90% of all transport emissions, coming from road transport. Therefore 21.5% of UK total emissions is road transport.
Legislation Road Traffic Fuel Obligation The Renewable Transport Fuel Obligation (RTFO) order obligates fossil fuel suppliers to produce evidence showing that a percentage of fuels for road transport supplied in the UK come from renewable sources and are sustainable, or that a substitute amount of money is paid. All fuel suppliers who supply at least 450,000 litres of fuel a year are obligated. 2013 requirement is that 5% must be Bio-fuel.
Potential Micro Drivers Centralised distribution supply chains built around a consolidated stock holdings and bulk movement of product Stockless supply chains the move to smaller, more frequent deliveries. Vendor Managed Inventory. Business consolidation manufacturing efficiency versus transport costs Developments in product range a shift from ambient, frozen and national ranges to short shelf life, chilled and local product ranges Consumer expectations how is this driving logistics practices and methods of operation Corporate Social Responsibility building in self-regulating mechanisms to ensure the business actively complies with the spirit of the law, ethical standards, and societal norms
Task 1: Practical exercise Micro-drivers Complete the worksheet When considering your responses try to consider: What are the key micro drivers for your business? How do they relate to the Triple Bottom Line? What are the important micro drivers that influence your supply chain interaction with 3663? What can be taken from this Task that can contribute to the development of your Action Log?
Sustainable Logistics Good practice and case studies
Current Sustainable Logistics Improvement Vehicle developments and technology Greener Fleets - engine specifications - trailer design - greater capacity vehicles vehicle telematics Alternative fuels Biofuels - Natural Gas - electricity - hybrid vehicles Operational processes and people Driver training - improved maintenance fuel consumption Changes to ways of working Logistics system redesign Vendor Managed Inventory (VMI) - new ordering processes/systems - delivery and service plans - transport collaboration - out-of-hours
Vendor Managed Inventory VMI is a family of business models in which the buyer of a product (business) provides certain information to a vendor (supplier) of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer's consumption location or store. The vendor specifies delivery quantities sent to customers through the distribution channel using data obtained from Electronic Data Interchange to make sure that the buyer has the required level of inventory by adjusting the demand and supply gaps.
Vendor Managed Inventory One such model would be a process where the vendor (supplier) creates orders for their customers based on demand information that they receive from the customer. The vendor and customer are bound by an agreement which determines inventory levels, fill rates and costs. This arrangement can improve supply chain performance but reducing inventories and eliminating stock-out situations. One of the keys to making VMI work is shared risk. In some cases, if the inventory does not sell, the vendor (supplier) will repurchase the product from the buyer (retailer). In other cases, the product may be in the possession of the retailer but is not owned by the retailer until the sale takes place, meaning that the retailer simply houses (and assists with the sale of) the product in exchange for a predetermined commission or profit (sometimes referred to as consignment stock).
Ref: ECR UK Transportation Collaboration Guide Transport collaboration: Case study Sainsbury s & Nestlé Background As part of the discussions between Nestle and Sainsbury s a number of standard backhauls were identified and implemented A further opportunity was identified for Sainsbury s fleet based in Maidstone (Kent) to collect bottled water from the Nestle warehouse in Dunkirk and deliver to Nestle in Bardon (Leicestershire) This required the procurement of 4 box trailers that were capable of meeting the different load restraint and weights required from Dunkirk, Bardon and Rye Park. Regular flows of traffic were available and timings could be adjusted to match spare tractor capacity in the off peak times at Maidstone The opportunity was also developed to facilitate Sainsbury s to collect volume from a site in Rugby that was transhipped to Maidstone via 3 rd party hauliers
Case study Sainsbury s & Nestlé Revising the Plan Discussions between Nestle and within Sainsbury s identified a much better round trip:- Day 1 - Maidstone run down to Dunkirk via P&O Ferries at Dover and return same day to Maidstone with Nestle product Day 2 - Maidstone despatch Nestle product to Bardon, collect Nestle load for delivery to Sainsbury s Rye Park (Hoddesdon) Day 2 - Collect Sainsbury s Tranship load from Rye Park for delivery to Maidstone
Case study Sainsbury s & Nestlé Implementation Having agreed routes the Sainsbury s Transport team then had to arrange the following:- CMR Insurance cover for France European breakdown cover Set up account with Ferry Operator Obtain Fuel Cards Communication to all involved
Case study Sainsbury s & Nestlé Results Initiative has been running for over 1 year Prompt and open communication between all parties have been essential to success There were few challenges along the way, mainly with Channel Crossings:- Bad Weather / Operation Stack on the M20 in Kent / The odd Industrial dispute in France Total round trip over two days, both in off peak times for Maidstone is 760kms, with full runs for 650kms i.e. 86% of trips. Significant reduction in empty running Kilometres saved per annum: Nestle = 21,000 Sainsbury s = 43,200 Total = 64,200
Driver training: Case study Wiseman Dairies SAFED Background SAFED (Safe And Fuel Efficient Driving) is a DfT-endorsed driving course, consisting of assessment and training. It aims to improve safety and fuel-efficient driving skills by improving driver awareness and understanding, focusing on factors such as journey planning, gear changing, braking, and engine revving. Robert Wiseman Dairies is a leading fresh liquid milk company in the UK. The company procures, processes and delivers milk from 8 dairies and 15 distribution depots throughout the UK and has a 900 vehicle fleet. In 2007 Wiseman Dairies trained 56 drivers through the SAFED Programme. This produced such positive business benefit results that the company implemented, and continues to run, its own annual in-house SAFED course. The company has also installed the Isotraks Active Transport Management System with a Driver Style Monitoring module powered using engine telematics data to monitor and reinforce the impacts of best-practice driver training.
