Green logistics: Industry expert cites ways of going green and cutting costs at the same time
Sean Murphy, Associate Editor -- Logistics Management, 10/21/2009
That was the message Jack Ampuja, president of the consulting firm Supply Chain Optimizers, and executive director of the Center for Supply Chain Excellence at Niagara University in Lewiston, N.Y., was trying to get across at a Council of Supply Chain Management Professionals (CSCMP) New England Round Table event in Waltham, Mass. Tuesday night.
The event featured, among other things, a description of a new type of tractor for hauling freight, which Ampuja dubbed the "Green Machine" because of its environmentally-friendly design.
The tractor, he said, was conceived and built by a number of former trucking industry workers and veterans in Michigan. The tractor, Ampuja said, contains a long list of "green" enhancements, including nitrogen-filled tires (ordinary air escapes through the rubber over time), carbon-fiber springs, and a special hydrogen injector system for the engine.
Right now, companies like office furniture maker Hayworth, along with Pepsi, Anheuser-Busch and other companies, are expecting to save thousands of gallons of fuel per truck per year, and cut greenhouse gas emissions by amounts measured in metric tons.
But Ampuja was selling a point, not a truck: for all the cutting-edge improvements and patented design, Ampuja said the tractor is built out of off-the-shelf parts, and therefore costs the same as any other tractor on the market, so using them will not cost extra. If anything, Ampuja said, using them will save money long-term.
And that, Ampuja told the packed room, is the reality of the green movement in the corporate world.
"They (cutting costs and helping the environment) are not at odds," he said. "They complement each other."
Ampuja cited a recent study by the Aberdeen Group which found that leading companies are "greening up" by, among other things, redesigning logistics systems and redesigning packaging.
In addition to technological advances, Ampuja challenged the audience of supply chain managers, consultants and vendors to look to their own operations for other ways to go green and save money. Network optimization applications, he said, will be another major component of a green plan in the future, especially with oil prices expected to rise.
This week, prices passed the $80/barrel mark, and the room was silent when Ampuja asked if anyone thought prices would fall anytime soon. That will become a big problem, he said, for unprepared companies with poorly-organized supply chains.
"Most networks are built around lower energy costs," he said.
Right now, Ampuja said, the smart companies are working on "what if" plans for oil prices at $100, $120, or even $150/barrel, ready to implement when and if prices go that high. With each plan, companies have to think about how many distribution centers they have, how efficient the routes are between them, how they manage inventory to feed those routes, and other issues.
"The (plan based on) $150 oil is going to give you a different network than $80, I guarantee," he said.
Another area that companies need to revisit is packaging optimization. Ampuja said packaging can cost companies much more money than it needs to, and use too many raw materials. Companies that cut packaging down to size can cut as much as 40 percent of their shipping costs.
To illustrate inefficiencies in packaging, he passed around a box roughly the size of a large toaster oven, which was full of plastic bags filled with air, standard packing material designed to protect fragile contents.
The problem was, Ampuja said he received a pair of socks in the box.
Ampuja also held up a single bottle of contact lens solution found on more store shelves and its box, which was almost large enough to hold two of the bottles inside.
"Anyone in here think that's efficient?" he asked the crowd.
Non-manufacturers, Ampuja said, aren't excused from the issue, as even retailers have suppliers that are likely to have a packaging efficiency problem.
"Companies that share a supply chain, they share the problems, or they share the opportunities," he said.
The ultimate lesson, he said, was that there was no real mystery to going green. In fact, he said, supply chain management is all about that, in a manner of speaking.
"All of you get paid to do more with less," he said. "All I'm telling you is you've got to keep doing that."
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