SmartWay Archives

HP and Home Depot Receive Recognition for Excellence in Transportation Sustainability

Procurement | By Steve Banker • 06/15/2015

In the last few weeks I’ve had the opportunity to speak to two of the three large shippers that were SmartWay Excellence awardees. I spoke to Ron Guzzi the Senior Manager of Transportation Carrier Relations and Sourcing at Home Depot. I also spoke to Blair Chikasuye, the Global Logistics Environment Manager at Hewlett-Packard (HP), about their transportation related sustainability initiatives.

The SmartWay Program is a voluntary collaboration between the U.S. Environmental Protection Agency (EPA), Natural Resources Canada, and the freight industry. It is intended to increase energy efficiency while trimming greenhouse gas emissions and air pollution.

Both Home Depot and HP have aggressive targets for reductions in greenhouse gases. Home Depot set a 20 percent reduction target for their domestic supply chain greenhouse gas emissions by 2015 (from 2008 levels).

HP has committed to reducing their first tier manufacturing and global product transportation-related GHG emissions intensity by 20% by 2020, compared to 2010. HP has made great strides in fulfilling this commitment and, as of December 2013, achieved a GHG emissions intensity reduction of 18% compared to 2010 levels.

At both companies, the transportation department has a role to play in helping their companies meet their overall corporate sustainability goals. Both Home Depot and HP are pushing to convert more shipments from truckload to intermodal. In Home Depot’s case, they are using a transportation management system (TMS) from Manhattan Associates to help facilitate this. HP is working with Menlo Worldwide Logistics as their managed transportation services provider. Menlo, in turn, utilizes their own homegrown TMS application.

Ron Guzzi from Home Depot leads a team of 10 people focused on getting carrier bids, writing the contracts, and making sure awarded contracts are adhered to. At Home Depot, carriers compete for business based upon cost, reliability, and sustainability. At Home Depot, Ron’s transportation team is influenced by the environmental team, “but we drive the procurement process.”

Ron made the point that every dollar of their North American transportation budget is spent on SmartWay certified carriers. Home Depot is one of the very few shippers that has gone beyond just having a preference for working with SmartWay carriers to giving preference to carriers that score in the top categories of SmartWay’s rankings. SmartWay carriers, in general, should be presumed to be causing fewer carbon emissions than carriers not certified. But SmartWay ranks carriers into five categories from the best in class, the top 20 percent of carriers in the program, down tier by tier to carriers that are still certified but not showing the same degree of excellence. Bids from Home Depot’s highest quintile of SmartWay carriers suffer no penalty. Bids from second quintile carriers have their rates on a particular lane inflated by one quarter of one percent; the third quintile has a lane penalty of one half a percent; the fourth quintile, three quarters of a percent; and the bottom category suffers a one percent inflation of their bid.

Blair Chikasuye from HP is part of the global transportation procurement team but has dotted line relationships to the global social and environmental responsibility team.

In 2008, HP was the first company to meet requirements from the EPA to have the agency’s SmartWay logo displayed on its consumer product packaging. Blair describes this as a “great partnership.” And the benefits are likely to increase in the next couple of years. In March, President Obama issued an executive order directing US federal agencies to set carbon reduction targets by at least 40 percent over the next decade. One part of the order mandates purchasing sustainable products and services identified by EPA programs including making use of SmartWay Transport partners. Out of the top 40 US government suppliers, HP is among only three that use SmartWay carriers for all domestic shipments.

But HP has a global supply chain, and SmartWay is just one piece of the puzzle to drive their end to end logistics sustainability efforts. In 2014, HP became one of the first companies to be awarded a “first leaf” by Green Freight Asia and Green Freight Europe for transparency of CO2e data and policies related to transportation GHG emissions. HP is also an active participant organizations such as the Global Logistics Emissions Council, the Clean Cargo Working Group (Ocean), and IATA (Air). These other organizations are necessary, because the carbon emissions from a truckload move in the US can’t be assumed to be the same as the same type of move in Thailand. Unfortunately, none of the other sustainability organizations have made as much progress as SmartWay.

