Las Vegas—Most merchants want to be green, in theory. But if being green means increasing costs for the long term, the notion can’t be sustained, said Robert Walters in his March 24 NCOF session “Clearing the Air on Green Operations Issues.”
Walters, president of consultancy Freight Management, defines green operations as those which focus on reduction of fuel consumption and shrinking the carbon footprint. To do this, he said you might consider rail as an alternative to trucks. It’s generally cheaper to move goods by rail vs. by truck; the downside is that it moves slower.
But not much slower: Walters noted that it takes the same amount of time—48 hours—to ship freight from Los Angeles to Chicago. When you’re shipping from cost to coast, though, it’s when you reach the Midwest and have to switch rail lines that adds time—another day or two for delivery. “If you can live with a few extra days for delivery, you can reduce your costs and your carbon footprint,” he said.
In fact, you may be paying for “over the road” truck delivery, but 70% of the truckers are using rail for longer haul freight, Walters says. And if you find your trucking company is using rail to move your goods, “you can demand a rail discount.”
What else can you do to make your logistics more earth-friendly? Consolidate double and triple orders send to the same customer on a given day with different bills of lading. The savings here can range from 5% to50%.
The key to this is master billing, what Walters calls “a paper marriage of freight” that puts the various bills of lading with one master bill. It’s tedious to do manually, he notes, but it can be automated.
You should also look at your returns policy to reduce shipping and handling. Walters cited a client that manufactured television sets. The client’s policy was that if the carton holding the TVs had even a slight crease, it was rejected and the TV would need to be reboxed. The client was losing money by shipping the TVs back to its West Coast distribution center, rather that shipping boxes to the TVs in the other warehouses.
Reduce shipments wherever you can, because handling products means fuel consumption. Even if you think your carrier is paying for the fuel, Walters said, “you’re paying—just wait until your next contract negotiation.”