How to Combat Logistics Inefficiencies in Your Organization
Many a time I have experienced transport managers, company directors and operations folk say, ‚ÄúIt‚Äôs an industry problem, not ours,‚ÄĚ on the subject of CO2 emissions from transport. Frankly, that excuse is wearing thin and just doesn‚Äôt cut it anymore; we all are party to it. Companies have an obligation nowadays to source their transport suppliers based on factors beyond price alone in the same way packaging and fair trade materials are expected as the norm. For example, what type of vehicles do your transport companies use (diesel, hybrid, electric?), do they have a carbon offset scheme and what are their policies on empty-running/groupage?
Here‚Äôs a staggering fact you might not know: 25% of all freight vehicles across Europe run empty of cargo and over 50% run only part-full. This is a monumental waste and has a staggering negative impact on the environment.
According to the European Environment Agency, transport equates to over ¬ľ of all carbon emissions in Europe. Road freight transport makes up a massive 1/3 of this – about 420 million tonnes of CO2/year – more than the entire carbon footprint of South Africa. When you consider that there are some 40 million freight vehicles across Europe, the sheer scale of the impact becomes clear. It‚Äôs also worth noting that these statistics are just about Europe; worldwide carbon emissions for road transport are in excess of 1.4 billion tonnes.
The European Environment Agency has also published papers predicting that freight transport will continue to increase in line with GDP and population growth. The 2006 European Commission White Paper also forecasts a 50% growth in freight transport between 2000 and 2020.¬† Clearly, transport is an industry which will continue to grow as more products are needed by a growing population. This basic fact is something which cannot be overlooked.
Given these shocking statistics, it is clear that government, transport companies and their customers do have some significant responsibilities on their shoulders, not only in moving onto cleaner modes of transport but also, in the shorter term, reducing this wastage fast. Is it really acceptable to send out a dedicated vehicle on a 500-mile round trip for a couple of documents/small boxes? There are many resources, freight brokers, freight forwarders and groupage solutions available to consolidate your delivery needs in with existing journeys, reducing unnecessary miles.
I want to share a recent story from an household brand e-tailer, who shall remain nameless.¬† I ordered 4 different products all from the same e-tailer in the same order, at the same time and was given one order number. So, I received an email 2 days later to tell me that the first package had been despatched. Normal enough, I guess; I know that sometimes if other products aren‚Äôt in stock, they will just send what they do have or it could be getting drop-shipped direct from the manufacturer. Five minutes later, an email to say package two had been despatched, then package three. Ten minutes later and you get the picture. Now, given these emails were apart by less than 30 minutes and were all addressed to me you‚Äôd expect they at least came in the same van, right? Wrong. Two days later I had four separate deliveries by two different delivery companies, each making a dedicated delivery (I saw one of the delivery men twice, who seemed quite embarrassed given he knew what my company does). This type of practice is still happening every day; it‚Äôs blamed on computer systems, drop shipping and everything else under the sun. I blame it on a lack of transparency not only between delivery companies but also within these companies. There are enormous and expensive IT systems in place and it would be ‚Äútoo much work‚ÄĚ to modernise and do everything possible to prevent such waste occurring.
Does the story above remind you of anything you‚Äôve heard through your customer support department or complaints department? What was done about it? Have you tried to improve communication lines with your chosen transport supplier to prevent this happening in the future? Have you tried to consolidate products inside one shipment rather than ten? It‚Äôs all common sense stuff, but all too often within supply chains, operations managers like to see shipment as something which is outsourced and which they don‚Äôt need to get involved in. However, the reality is, consumers are just as likely (if not more) to take a dim view of the retailer/company as the delivery company themselves. So, even if you aren‚Äôt given the manpower to sort out your logistics efficiency to keep CSR policies in trim, then there is always customer satisfaction/brand reputation that is on the line – something you will find most CEOs are pretty keen to allocate resource on.
Robert Matthams is Managing Director of Shiply – the online transport marketplace and Shell Young Entrepreneur of the Year.
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