In the U.S., HP, like Home Depot, is incentivizing carriers to improve their emissions performance by partnering with carriers to implement natural gas trucks at their West Coast distribution center and developing shared freight arrangements.

On the global front, HP is actively exploring new lanes and gateways to drive lower greenhouse gas emissions. They have helped establish a new freight train network from Chongqing to Germany, along the Trans-Eurasian Railway, which enables the shipment of products at a fraction of the carbon impact of air freight and investigated alternative ports to decrease shipping distances, including use of the port of Piraeus in Greece, and expanded use of the Panama Canal.

The pressure to be a sustainable company is only going to grow. Home Depot and Hewlett-Packard are currently at the front of the pack when it comes to excellence in transportation sustainability.

Guest Commentary: Driving Data Integrity in the Supply Chain

Guest Commentary | By Ben Cubitt • 11/14/2013

Collecting and analyzing data is critical for organizations to make strategic, data-driven decisions that positively impact the supply chain. But simply collecting data can lead companies to make incorrect decisions based on inaccurate data. As a result, data collection and integrity are critical to a company’s success – both financially and environmentally.

In a recent panel at the Council of Supply Chain Management Professionals’ (CSCMP) 2013 Annual Global Conference, I joined representatives from Kimberly-Clark Corporation, Sharp Electronics, Menlo Worldwide Logistics and the U.S. Environmental Protection Agency to address the commitment to data integrity within the EPA’s SmartWay partnership, and highlight steps the transportation community can take to support more accurate, consistent and reliable SmartWay data collection and reporting.

Best Practices to Ensure Data Integrity

Data is at the foundation of an organization’s planning and decision making, and as a result, data integrity is essential to establish what a company has done and to build strategies for moving forward – whether it’s to reduce transportation costs or carbon emissions. Likewise, SmartWay’s success depends on measuring and documenting emissions savings, making it critical that SmartWay partners track and report their data accurately and completely. As a result, the EPA and its SmartWay partners worked collaboratively to develop and implement a number of data quality assurance best practices that help ensure SmartWay’s data integrity. These best practices are intended to help SmartWay partners in their own efforts to collect, manage and assure the quality of their SmartWay-related data and get the most out of their investment.

Ensure Data Security
A critical quality assurance component is to ensure the physical security of your supply chain data. This can be done by:

Limiting access to the data to just those staff members who are charged with entering it into the system and those who directly need to use it. Do this by making the data “read only.”
Using a rigorous data back-up process, and having a data recovery system in place.
Citing your data sources so users know where they can go to retrieve the information should there be a computer malfunction or a system crash.
Keeping copies of data in another physical location or back-up data center.

Ensure Effective Data Management
Many companies are already using established quality systems and standards – for example, ISO registration or Lean processes – to ensure quality across their entire operations, but quality can be taken to the next level by integrating SmartWay data collection and tracking into these procedures. Having comprehensive and up-to-date standard operating procedures in place for the collection, storing and reporting of all SmartWay-related data is essential in ensuring quality. These practices include:

Train staff assigned to perform SmartWay data collection and entry. SmartWay has excellent user guides that you should share with your staff. It’s very important that you be able to seamlessly transition from one person to the next in collecting and storing SmartWay data in case there is staff turnover.
Conduct periodic reviews on SmartWay data and have multiple trained team members review the reporting tool data. Don’t forget to perform a year-over-year comparison of the SmartWay data before submitting the reporting tool.
Specific red flags to watch out for include major discrepancies or missing data, as these could indicate data entry or collection errors.
Share the data from the report with senior management before submitting it, which is another way to double check the accuracy of the data. It’s also a great way to involve them more in SmartWay, as it may lead to collaboration on crafting new environmental performance goals for the company.

SmartWay is about more than the trendy “being green” and cutting down your company’s environmental impact – it’s about being a true leader in freight supply chain environmental performance and energy efficiency. And achieving and sustaining environmentally responsible supply chain operations requires organizations place a strong focus on data integrity and implement best practices that support more accurate, consistent and reliable collection of information.

