Monday, August 20, 2012

Sustainable Packaging – Creating the Incredible All-round Impact

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Design for Environment is the new order of packaging logistics. Reduce, Reuse, Recycle……is the mandate towards sustainable packaging.
Environmental concerns like deforestation, packaging waste, bio-degradation problem and carbon emissions are adversely affecting environment due to packaging practices of companies worldwide. The use of biodegradable and sustainable materials, have a growing impact on package design and materials sourcing across all industries. Though packaging optimization is preferred, reuse  of pallets & containers to refrain packaging development in every cycle, offers good potential. Recycling packaging material for reuse is next best way to sustainable  packaging. Design packaging that  is eco-friendly, low-dense or consumes less material to minimize the impact, especially when reuse or recycling  opportunity is limited. Sustainable packaging has become both, a mandate and consumer  voice to all industries.

Green packaging strategies such as packaging optimization, light-weighting, selection of alternative material resources which easily biodegrade or turn into compost and promoting re-purpose will help companies to have an overall cost reduction and increased consumer preference while minimizing packaging waste, deforestation, carbon emissions, etc. Firms like Nestle, Starbucks, Wal-Mart, Campbell, etc., initiated an integrated approach towards its product packaging that incorporates source reduction, re-use, recycling and energy recovery while cutting cost.  

NestlĂ© is one among those few companies that have taken the use of biodegradable materials for packaging or material handling. For instance, it uses biodegradable trays into its packaging for Dairy Box and Black Magic chocolate assortments. The tray is made of a substance derived from Maize, designed to decompose within three months on a compost heap. Besides, producing these trays consumes around half the energy required for plastic version. The company realized packaging material cost savings worldwide up to $510 million during 1991-2006 while decreasing its environmental impact. 

Starbucks, which account for large percentage of disposable packaging has recently introduced earth-friendly hot cup sleeves, ‘EarthSleeve’ to eliminate some of the packaging waste it generates. The manufacturing process adopted for this (developed an adhesive that effectively facilitates the removal of fiber) is expected to save close to 100000 trees. Raw Fibre material is reduced by 34% and post-consumer content (i.e., recycled materials) is increased by 25%.  With 3 billion sleeve cups used every year for US market alone, the new packaging is expected to make a big eco-difference in the industry. Curbing the supremely wasteful practice of double-cupping and encouraging reuse of cups or own cups, the new Starbucks Earth Sleeve(TM) allows for a case cube and truckload yield improvement of 15%, reducing overall environmental impact of the transportation of the sleeves.

Sustainable packaging design seeks to reduce the overall impact on environment.  A complete redesign of their Monte Carlo product line saved Campbell about 15 tons of packaging materials. Redesigning shapes and Jatz packaging at Campbell Australia, reduced paperboard by 440,000 pounds and eliminated 12,000 pallets from distribution. Globally, packaging improvement projects of Campbell eliminated more than 9.3 million pounds of packaging materials in just two years. It saved more than 4.5 million pounds of steel, plastic and paper packaging materials in 2010 alone. Environmental labeling also aid in better reuse or recycling of packaging material and managing of packaging waste as it assist consumers in identifying if the packaging can be recycled or how it should be disposed of.  

The retail giant Wal-Mart expects the cut in packaging will save 667,000 metric tons of carbon dioxide from entering the atmosphere and estimates $3.4 billion in direct savings and roughly $11 billion in savings across the supply chain.  It also introduced a system called “packaging scorecard” to rate vendors on their sustainability— based on Green House Gas (GHG) emissions, product-to-package ratio, and the amount of renewable energy used throughout the manufacturing and delivery process.

Wednesday, July 18, 2012

Green Procurement: Eco-Friendly Way to Business Growth

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Environmental protection is one of the major responsibilities of industry and organizations as part of their triple bottom-line - People, Profits and Planet. Sustainable procurement is a way that organizations can practice to benefit both, environment and economy. It emphasizes on the selection and purchase of eco-friendly materials, parts and supplies like recycled-content office paper, energy from renewable sources, VOC-free paints, natural ingredient cleaners, etc., which will have no or less impact on the environment. 

Green procurement offers the potential to reduce environmental impacts and risks, while delivering economical benefits to the organizations. INSEAD Business School has proven through its research that, Sustainable Procurement can yield positive economical benefits for companies in terms of "Risk Management", "Cost Reduction" and "Revenue Growth." By sourcing environment-friendly material or parts, organizations preempt consumer and environmental risks during usage and disposal stages and ensures quality living. As consumers are becoming sensitive to environment, companies can benefit from increased sales and revenue by offering products that are made with eco-friendly materials or parts. On the other hand, by controlling the use of hazardous waste and through recycling, costs of material, logistics, and disposal can be saved significantly. For example, Anheuser-Busch saved more than 250 million pounds of aluminum and 800 million pounds of glass and recycled more than 1,000 tons of plastic strapping by working with suppliers.  Whirlpool, through its strict manufacturing process, ensures that 85 to 90 percent of the materials (steel and other metals, some plastics) used in Whirlpool products can be recycled.
Purchase organizations, as part of their procurement & quality policy should include green standards/criteria that guide buyers to source materials from suppliers whose processes are driven by environmental standards. In 1997 recognizing the negative impacts of parts sourced on environment, Canon has issued "Global Canon Green Procurement Standards" and "Global Canon Green Procurement Guide." As part of its purchase policy & standards, Canon's primary focus is to assess and ensure their supply sources for environmental sustainability. It conducts Supplier Environmental Evaluation every time contracts are renewed or contracts awarded. Their latest version is 8.1 which was issued in March 2012. Canon's purchase policy lists out chemical substances contained in parts and materials delivered to Canon into three categories: 1) prohibited substances - substances which should not be used in materials or parts; 2) Use-restricted substances - substances that are allowed to be used in parts and materials for a specified periods; 3) Controlled Substances - that require tracking of the absence/presence of each substance in parts and materials. 

