It's Not an Either/Or: How Streamlining the Supply Chain Feeds Sustainability Efforts

Tyler Vassar, SVP of Supply Chain & Operations, CHEP North America

Tyler Vassar, SVP of Supply Chain & Operations, CHEP North America

In today’s supply chain, “streamlined” is the main objective. Businesses want to reduce the number of touches required as products move from manufacturing to the store shelf, processing them through the warehouse and getting them into customer hands as quickly and efficiently as possible.

But a streamlined supply chain also goes hand-in-hand with another value quickly increasing in importance: sustainability. Manufacturing processes that leave waste result in both a costly expenditure of raw materials and an increase in the size of nearby landfills. Trucks driving empty miles expend resources both tangible (costs for extra fuel) and intangible (time lost that could’ve been used to deliver goods). These empty miles also mean we create an unnecessary increase in carbon emissions.

So how do supply chain experts achieve solutions that help us simultaneously streamline our operations and reduce environmental impact? The answer lies in how these experts leverage technology to collaborate with suppliers, partners and customers.

Vehicles: Adopting Transport Collaboration

One effective way of reducing the environmental impact of transportation is to move more goods using fewer resources. To enable this, manufacturers, retailers and service providers are partnering with each other to close transport loops and fill empty backhaul miles.

“One effective way of reducing the environmental impact of transportation is to move more goods using fewer resources”

Transport collaboration allows partners to reduce the number of trucks on the road, minimize labor dependency and reduce emissions while still meeting ever-changing demand. The process focuses on lane matching, where a logistics partner uses the data it gathers from its customers to determine which are delivering on similar routes, and what their capacity is on each haul. The partner can then bring these similar businesses together to determine whether they can share routes and could deliver goods for one business on a leg that would otherwise be an empty load for the other.

The process has already seen success in the U.S., even within our own operations. Our company, CHEP, expanded existing and new transport collaboration with 21 customers in the last 12 months. Our customers partnered on 425 lanes, eliminating 2.1 million empty miles and reducing 8.1 million pounds of CO2 from the atmosphere.

Efficiencies: Rethinking unit load touches

With unprecedented consumer behavior and panic buying during early COVID-19 lockdowns, supply chains experienced an immediate shift in volume from the quick service restaurant channel (QSR) to traditional grocers, mass merchants and club channel retailers. Retailers were forced to narrow their focus on fulfilling high velocity products that were frequently experiencing stock shortages.

One of the tactics deployed was to increase minimum order quantities on key products while reducing product touches to increase speed to market. The reduction occurred by flowing full unit loads of product, at specific times, directly from the warehouse to the store. This data allowed these businesses to better understand which products needed to be replenished more often and, because of load economics, needed to be transported only as full pallet loads.

The streamlined, sustainable solution? Half pallet unit loads, designed to reduce product touches, reduce labor dependency and increase speed to shelf in the supply chain. Certified timber half pallets (like the CHEP Carbon Neutral® Half Pallet), obtained through a share-and-reuse model, allow businesses to invest in sustainable efficiencies. As a bonus, half pallet unit loads reduce excess packaging and eliminate over production waste in the supply chain.

Let’s look at how one company leveraged half pallets to achieve a more streamlined, sustainable supply chain.

Sustainability in action: Michigan Sugar

Michigan Sugar received a request from its largest retail partner to find new ways to cut costs and carbon. It was a large challenge, but this challenge fit right in with Michigan Sugar’s long-standing approach to business.

Michigan Sugar had been shipping 4-pound bags of sugar in 40-pound bales on full sized 48x40-inch pooled pallets. Once full pallets were shipped to the store, employees transferred the heavy bales from pallets to store handling equipment, unwrapping the bulky 40-pound bales and carefully hand stacking each bag of sugar on the shelf. Michigan Sugar needed a way to reduce handling (fewer touches) and the resulting product damage, while improving on-shelf availability. The objective was to provide shelf-ready merchandise with less waste fuldunnage and handling in the supply chain.

The solution was to shift from producing and shipping on full-sized pallets to shelf-ready, half pallet merchandising units. By analyzing sell-through velocity and optimizing assortment in the baking aisle, the retailer was able to augment in-store shelving to accommodate space for half pallet merchandising units. As a result of using the Carbon Neutral ®Half Pallets, the program also drove sustainability benefits with an expected annual reduction of 231,000 pounds of CO2.As a result, the retailer awarded Michigan Sugar with its 2019 Efficiency in Packaged Goods Award.

Don’t choose between streamlined and sustainable

As we saw in the Michigan Sugar case study, data – when combined with physical tools such as the half pallet unit load– this solution ends the question of streamlined vs. sustainable: yes, we can accomplish both. When companies collaborate with their trading partners in pursuit of comprehensive fulfillment strategies, sound solutions can emerge that will benefit participating businesses in both cost savings and improved sustainability. When we optimize the manner in which we store and palletize goods, we simplify logistics, save money, and create more sustainable supply chains.

Bottom line: when we unlock innovation in the supply chain, we can develop the efficient supply chains we desire– while simultaneously achieving our sustainability goals.

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