Ben Cubitt is Senior Vice President, Consulting & Engineering, at Transplace. With more than 20 years of industry and consulting experience in freight optimization, Mr. Cubitt has a deep familiarity with the freight procurement field working for consulting firms and multiple Fortune 500 companies in the consumer products, paper and automotive industries. Mr. Cubitt joined Transplace in July 2010 after four years as Vice President, Supply Chain for RockTenn Corporation. At Transplace he leads the engineering and consulting teams.

This Week in Logistics News (April 8-12, 2013)

Statistics | By Adrian Gonzalez • 04/12/2013

I’m on borrowed time this morning, so without delay, here’s the news that caught my attention this week:

Lots of transportation and trade statistics to analyze this week. Here’s a quick summary:

The Freight TSI Index, which measures the amount of freight carried by the for-hire transportation industry, increased 1.2 percent in February from January. This was the fourth month in a row the index has risen, and it is now at the second highest level since April 2009. According to the press release, “This increase was consistent with several other indicators pointing to economic growth in February…[and] the index has exceeded its 2012 range for two months in a row.”

Truckload linehaul rates fell 1.3 percent from February to March, according to the Cass Truckload Linehaul Index. Year-over-year, however, rates are up 3.9 percent. “Supply and demand seem to remain relatively balanced,” but analyst Donald Broughton also added that “although tonnage has rebounded modestly to start 2013, we believe the effects of contractionary fiscal policy are likely to weigh on demand” for at least the first half of 2013.

Import volumes is expected to increase 2.7 percent in April over the same month last year, according to the monthly Global Port Tracker report released by the National Retail Federation and Hackett Associates. “Economic indicators continue to present a mixed picture of the prospects for the remainder of the year,” Hackett Associates Founder Ben Hackett said. “Sequestration does not help but on the other hand is not yet a major factor to take into account.”

Meanwhile, according to a Reuters article, “the World Trade Organization cut its forecast for global trade growth in 2013 to 3.3 percent from 4.5 percent and said trade grew only 2.0 percent in 2012. That was the smallest annual rise since records began in 1981 and the second weakest figure on record after 2009, when trade shrank.” In its press release, the WTO said the weak growth in 2012 “was attributed to slow growth in developed economies and recurring bouts of uncertainty over the future of the euro. Flagging output and high unemployment in developed countries reduced imports and fed through to a lower pace of export growth in both developed and developing economies.”

To use a weather analogy, the economic skies are partly cloudy with occasional sun in some areas. But there’s an ongoing chance for rain, maybe severe thunderstorms, which can break out at any moment, so be prepared and carry an umbrella.

Is the freight brokerage model ready for re-invention? Last Month, Open Mile, which calls itself “The First High-Tech Freight Broker,” was acquired by Echo Global Logistics. This week, buytruckload.com — which calls itself “The First Fully-Automated Freight Broker” — was officially launched. According to the press release:

buytruckload.com has no sales force and provides instant rate quotes that can be ordered without any delay or haggling. The automated pricing model ‘learns’ a bit more every day, which enables buytruckload.com to continuously improve the prices that are offered to shippers. Shippers can book van, flatbed, and refrigerated loads with partial truckload options available for van and refrigerated shipments. buytruckload.com also supports and automatically prices more complicated requirements such as multi-stop loads, team-transit requirements, various accessorials and more.

The founders of the company, John Labrie and Sean Devine, have extensive experience in the industry, including leadership roles at Con-way, Echo Global Logistics, and CRST Expedite. So, presumably, they know the shortcomings of the traditional freight brokerage model and are looking to offer shippers and carriers a different way to work together.

The high level strategy of these startups is to leverage technology (analytics, optimization, mobile, social networking, and online self-service tools) to greatly reduce overhead and transaction costs, allowing them to offer more competitive rates to shippers, as well as greater visibility and transparency. While I agree with the strategy, I also believe that relationships matter in transportation management, so don’t discount the role and importance of people in the process. Also, the most efficient way for shippers to use these systems and services is to integrate them seamlessly within the workflow of their transportation management systems, so creating partnerships and APIs with leading TMS vendors will be important.

