Transport and Distribution Workshop

Transport and

Distribution

Workshop

John Sheehy -

3 October 2013

Agenda

09.30 – 09.50 Welcome, introductions, updates

09.50 – 10.10 Context and definitions

10.10 – 10.40 Macro and micro business drivers

10.40 – 10.50 Task 1: Micro-level/business-specific drivers

10.50 – 11.20 Good practice and case studies

11.20 – 11.35 Task 2: Supply chain opportunities

11.35 – 11.50 Interactive exploration of opportunities and

barriers

Sustainable

Logistics

Context and

Sustainable Logistics

What does it mean in terms of your business?

Let’s quickly share a few ideas!!

What does

this mean in

broad terms?

A definition of Sustainable Logistics

“Sustainable Logistics is an umbrella term for a range

of measures that can be used to cut CO

emissions

within companies’ logistics operations. The concept

centres on the storage and movement of goods in a

way that supports continued economic growth while

protecting the environment and delivering a better

quality of life for future generations”

Definition examination

“

Sustainable logistics is an umbrella term for a

range of measures

that can be

used to cut CO

emissions

within companies’ logistics operations.

The concept centres on the storage and movement of goods in

a way that

supports continued economic growth

while

protecting the environment

and

delivering a better

Sustainability as a

Business Management Approach

The three elements of

Sustainable Logistics Performance

“A sustainable supply chain is one that includes measures of profit and loss as well as social

and environmental dimensions. Such a conceptualisation has been referred to as the Triple Bottom Line – Environmental Performance, Social Performance, Economic Performance”

Sustainable

Logistics

Macro and micro

drivers

SOURCE: IPCC, 2007; Stern Review; team analysis

Global warming

Under a business as usual scenario,

temperatures may rise by up to 6°C

by the end of the century.

Pre-industrial

Industrialisation

Projected future temperature rise

Observed temperature range for past 1000 years (white line indicates average)

The food and drink processing industry is

the fourth highest industrial energy user

in the UK.

In 2010 it consumed nearly 37TWh which is

enough energy to power 125,000 homes for

nearly 15 years; and emitted around 11

million tonnes of carbon dioxide into the

Macro Drivers



Climate change – the correlation between CO

emissions and temperature



Fossil fuel availability – soaring demand for oil

and diesel leading to higher prices



Road congestion – road traffic exceeding road capacity



Energy use – rising prices and an inherent lack of

energy efficiency in the food and beverage industry



Government emissions targets - reducing the UK's

greenhouse gas emissions – Climate Change Act 2008

(against 1990 levels).

UK carbon budgets

- at least 80% below 1990 levels by 2050.

http://www.decc.gov.uk/assets/decc/11/tackling-climate-change/carbon-plan/3702-the-carbon-plan-delivering-our-low-carbon-future.pdf

Budget period

Target reduction

against 1990 levels

2008 – 2012

23%

2012 – 2017

29%

2018 – 2022

35%

Road Traffic Emissions

DfT Statistic - In 2009, domestic transport

accounted for 24% of all UK greenhouse gas

emissions with the vast majority of this, at

around 90% of all transport emissions, coming

from road transport.

Therefore 21.5% of UK total emissions is road

transport.

Legislation

Road Traffic Fuel Obligation

The Renewable Transport Fuel Obligation (RTFO) order

obligates fossil fuel suppliers to produce evidence showing

that a percentage of fuels for road transport supplied in the

UK come from renewable sources and are sustainable, or

that a substitute amount of money is paid. All fuel suppliers

who supply at least 450,000 litres of fuel a year are

obligated.

Potential Micro Drivers



Centralised distribution – supply chains built around

a consolidated stock holdings and bulk movement of product



Stockless supply chains – the move to smaller, more frequent

deliveries. Vendor Managed Inventory.



Business consolidation – manufacturing efficiency versus transport

costs



Developments in product range – a shift from ambient, frozen

and national ranges to short shelf life, chilled and local product ranges



Consumer expectations – how is this driving logistics practices and

methods of operation



Corporate Social Responsibility – building in self-regulating

mechanisms to ensure the business actively complies with the spirit of

the law, ethical standards, and societal norms

Task 1: Practical exercise

Micro-drivers

Complete the worksheet

When considering your responses try to consider:



What are the key micro drivers for your business?

How do they relate to the Triple Bottom Line?



What are the important micro drivers that influence your supply chain

interaction with 3663?



What can be taken from this Task that can contribute to the

development of your Action Log?

