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Greening the Supply Chain

Greening the Supply Chain. Jack Ampuja Supply Chain Optimizers Niagara University. Green Logistics – Centerpiece of Green SCM. Green program motives Cost Reduction Regulatory Compliance Carbon Footprint Competitive Advantage. Key Pressures Driving Green Initiatives. Green Goals.

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Greening the Supply Chain

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  1. Greening the Supply Chain Jack Ampuja Supply Chain Optimizers Niagara University

  2. Green Logistics – Centerpiece of Green SCM Green program motives • Cost Reduction • Regulatory Compliance • Carbon Footprint • Competitive Advantage

  3. Key Pressures DrivingGreen Initiatives

  4. Green Goals

  5. Best-In-Class Metrics • Transportation & Logistics Costs: 2% decrease • versus 1% increase for Industry Average, and 4% increase for Laggards • Energy Costs: 6% decrease • versus no change for Industry Average and 7% increase for Laggards • Operations and Facilities Costs: 2% decrease • versus no change for Industry Average and 4% increase for Laggards • Supply Costs: 2% decrease • versus no change for Industry Average and 6% increase for Laggards

  6. What Will They Do?

  7. Walmart Private Fleet • Surpassed stated corporate goal by achieving 25% increase in efficiency between 2005 & ‘08 • Used technology for • Reducing vehicle weight • 1000 lbs = .10% increase in mpg • Increasing weight per truckload • More efficient routing of trucks • Goal is to double fleet efficiency by 2015 from 2005 standards

  8. Loading Software • Inventory planning systems use averages to define truckload: weight, cube, pallet spots • Many trucks run below max about 5% • New software allows for real ‘full’ truckloads while staying in legal limits • Can also plan ‘best’ pallet loading techniques • Used by companies such as Procter & Gamble, Kraft, Nestle, Smuckers

  9. The Green Machine

  10. What is “Green Machine” • Patented tractor from HydrogenFS.com • HFS is a group of trucking industry veterans who pooled their knowledge on efficiency to create the Green Machine • Key component = Jetstar hydrogen booster invented & manufactured in Pickering ON • Engine & transmission are re-manufactured units: less expensive + more green

  11. Jetstar Booster • Uses “jetstar fuel”…specially treated water • Electrifying water creates hydrogen & oxygen • Gases are piped to intake manifold • There is no hydrogen storage in truck…gases are burned as soon as they are created • Hydrogen + oxygen give engine power boost & burn diesel fuel completely reducing emissions to almost nothing

  12. Green Machine Details • Engine is most widely sold Detroit Diesel ever • Larger single tires filled with nitrogen • All aluminum wheels – including 5th wheel • Air deflectors on side & top • Carbon fiber springs • Alan Bishop electric engine fan system • Jetstar hydrogen booster for engine • Synthetic oil is changed after 100,000 miles

  13. Results • Engine burns fuel more completely generating more power & less carbon output • All technology used is available to any firm • Green Machine was conceived by trucking industry veterans and assembled in Michigan • Verified national test shows tractor hauling loaded trailer averages 8 mpg…30% gain with emissions below 2014 EPA standards • Latest test = 10 mpg

  14. Pepsi Press Release “The hydrogen-injected trucks will enable a 15% increase in fuel economyand exceed vehicle emission standards by 11%. These vehicles inject small amounts of hydrogen and oxygen into the engine’s air intake, resulting in a shorter burn time that uses less fuel and produces cleaner emissions. The company expects to save more than 4,200 gallons of fuel per hydrogen truck and eliminate over 216 metric tons of greenhouse gas emissions annually.”

  15. Systems Application • SaaS - Software as a service is major benefit for smaller companies • Gets them into the game at low cost • Far surpasses performance of manual systems • TMS becomes viable for almost all firms • Lets user focus on business issues rather than IT • Leading SaaS interface with major ERP packages

  16. Baseline

  17. Best-Use-Of-Current

  18. Absolute Minimum Cost

  19. Final Management Choice

  20. Cost Comparisons $000 Transport Inv & OH Total % Baseline 34,500 19,750 54,250 100 Locations 26,800 22,500 49,300 91 Least 30,600 13,400 44,000 81 Final 29,900 15,300 45,200 83

  21. Usual Scenarios • Lowest cost network • Best service network • Optimal combo of cost and service • Lowest carbon footprint network • Management now has a $ target between lowest cost and lowest carbon • They now know what it will cost the company to operate a green network

  22. Environmental Application [New] • Adding carbon footprint weighting to model allows for comparing environmental impact of various scenarios • Comparing total miles of different logistics networks – inbound & outbound – allows for identification of lowest miles of movement • Calculates $ of environmental improvement

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