Well, I’m out of time and space for this week. Have a happy weekend!

Song of the Week: “El Carretero” by Eliades Ochoa (in memory of my Papi, who would have turned 78 yesterday).

Guest Commentary: SmartWay Certified Carrier – So What?

Guest Commentary | By Ben Cubitt • 12/20/2012

Launched in 2004, SmartWay® is an EPA program that reduces transportation-related emissions by creating incentives to improve supply chain fuel efficiency. For years shippers have worked to recognize and reward “SmartWay Carriers” with more business and bid awards. Some shippers have mandated that any carrier participating in their bid be SmartWay certified or become certified within a specified time period after the bid is completed.

But many shippers are also uncertain exactly what it means to be SmartWay certified and wonder “Is this just marketing?” or do SmartWay carriers have to really work to become certified?

Results of a recent survey initiated by PepsiCo and Transplace confirmed that SmartWay certification is much more than marketing, and carriers are working hard to evaluate, implement and optimize the technology changes that will significantly improve fleet fuel mileage performance.

We worked with many of our core carrier partners and the EPA SmartWay team to design the survey, which was sent to 65 carriers – representing a range of small, mid-sized and large carriers. The survey results showed which initiatives are being widely implemented with good results, and they also revealed some surprising insights.

SmartWay Technology Implementation
The survey and discussions with participating carriers confirmed that some initiatives have a clear payback and are widely implemented while others have a mixed track record on both ROI and levels of implementation. Widely implemented initiatives include:

Drive Training and Awareness
Reducing Highway Speed
Progressive Shifting
Verified Low Rolling Resistance Tires
Record Engine / Performance Data (for driver feedback and training)

Each carrier is evaluating these initiatives on a wide range of criteria, such as fit with their fleet (avg. length of haul, trailer-to-tractor ratio, customer base, etc), cost to implement and capital plans. This was reflected in the survey results, and some of following initiatives showed a mixed level of adoption or implementation across fleets:

Tire Pressure Monitoring System
Trailer Gap Reducers
Trailer Side Skirts
Nitrogen Filled Tires

Survey Surprises
The survey uncovered a number of findings that stood out as surprises or gave a deeper understanding of why there is such a variance in how widely or consistently initiatives are implemented. Some of these include:

Every technology does not fit every fleet. Side skirts, for example, have a higher payback for fleets with a longer average length of haul and/or a lower trailer-to-tractor ratio.
It is difficult for carriers to get all of their existing trailers into the shop to retrofit them with fuel mileage technology. Some initiatives therefore, are either implemented only on new equipment purchases or as existing trailers come in for other repairs or work.
While some initiatives may not have a clear ROI they may still be implemented on dedicated fleets where fleet customers want to maximize sustainability initiatives.
Driver support may be difficult at first, but over time, as they see the benefits, they become enthusiastic supporters. Drivers reported liking that “side skirts” make pulling the trailers much easier while also helping improve fleet miles per gallon.

The SmartWay Technology Program has helped encourage industry adoption of fuel efficient technologies. As a result, carriers are doing their part to implement the initiatives that they believe fit their fleet, have a positive ROI, and help increase fleet fuel efficiency.

Original equipment manufacturers and after-market suppliers continue to improve the technology, and carriers are working with these partners to evaluate and improve these technology innovations. There is tremendous work being done in this area and its impact on fleet miles per gallon has been significant.

We continue to work with the EPA SmartWay Team, PepsiCo and carriers to expand the survey, while sharing the results with carriers and shippers to ultimately improve our collective understanding of how SmartWay technology is being implemented and the overall benefits for the whole industry.

Ben Cubitt is Senior Vice President of Transplace, leading the company’s Engineering, Consulting and Strategic Carrier Management team. Ben has been active in Supply Chain and Transportation optimization for over twenty years, with most of his time spent on the shipper side of the table with companies including Federal-Mogul, MeadWestaco and RockTenn Corp. He also has more than five years of experience in consulting.

