The Carbon Disclosure Project puts out an A List of top performers every year. Their 2014 report lists 190 companies. I took a look at the 21 companies listed in the Consumer Staples category, a mix of food & beverage and retail corporations.
I was curious how many of these companies were using a transportation management system. A TMS can serve to both reduce transportation spend and lower carbon emissions. 14 of the 21 companies that made the list are definitely using TMS:
|Anheuser Busch InBev
|Descartes Analyst Day
|GT Nexus (Ocean)
|Diageo Scope 3 Logistics CO2 emissions Report
|J Sainsbury PLC
|Paragon Software Systems
|Kirin Holdings Co Ltd
|Sustainability Report, Industry Sources
|Paragon Software Systems
|Pick ‘n Pay Stores Ltd
|One Network (used by Pick n’ Pay’s 4PL Imperial Logistics)
|JDA Press Release, Transwide Press Release
|Using TMS, solution not named
|Wal-Mart Stores, Inc.
2014 Climate Performance Leadership Index: Consumer Staples
A few warnings about this chart are in order. First, there are companies that made the A-list that do not appear to have a TMS from an Internet search; that does not absolutely prove they don’t. Secondly, the TMS solutions listed are not necessarily the only TMS solutions used by those companies. I know, for example, Walmart is using other TMS solutions, they just don’t come up in the search. It is also not uncommon for big companies to use different TMS solutions in different regions of the world.
On the face of it, it seemed crazy to me that companies committed to sustainability would not use TMS, particularly in this industry where transportation as a percentage of sales is higher than in many other industries. By reducing empty miles, finding mode optimization opportunities, improving the transportation network, and loading trucks more fully a company not only save money, they get the added bonus of being able to report that they are committed to sustainability.
Also, documenting your carbon footprint is no trivial task. A TMS makes it much easier to gather the base data. Some TMS solutions, MercuryGate, LeanLogistics, JDA, Manhattan Associates, and Descartes for example, have functionality that automates the task of calculating the greenhouse gas emissions.
TMC does as well, but they have gone further. Accurately estimating emissions from LTL is not easy. They have created a new methodology for estimating carbon emissions of individual LTL shipments while considering the complexities of a typical LTL network.
As I looked through the sustainability reports of the “A” listers, a few explanations emerged for why some may not be using TMS.
First of all, for most companies C02 emissions from other parts of their supply chain represent a bigger source of carbon emissions and could be seen as a bigger initial target for reducing carbon. In Heineken’s case, they achieved their 2015 targets for CO2 reductions in production and cooling, but admit they have more to do in distribution. From a prioritization perspective, they have approached the problem intelligently; they have focused on the bigger impact areas first.
Heineken Carbon Footprint
Secondly, a company’s ability to set long range goals depends upon where they are in their journey. Associated British Foods made the A list and they don’t appear to have a TMS. However, their sustainability journey is just beginning. This company’s first sustainability report came in 2013.
Companies early in their journey are more likely to focus on what corporate responsibility professionals call “scopes 1 and 2” and defer “scope 3 until later.” Scope 1 includes direct greenhouse gas (GHG) emissions that occur from sources that are owned or controlled by the company. Scope 2 accounts for GHG emissions from the generation of purchased electricity consumed by the company. Scope 3 emissions are a consequence of the extended value chain activities of the company, but occur from sources not owned or controlled by the company. So for example, if a company outsources the transportation planning function to a 3PL, they would not control those functions and they do not own the transportation assets. Coca-Cola HBC AG is an A lister, but they have chosen to target scope 1 and 2 GHG emissions associated with their plants.
Nevertheless, if you are a company that publishes a sustainability report, and carbon reduction is one of your corporate goals, implementing a transportation management system will usually represent an easy win.