Sustainable

Logistics

Good practice and

case studies

Current Sustainable Logistics Improvement

Vehicle developments and technology

Greener Fleets - engine specifications -

trailer design - greater capacity vehicles – vehicle telematics

Alternative fuels

Biofuels - Natural Gas - electricity - hybrid vehicles

Operational processes and people

Driver training - improved maintenance – fuel consumption

Changes to ways of working

Logistics system redesign – Vendor Managed Inventory (VMI) -

new ordering processes/systems - delivery and service plans -

transport collaboration - out-of-hours

Vendor Managed Inventory

VMI is a family of business models in which the buyer of a

product (business) provides certain information to a vendor

(supplier) of that product and the supplier takes full

responsibility for maintaining an agreed inventory of the

material, usually at the buyer's consumption location or

store. The vendor specifies delivery quantities sent to

customers through the distribution channel using data

obtained from Electronic Data Interchange to make sure that

the buyer has the required level of inventory by adjusting the

demand and supply gaps.

Vendor Managed Inventory

One such model would be a process where the vendor (supplier) creates

orders for their customers based on demand information that they

receive from the customer. The vendor and customer are bound by an

agreement which determines inventory levels, fill rates and costs. This

arrangement can improve supply chain performance but reducing

inventories and eliminating stock-out situations.

One of the keys to making VMI work is shared risk. In some cases, if

the inventory does not sell, the vendor (supplier) will repurchase the

product from the buyer (retailer). In other cases, the product may be in

the possession of the retailer but is not owned by the retailer until the

sale takes place, meaning that the retailer simply houses (and assists

with the sale of) the product in exchange for a predetermined

Transport collaboration:

Case study – Sainsbury’s & Nestlé

Background

 As part of the discussions between Nestle and Sainsbury’s a number of standard backhauls were identified and implemented

 A further opportunity was identified for Sainsbury’s fleet based in Maidstone (Kent) to collect bottled water from the Nestle warehouse in Dunkirk and deliver to Nestle in Bardon (Leicestershire)

 This required the procurement of 4 box trailers that were capable of meeting the different load restraint and weights required from Dunkirk, Bardon and Rye Park.

 Regular flows of traffic were available and timings could be adjusted to match spare tractor capacity in the off peak times at Maidstone

 The opportunity was also developed to facilitate Sainsbury’s to collect volume from a site in Rugby that was transhipped to Maidstone via 3rd _{party hauliers}

Case s

tudy

– Sainsbury’s & Nestlé

Revising the Plan

Discussions between Nestle and within Sainsbury’s identified a much better round trip:-

 Day 1 - Maidstone run down to Dunkirk via P&O Ferries at Dover and return same day to

Maidstone with Nestle product

 Day 2 - Maidstone despatch Nestle product to Bardon, collect Nestle load for delivery to

Sainsbury’s Rye Park (Hoddesdon)

Case study – Sainsbury’s & Nestlé

Implementation

Having agreed routes the Sainsbury’s Transport team then had to arrange the following:-











Case study – Sainsbury’s & Nestlé

Results



Initiative has been running for over 1 year



Prompt and open communication between all parties have been

essential to success



There were few challenges along the way, mainly with Channel

Crossings:- Bad Weather / Operation Stack on the M20 in Kent / The

odd Industrial dispute in France



Total round trip over two days, both in off peak times for Maidstone is

760kms, with full runs for 650kms i.e. 86% of trips.

Significant reduction in empty running

Kilometres saved per annum:

Driver training:

Case study – Wiseman Dairies SAFED

Background

SAFED (Safe And Fuel Efficient Driving) is a DfT-endorsed driving course,

consisting of assessment and training. It aims to improve safety and fuel-efficient driving skills by improving driver awareness and understanding, focusing on

factors such as journey planning, gear changing, braking, and engine revving. Robert Wiseman Dairies is a leading fresh liquid milk company in the UK. The company procures, processes and delivers milk from 8 dairies and 15 distribution depots throughout the UK and has a 900 vehicle fleet. In 2007 Wiseman Dairies trained 56 drivers through the SAFED Programme. This produced such positive business benefit results that the company implemented, and continues to run, its own annual in-house SAFED course. The company has also installed the Isotraks Active Transport Management System with a Driver Style Monitoring module powered using engine telematics data to monitor and reinforce the impacts of best-practice driver training.

Case Study - Wiseman Dairies SAFED

Motivations

The drivers for Wiseman Dairies to look at its transport as a route to reducing costs, and increasing environmental performance, were:

 A recognition of the increases in fuel costs and potential savings  A corporate commitment to look at environmental performance  A focus on staff satisfaction and driver safety

Results

 Average MPG improvement 8%

 Average annual fuel saved per driver 1220 litres (900 vehicles - £1 a litre)  Environmental improvement for the company – Estimated 920 tonnes of

Alternative Fuels: Case Study – 3663

Background

3663 is a leading foodservice wholesaler distributor and supply partner,

offering complete catering solutions to over 60,000 customers of all sizes and capabilities across the UK. The company operates:

 26 depots, including 3 regional distribution centres (RDCs)  Over 1,025,000 sq. ft. of warehouse storage

 765 temperature controlled vehicles making over 48,000 weekly deliveries  Employing 4,300 people

 Supplying over 15,000 products, including over 800 Own Brand lines As part of their wider sustainability agenda the company worked with

Convert2Green, the fourth largest bio-fuel producer in the UK, using waste cooking oil to produce bio-fuels for road transport and change the makeup of their vehicle fleet. The intent was to minimise dependency on fossil fuels, and so reduce greenhouse gas emissions and their carbon footprint.