Sharp Electronics: A Vice President of Logistics and Environmental Affairs?

High Tech & Electronics Industry | By Steve Banker • 09/16/2010

As I searched through my supply chain contacts in preparation for some research I was kicking off, I came across the name Mark Servidio, Vice President Logistics & Environmental Affairs at Sharp Electronics. Mark’s title caused me to pause and think: If a company is serious about being green, it would likely have executives with titles similar to Mark’s.

I contacted Mark and he was gracious enough to talk to me, along with his colleague Dave Dwyer, the Director of Logistics & Environmental Supply Chain Planning. They told me that the corporate office of Sharp Electronics—the $33 billion Japanese consumer electronics company—has been concerned about green issues for some time. The company is now looking for its international divisions to become equally concerned.

In the US, one of Sharp’s big initiatives in this area was to become a member of the US Environmental Protection Agencies SmartWay Transport Partnership in 2004. Sharp was the program’s 40^th member. If you’re not familiar with SmartWay, it is an initiative that includes shippers and carriers and its goal is to save energy and reduce carbon dioxide emissions. Carriers need to make their fleet more fuel efficient by doing things like adding equipment to their trucks and trailers to make them more aerodynamic, using advanced lubricants, reducing idling, and driver training. Shippers, in turn, agree to use US EPA SmartWay certified carriers at least 50 percent of the time.

When Sharp USA joined, only 28 percent of its carriers, representing 33 percent of total tons shipped, were SmartWay certified. The company let its carriers know that it had joined SmartWay and urged them to join too otherwise it would affect their future business relationship. Step by step, the percentage of SmartWay certified carriers increased. In the second year, 46 percent of Sharp’s carriers were certified and 79 percent of its tonnage went via certified carriers. Today, six years into the program, 100 percent of tonnage is moved via SmartWay certified carriers. This is quite an achievement when you consider that many of Sharp’s shipments cross the Mexican border and the company has been able to get Mexican carriers to become SmartWay certified too.

Along the way, Sharp has won the SmartWay Excellence Award four times, from 2006 through 2009. It is the only shipper to win the award four times. For some perspective on the award’s significance, there were 2,200 SmartWay members last year, but only 38 awards presented.

My colleague Adrian Gonzalez has commented that green is good for business because green projects with a poor ROI don’t get approved. In this case, that is not fully true. When companies reduce their carrier base, they often end up saving money in procurement. Dave told me that from an ROI perspective, this program is a “net zero change”—it has not hurt their bottom line, but it hasn’t helped it either. Apparently, SmartWay carriers are able to get a small premium based on their certification.

Sharp’s latest large initiative in this area is to increase the amount of goods it ships intermodal. This project has been good for the bottom line. In 2009, 8 percent of Sharp’s shipments were shipped intermodal. This year the percentage is close to 24 percent of shipments. According to Mark and Dave, the transportation savings have not been facilitated by improvements in forecasting or an increase in inventory. Sharp’s North American supply chain is fairly short. Finished goods land in Huntington Beach California. Meanwhile, a significant number of products go through final assembly in Mexico. With this supply chain, intermodal typically only adds a day.

One key to increasing intermodal shipments has been increased communication with Sharp’s retail customers. If a customer says they need a shipment to arrive at a particular destination on September 1st plus or minus one day, Sharp may call them and ask if it could it deliver on September 3^rd instead and explain its goal of being greener. Often the retailer agrees to the change. How retailers will respond once the economy starts humming again remains to be seen.

This past May, Mark’s duties expanded to include Environmental Affairs. He and two other executives from Legal and Corporate Planning are part of this team. His responsibilities have grown to include recycling, ISO (quality standards), and corporate social responsibility.

In conclusion, it strikes me that if companies are serious about green/sustainability, they will create executive roles and titles similar to Mark’s and Dave’s, and give them performance goals related to not just costs and service, but also environmental improvements.