Case Study - Wiseman Dairies SAFED Motivations The drivers for Wiseman Dairies to look at its transport as a route to reducing costs, and increasing environmental performance, were: A recognition of the increases in fuel costs and potential savings A corporate commitment to look at environmental performance A focus on staff satisfaction and driver safety Results Average MPG improvement 8% Average annual fuel saved per driver 1220 litres (900 vehicles - 1 a litre) Environmental improvement for the company Estimated 920 tonnes of CO 2 and 280 tonnes of carbon per annum
Alternative Fuels: Case Study 3663 Background 3663 is a leading foodservice wholesaler distributor and supply partner, offering complete catering solutions to over 60,000 customers of all sizes and capabilities across the UK. The company operates: 26 depots, including 3 regional distribution centres (RDCs) Over 1,025,000 sq. ft. of warehouse storage 765 temperature controlled vehicles making over 48,000 weekly deliveries Employing 4,300 people Supplying over 15,000 products, including over 800 Own Brand lines As part of their wider sustainability agenda the company worked with Convert2Green, the fourth largest bio-fuel producer in the UK, using waste cooking oil to produce bio-fuels for road transport and change the makeup of their vehicle fleet. The intent was to minimise dependency on fossil fuels, and so reduce greenhouse gas emissions and their carbon footprint. Ref: www.3663.co.uk/waste-oil-recycling
Case Study - 3663 3663 has worked with Convert2Green, and vehicle manufacturer, Scania, to establish the most efficient bio-diesel mix for the 3663 delivery fleet. Vehicles were replaced/modified on an on-going basis, and now 92% of the fleet is powered by B30 bio-diesel (a mixture of standard diesel and bio-diesel). A key ingredient of the bio-diesel is waste cooking oil, collected from 3663 customers by Convert2Green. 3663 s Waste Oil recycling scheme is accredited to ISO 14064-1 standard. Results 3663 recycles approximately 2 million litres of waste cooking oil per annum In the past 4 years, 3663 has used just over 10 million litres of biodiesel In the past 4 years 3663 has saved over 14,000 tonnes of CO 2 by using recycled biodiesel This has reduced fleet related carbon emissions by 20%.
System Redesign and Collaboration: Case study Kimberly-Clark, LPR, TDG Background The main issue here is that LPR routinely conducts 6 transport movements but only 3 of real value There is therefore a significant amount of empty running
Case Study - Kimberly-Clark, LPR, TDG System redesign An LPR depot is located within Kimberly-Clark DC site at Northfleet site Site managed and run by TDG 125k Investment required Increased processing capability to 1.6m pallets per annum Vacu-lift sort capability incorporated Pallet repair facility incorporated No transport required to deliver pallets to production Significant reduction in the number of transport legs required Increased efficiency in Northfleet onsite operations Increase in pallet availability and quality Backhauling empty pallets to Kimberly-Clark DC reduces LPR empty running by 7% LPR saving of 194,000 miles per annum & approx 290,000kgs CO 2
Case Study - Kimberly-Clark, LPR, TDG
Sustainable Logistics Identifying your supply chain opportunities
A Road Map to Sustainable Logistics Step 1 Understand the facts. Perform an assessment of supply chain sustainability in terms of financial, social, and environmental status and needs. Step 2 Develop a vision. Develop an understanding of the entire supply chain (through a mapping exercise) and then talk and collaborate with suppliers and customers, along with stakeholders. A vision statement should then be developed that describes the ultimate goals of a sustainability program and includes a set of goals that will drive actions. Step 3 Create a Road Map. Make sure basic compliance guidelines are being met. Develop a business case to address gaps identified in the sustainability assessment. Select low investment projects, with clear ROI initially. Measure improvements. Extend efforts beyond traditional internal improvements. Examine joint improvement events with key supply chain partners. Finally, consider the triple bottom line in design of new products and initiatives. Step 4 Execute, monitor, review, and change. The process should be looped back around in terms of executing, reviewing, and changing direction (if needed) to continuously gain a better understanding of the impacts of decisions on sustainability.
A Road Map to Sustainable Logistics Sample Vision and Goals Vision: Create a sustainability culture that allows employees to improve products and operations to minimize environmental impact while maximizing shareholder return and community benefits. Goals: Short Term Reduce water use by 10% by 2014 Reduce energy use by 10% each year Ensure 100% of Tier 1 suppliers adopt supplier responsibility statements Long Term Redesign products to minimize energy use by the customers Fully eliminate the use of toxic chemicals in product x by 2020
Task 2: Practical Exercise Opportunities There are two elements to this task: Opportunities within your business Opportunities specifically related to working with 3663
Sustainable Logistics Possibilities Current Initiatives in Your Business Are there any on-going developments to build on? Vehicle developments and technology Greener Fleets - engine specifications - trailer design - --------- - greater capacity vehicles vehicle telematics Alternative fuels Biofuels - Natural Gas - electricity - hybrid vehicles Operational processes and people Driver training - improved maintenance fuel consumption Changes to ways of working Logistics system redesign Vendor Managed Inventory (VMI) - new ordering processes/systems - delivery and service plans - transport collaboration - outof-hours
Exploration of supply chain opportunities - facilitated discussion This session is intended to stimulate discussion between the delegates and the host company, and give the delegates and host an opportunity to explore opportunities and barriers within the supply chain for improving the triple bottom line/sustainability.
Task 3: Practical Exercise Action Plan Extension Forms Fill out your Action Plan Extension Forms with 5 steps for improvement. Try to come up with at least 3 actions that you will undertake on your return to work as a result of the workshop.
Any questions?