Sustainability data from all sides
The major benefit of current technology trends like cloud computing and heavily integrated systems is that companies have more data at their fingertips than ever before, but that comes with the pitfall of figuring out how to manage it all.
Often data is parsed out to one business segment or another in a company, losing its cohesive value and potential use as a cost savings tool.
One area where this breakdown has become increasingly apparent is with new technology and services around sustainability. Those responsible for operations don’t always look at this data or have it in hand to make the right investments. This may result, for example, in overlooked intermodal and rail transport benefits as cost savers and sustainability initiators in the supply chain.
Comprehensive data access should be a concern for all logistics managers. However, today’s transportation management systems (TMS) may not take the combination of transport and sustainability data into account when developing freight bids and moves.
In your TMS, it’s important to add as much information as possible to make sure you’re accounting for everything, especially cost savings around fuel. Currently, many companies expect future operational costs to rise alongside fuel costs. Proving the need to invest in new technologies to reduce these costs may be difficult without solid data.
The “Third Party Logistics Sustainability Report,” produced by Robert Lieb, professor of supply chain management at Northeastern University, and Kristin Lieb, assistant professor of marketing communication for Emerson College, features third party logistics services provider chief executive officers who say sustainability projects reduced their operating expenses, especially in fuel costs; with one even noting a 40-percent drop in overall fuel spend.
While TMS should capture sustainability information and use it during bids and proposals, not all systems currently do. If that information is not in your system, ask for it from your partners. It’s a safe bet that they’re trying to keep track of it.
There are also data-related steps you can take when first considering investments and expansion that can help you realize savings. They typically point to the low-hanging fruit that can get executives to sign on for initial investments as well as give guidance on where to look for the higher, juicier fruit.
The first thing to do is look at what data you already have and verify it as much as possible. Data must be accurate because you’ll use it as a baseline to compare future efforts. In terms of sustainability, empty backhauls can be a good place to start. Look at your numbers and try to verify their accuracy by checking things like loads, pallets, weights, estimated versus actual mileage, and any other factor involved with your typical move. Backhauls can also be a good place to commence a fuel cost analysis because more service providers are adding in rail shipments for trailers.
Expand that across all trade lanes, distribution centers, and other areas where you collect data to flesh out this baseline. Here you can also start to look at potential cost savings areas by doing things like taking note of empty space, existing routes that provide no backhaul opportunities, and potential delays at distribution centers and other points in the supply chain.
Next, ask everyone you can about what they’re doing in the analyzed space. This step can sometimes go against traditional wisdom, but it will actually pay off. Thomas Goldsby, a professor of logistics at Ohio State University, said companies testing a variety of sustainable efforts should be willing to share their success stories as well as their failures. Also, reach out to every partner you have because making your network smarter often means it interacts better with theirs, he said.
As you partner or look to new systems, one key is to expand your data pool by looking for any two or more services and systems you have that collect the same types of data but don’t talk to each other. This can include operations like inbound and outbound systems or those that cover moves in designated regions or countries but do not report back to a wider global trade management platform. New processes you implement around one type of data can typically be useful for every other system that measures and monitors data.
Also look at every measurement you can and list where it has an impact. Changes in issues like packaging can echo throughout the supply chain. Reducing the amount of materials you’re shipping or the amount of containers you need to ship them impact every step along the supply chain. Surprisingly, not all systems that you may have currently in place can take those changes into consideration and reflect the actual savings and reductions seen from such efforts.
For new sustainable services, never underestimate the power of existing technology. TMS has gotten more powerful and can help users track much of this data and present it in actionable ways. Also, removing manual steps can speed up most processes and eliminate wasted man-hours and mistakes.
While this industry technology is rarely implemented for its own sake, it’s often not given its full due until long after initial implementation.
Walmart is a great example of how to use TMS to its fullest potential to implement a sustainable and more efficient supply chain. The retail giant has improved fleet efficiency by 69 percent compared to its 2005 baseline. It was also able to deliver 65 million more cases while driving 28 million fewer miles thanks to route optimization, reduced empty backhauls, and increased pallets per trailer. Walmart said that further optimizing its TMS around backhauls led to a savings of more than 56,000 trips.