Tips for Improving Fleet Utilization and Reducing Operating Costs

Logistics Technologies | By Steve Banker • 07/17/2009

Looking for some good ideas on how to improve your private fleet’s utilization or how to save money on fuel? In 2004, the Environmental Protection Agency launched SmartWay, a program (and brand) that identifies products and services that reduce transportation-related carbon dioxide emissions. As part of this program, they annually announce the SmartWay Excellence Award Recipients. Reducing CO2 emissions and reducing gas consumption often go hand in hand. The document announcing the 2008 SmartWay Excellence Award Recipients provides some good ideas that companies can use to improve their fleet’s utilization and save money on fuel.

Any improvement program should focus on people, process and technology, and that is the way I have grouped the ideas.

People:

Roehl Transport combined targets for drivers – maximum idling levels that drivers are asked not to exceed and miles per gallon targets – with weekly idle-time evaluations to tell drivers how they are performing.
Equipment upgrades designed to make cabs more comfortable and reduce idling are often not enough. Stan Koch and Sons Trucking coupled those improvements with a bonus program for drivers to reduce idle time. These actions have helped the company lower its “idling activity from 60 percent in 2005 to just 15 percent in 2007.” Covenant Transport went the opposite way; it charges drivers an hourly fee for idling in excess of a set maximum.
Other incentive programs were also used – including a bonus paid for every mile per gallon improvement above a threshold set by the company or recognizing top drivers monthly with special prizes.
Several carriers trained its drivers to use progressive shifting. Progressive shifting is accomplished by changing gears upward as early as possible when accelerating. After each shift is completed, the engine and transmission should be operating at or near the lowest RPM speeds recommended by the truck manufacturer. Others talked about providing ongoing training and education programs on fuel efficient driving practices and fuel conservation strategies.
Sharp Electronics came up with the idea of adding driver comfort lounges at their facilities. If you don’t want drivers idling, it is a good idea to provide them with a comfortable place to hang out while their trucks are unloaded.

Process:

Improved packaging initiatives can reap great savings. For example, HP “redesigned the packaging for its notebooks to reduce the size and weight of each box” which “reduced package weight by 8 percent” and increased “the number of boxes per pallet by 25 percent.” “Kimberly-Clark reduced the package size of personal care products by 12 percent, significantly increasing the amount of product that can be shipped in each truckload. This strategy alone allowed Kimberly-Clark to utilize 96 percent of its trailer space, eliminating 2,100 truckloads in 2007.”
Kohls “improved its backhaul program by 29 percent, resulting in nearly 19,000 backhaul trips executed on return from stores and eliminating 3.6 million miles of empty truck hauls. These once-empty trailers now carry merchandise from Kohl’s vendors back to the distribution centers.”
Equipment maintenance programs are critical to both better mileage and fleet utilization.

Technology:

Several companies govern their fleet speed, most often at 65 mph.
All of Dillon Transport’s 250 trailers “utilize automatic tire inflation to ensure proper air pressure.”
Several award winners bought new trucks with more aerodynamic profiles, mirrors, and air shields, or they added low cost trailer skirting and cab roof and side fairings to existing trucks.
The use of bunk heaters, auxiliary power units (APUs), or auxiliary cooling systems to make the cab more comfortable and reduce idling was common. Others installed automatic engine shut-off controls to minimize idle time while parked.
Watkins Shepard found that super single tires reduced fuel consumption by as much as a full mile per gallon per truck. Others mentioned purchasing low-rolling resistance tires. Low-rolling resistance tires are designed to improve fuel efficiency by minimizing the energy wasted as heat as the tire rolls down the road.
“Lowe’s increased the overall cube utilization of its trailers, allowing the company to ship the same product using 4,866 fewer trailers.” While the article did not say how they accomplished this, one way is through the use of load building software.
If you want understand the effectiveness of your training or incentive progams to save fuel, you need to track it. Electronic speed management, weekly miles per gallon and idling can all be tracked using telematics.
With the right fleet maintenance software analytics it is possible to specify “engine and drive-train combinations that maximize fuel mileage.”
Route planning software and programs can reduce the number of empty miles traveled.

As these examples illustrate, being eco-green can save you green (money)!

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