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Consumer Goods Logistics Blog


Supply Chain Sustainability Key to Increased Profits

Published by Alex Stark on February 19, 2014

"Reducing carbon emissions always results in lower operating costs."  - James Morton, Capgemini.

'Always' is yet to be proven.  But in most cases, companies that implement greener logistics practices are learning that it's not just the right thing to do, it's a smart business decision.  Sustainability is a critical part of a supply chain strategy because it aligns economic, social, and environmental interests.  Sustainability is one of the five forces discussed in the recent Capgemini/KANE paper on Supply Chain Trends Impacting the Consumer Products Industry.

Achieving Sustainability in the Consumer Goods Supply Chain

Consumer goods companies are moving aggressively to exploit profit-enhancing green strategies.  Here are some ideas to consider:

  • Create less waste by reducing packaging materials.
  • Right-size shipping boxes to reduce unneeded air.  This will improve cube utilization and allow you to ship the same volume of goods with fewer trips.
  • Collaborate with other companies who share the same lines of supply to the same retailers.  Combining inventory and co-loading freight reduce emissions and energy consumption.  Your logistics partner may know other companies with like products and like ship-to points and is in a prime position to play matchmaker.
  • Shift a portion of your freight from truck to rail.  Rail services are four times more fuel efficient and reduce emissions up to 75 percent versus trucking.  Pet food maker WellPet commissioned a supply chain study that indicated potential savings of over $3 million by optimizing its distribution network and using intermodal rail for a larger percentage of shipments.
  • Get the most out of every load.  Ceramic tile manufacturer Daltile was "weighing out" boxcars at only 20 percent of the available space because the product was so heavy.  Meanwhile Whirlpool, which had a nearby manufacturing facility, was "cubing out" on its outbound shipments of large appliances at less than 20 percent of the weight limit.  The two companies now co-load freight to share the cost of rail shipments, with boxcars stuffed to the brim with heavy tile and large, lighter appliances.
  • Change carrier selection policy.  Many companies are stipulating in proposals that bidding carriers must meet certain environmental criteria, such as being a member of the EPA's SmartWay program.

The Momentum is Building

Retailers and, ultimately, consumers will pay more and more attention to the sustainability practices of the consumer product companies.  For instance, Walmart is participating in a coalition called the Sustainability Consortium.  The consortium works toward a sustainability index that measures the environmental effects of products that CPG suppliers make.  The results are actually considered by Walmart and other retailers to determine which products they choose for retail sales in their stores.

KANE is working hard to minimize the carbon impact of our own business and those of our customers.  We believe collaborative distribution is just one of the strategies with the most potential to drive dramatic reductions in freight emissions in the consumer goods supply chain. 

Today's KANE's consumer goods distribution campuses enable like shippers to share warehouse and freight costs since they are shipping to the same mass retailers and grocery chains.

Learn more about our supply chain services to the consumer product companies and their retail customers.  Or call us at 888-356-KANE (5263).

Achieving Sustainability in the Consumer Goods Supply Chain

Filed under: Collaborative Distribution| CPG Logistics| Food Logistics