Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

Fuel Efficiency and the Green Bonus

Sustainability and cutting gas consumption

The skyrocketing cost of fuel is reason enough to take as many miles out of distribution networks as possible without compromising service levels. But aside from helping to control diesel consumption costs, these efforts yield an environmental payback that transportation practitioners should not overlook.

Shippers and service providers are looking to cut fuel consumption in a number of ways. Here are some examples. 

  • Optimizing orders, resulting in more weight on a truck or more efficient cube utilization and fewer LTL shipments.
  • Optimizing modes, especially shifting truckload to intermodal or rail.
  • Taking control of inbound transportation and actively managing it.
  • Eliminating deadheads with continuous moves and interplant shipments.
  • Reengineering freight and distribution networks.

Strategies like these also reduce carbon emissions levels. And irrespective of the main objective, shrinking the carbon footprint is a valuable benefit for any company. Greening the supply chain might be attracting less attention today than was the case before the Great Recession, but these issues will not go away and companies generally are looking for more information on the environmental performance of their trading partners.

But first you need to measure the footprint of your operations. There are different ways to do this, depending on the measurement standard you choose to apply. At TMC, we use the Greenhouse Gas Protocol (GHG Protocol) that claims to be “the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions.” The protocol was developed by a partnership between the World Resources Institute and the World Business Council.

The GHG tool is designed for use in specific functional areas such as supply chain, and the number of these applications is increasing. This past March the organization announced an initiative to provide common approaches for calculating carbon emissions of information and communication technology products and services, for example.

The protocol might sound complicated but the basic math is straightforward. In essence, you figure out the per gallon fuel consumption on a specific route or lane and apply a combustion rate factor, and multiply this figure by the number of pounds of carbon that a gallon of diesel burns.

As is the case with many performance calculations, probably the most bothersome part is defining the inputs. Combining shipments on a multi-stop route, allowing for deadheads and the type of equipment used in a fleet you do not own, are some of the complicating factors that have to be taken into account. But transportation professionals are very familiar with these nuances.

We have made it easier by building the carbon footprint calculation into TMC’s transportation management system (TMS). Managers can calculate emissions levels on different segments at the touch of a button. Another advantage of making the calculation a TMS routine is that it can be used as an input for other analytics. Analysts are able to designate carbon emissions levels as a constraint when designing or reconfiguring a distribution network, for instance. TMC carried out such an analysis for a company that set itself a goal of significantly reducing carbon emissions levels in its operations.

Regardless of how ambitious your carbon footprint targets are, by trimming your freight transportation fuel budget you are probably delivering a green dividend that the organization should know about.

Chris Brady is co-presenting a session on the practicalities of network fuel efficiency at the Council of Supply Chain Management Professionals’ annual conference, October 2, 2011, in Philadelphia.

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