Case Study - 3663

3663 has worked with Convert2Green, and vehicle manufacturer, Scania, to establish the most efficient bio-diesel mix for the 3663 delivery fleet.

Vehicles were replaced/modified on an on-going basis , and now 92% of the fleet is powered by B30 bio-diesel (a mixture of standard diesel and bio-diesel). A key ingredient of the bio-diesel is waste cooking oil, collected from 3663 customers by Convert2Green. 3663’s Waste Oil recycling scheme is accredited to ISO 14064-1 standard.

Results

 3663 recycles approximately 2 million litres of waste cooking oil

per annum

 In the past 4 years, 3663 has used just over 10 million litres

of biodiesel

 In the past 4 years 3663 has saved over 14,000 tonnes of CO₂ by using recycled biodiesel

System Redesign and Collaboration:

Case study – Kimberly-Clark, LPR, TDG

Background

The main issue here is that LPR routinely conducts 6 transport movements but only 3 of real value There is therefore a significant amount of empty running

Case Study - Kimberly-Clark, LPR, TDG

System redesign

 An LPR depot is located within Kimberly-Clark DC site at Northfleet site

 Site managed and run by TDG  £125k Investment required  Increased processing capability

to 1.6m pallets per annum  Vacu-lift sort capability

incorporated

 Pallet repair facility incorporated  No transport required to deliver

pallets to production

 Significant reduction in the number of transport legs required

 Increased efficiency in Northfleet onsite operations  Increase in pallet availability and quality

 Backhauling empty pallets to Kimberly-Clark DC reduces LPR empty running by 7%

 LPR saving of 194,000 miles per annum & approx 290,000kgs CO₂

Sustainable

Logistics

Identifying your

supply chain

A Road Map to Sustainable Logistics

Step 1—Understand the facts. Perform an assessment of supply chain

sustainability in terms of financial, social, and environmental status and needs.

Step 2—Develop a vision. Develop an understanding of the entire supply chain (through a

mapping exercise) and then talk and collaborate with suppliers and customers, along with

stakeholders. A vision statement should then be developed that describes the ultimate goals of a sustainability program and includes a set of goals that will drive actions.

Step 3—Create a Road Map. Make sure basic compliance guidelines are being met. Develop

a business case to address gaps identified in the sustainability assessment. Select low

investment projects, with clear ROI initially. Measure improvements. Extend efforts beyond traditional internal improvements. Examine joint improvement events with key supply chain partners. Finally, consider the triple bottom line in design of new products and initiatives.

Step 4—Execute, monitor, review, and change. The process should be looped back

around in terms of executing, reviewing, and changing direction (if needed) to continuously gain a better understanding of the impacts of decisions on sustainability.

A Road Map to Sustainable Logistics

Sample Vision and Goals

Vision:

Create a sustainability culture that allows employees to improve products and operations to minimize environmental impact while maximizing shareholder return and community benefits.

Goals:

Short Term

 Reduce water use by 10% by 2014  Reduce energy use by 10% each year

 Ensure 100% of Tier 1 suppliers adopt supplier responsibility statements Long Term

 Redesign products to minimize energy use by the customers  Fully eliminate the use of toxic chemicals in product x by 2020

Task 2: Practical Exercise

Opportunities

There are two elements to this task:



Opportunities within your business



Opportunities specifically related to

Sustainable Logistics Possibilities

Current Initiatives in Your Business

Are there any on-going developments to build on?

Vehicle developments and technology

Greener Fleets - engine specifications - trailer design - --- greater capacity vehicles – vehicle telematics

Alternative fuels

Biofuels - Natural Gas - electricity - hybrid vehicles

Operational processes and people

Driver training - improved maintenance – fuel consumption

Changes to ways of working

Logistics system redesign – Vendor Managed Inventory (VMI) - new ordering processes/systems - delivery and service plans - transport collaboration - out-of-hours

Exploration of supply chain opportunities -

facilitated discussion

This session is intended to stimulate discussion between

the delegates and the host company, and give the

delegates and host an opportunity to explore

opportunities and barriers within the supply chain for

improving the triple bottom line/sustainability.

Task 3: Practical Exercise



Fill out your Action Plan Extension Forms with 5 steps for

improvement.



Try to come up with at least 3 actions that you will

undertake on your return to work as a result of the

workshop.