Toyota Motor Corporation, through the company-wide implementation of its Earth Charter strives to work more closely with its suppliers and promotes green procurement in order reduce environmental impact of vehicle parts as well as raw and supplementary materials at a global scale. Since April 2003, Sony sources its parts and materials for its products solely from suppliers that have been certified as Green Partners. This green procurement policy has also been extended in the purchase of its office products & supplies and ensures that only "eco" mark products are bought.

Tuesday, July 3, 2012

Go Green with Efficient Freight Logistics

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Freight logistics across the world account for at least 1/3rd of fuel consumption and carbon dioxide emissions. Employing efficient transportation mode(s) will reduce carbon emissions and energy costs. For instance according to one of the IEA publications, shifting to more efficient freight transportation modes is expected to reduce CO2 emissions by at least forty per cent. Road transport consumes significantly more energy per tonne-km than rail or ship freight transport. Using more marine and train solutions to supplement truck transportation will reduce the emissions. But because freight can't be shipped to every place using train or marine, freight transporters prefer road transportation. Multi-modal transportation integrating road, rail and marine offers the best solution in such cases. Banking more on LTL (Less-than-truck-load) for goods shipment will not only reduce transportation costs for firms but also reduces congestion and impact on environment. However, when orders need to be expedited transporters bank on trucks for direct shipment. In such situation, logisticians should employ better practices that will improve logistics efficiency and cut carbon emissions.   More efficient logistics reduced the Volvo Group’s carbon footprint by 22 percent.
Use of advanced methods & tools for Vehicle Routing & Scheduling and load planning can optimize both loads and traveling distance. With the help of longer vehicles, firms can transport more goods during each run. For instance, use of truck rigs that are 25, 32, 40 meters long will make road transportation more efficient. Rigs will be able to ship two to three 40-ft containers, thus reducing CO2 emissions per ton per kilometer drastically. Besides, theoretical and practical training for truck drivers in fuel-efficient driving, will improve the fuel efficiency. Further, trucks should be equipped with more modern engines, which consume less fuel and emit less carbon dioxide. During 2006 - 2010, such green logistics practices helped Volvo Group’s transportation of goods in Europe reduce their carbon footprint by 22 percent improving their logistics efficiency.

Monday, June 25, 2012

Green Logistics - Network Optimization

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Global sourcing & distribution practices are creating large and complex logistics networks.  Consequently, long distance product movements and inter-related shipment flows are resulting in high energy costs and increased CO2 emissions. On the other hand in the name of expediting orders or just-in-time (JIT) practices, multiple direct and repeated small shipments are adding to traffic congestion, further aggravating fuel costs and CHG emissions.  Besides, emissions per mile also increase with the level of congestion as vehicles move at unproductive speeds. In this way, most of the companies have become liable for increased carbon footprints in the environment.

Studies have shown that, supply chain network optimization can cut cost by eleven percent and reduce CO2 emissions by ten percent.  A well designed supply chain network with an aim to reduce length of product movements can minimize both costs and environmental impacts.  As a result, shipping distances shrink lowering fuel consumption, distribution costs and carbon emissions.  Further, supply chain risks such as volatile fuel prices and long lead times will lessen. Therefore, network optimization should be the key strategic objective to realize additional cost and green benefits.

Best network-related decisions regarding facility locations and flows should be made using scientific and advanced network design methods. While network optimization is one way to protect environment, companies also can rethink their supply or sourcing strategies.  Shifting to local sourcing though increases material cost, product movement can be curtailed considerably. Additional costs due to local sourcing can be easily offset through savings in shipping and distribution.

Towards Green Logistics Practice

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Environmental protection is one of the major concerns of this decade. Goods shipment is estimated to account for about eight per cent of energy-related carbon dioxide emissions globally. Warehousing and freight related emissions add another three per cent. In view of this, there has been a significant pressure on firms to take steps towards reducing environmental impact due to their logistics operations. Sustainable logistics require reducing carbon emissions drastically. Both logistics costs and environmental impact can be reduced significantly through green supply chain practices. Besides complying with environmental regulations, firms can benefit from financial gains. It is a win-win situation for both environment and industries.

Shifting to more efficient freight transportation modes is expected to reduce CO2 emissions by at least forty per cent according to one of the IEA publications.  Studies have shown that, supply chain network optimization can result in cost cutting by eleven percent and a ten percent reduction in CO2 emission. Green packaging practices like packaging elimination, light-weighting and use of alternative or recyclable material help companies to have an overall cost reduction. Estimates say that, atleast 50 % of power can be conserved in warehouses through daylight dimming and use of motion sensors.  Purchase departments can also save significant cost through sustainable initiatives.  Above all, firms can improve their public image.  
Corporate policies should now aim at reducing their impact on environment and gain from sustainable practices.  According to New 'Green Transportation & Logistics' report, 94% of supply chain professionals rate green issues as a business priority. Industries like CPG, Food & Beverages, Heavy Engineering, Automobile, Pharma, etc., should motivate and empower their logistics & supply chain professionals towards green logistics initiatives.  Executives involved in product development, purchase and logistics management should understand: (1) Ways to measure the impact of their transportation and logistics on the environment (Environmental Footprint Measurement) and how corporate can gain from footprint reduction; (2) How to develop an action blueprint for each mode and their vertical, to reduce environmental footprint; (3) Best practices like sustainable procurement, network optimization, green packaging, layout optimization, etc., and (4) Corporate Sustainability Reporting, and benchmarking with the industry.