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The journey to crafting a truly sustainable supply chain requires a number of painstaking evaluations and actions along the way. Just ask The Dow Chemical Company.
Back in 2009, Dow was shipping around 12,000 metric tons of PolyAcrylic Acid (PAA), an ingredient found in many household and personal care products, from France to Russia. The buyer was multinational giant Procter & Gamble.
The transit was complex and decidedly un-green. Originating in the town of Villers-Saint-Paul, France, product was being trucked in liquid form to the Port of Rotterdam, where tanks were then loaded onto vessels bound for St. Petersburg, Russia. A final over-the-road segment took the chemical to its destination at the P&G plant in Novo.
The routing left much to be desired, both in terms of efficiency and environmental impact. Individual payloads were limited to 21.5 metric tons, due to European Union regulatory restrictions. Secondly, ships often encountered heavy congestion at the Port of St. Petersburg, a major gateway into Russia. Then there were Northern Europe's harsh weather conditions, with temperatures dropping to minus 30 degrees Celsius, causing both seawater and the product itself to freeze. (The latter had to be reheated before final delivery.)
Not surprisingly, Dow's shipping performance was less than stellar. Its on-time record hovered at 85 percent or below. And the environmental impact of the three-stage transit was huge. Using the calculation tool known as EcoTransIT, Dow learned that its PAA supply chain was emitting 1,664 metric tons of carbon dioxide a year.
Dow uncovered multiple opportunities for cutting that number, although they couldn't be implemented all at once. Instead, working in partnership with Belgium-based Haesaerts Intermodal, the company undertook a five-phase plan, which ultimately resulted in a reduction of its CO2 footprint on that lane by 800 metric tons. At the same time, Dow was determined to increase customer satisfaction, without adding cost to the system.
From Truck to Train
Dow's analysis showed that the biggest source of CO2 emissions was the short-sea leg from Rotterdam to St. Petersburg. For that portion, it switched over to a block train out of Antwerp, Belgium. That shortened the over-the-road "pre-carriage" stage, cutting down significantly on truck emissions. Powered by an electrical engine, the Haesaerts-operated train took the product all the way to Novo, just six kilometers from P&G's plant. The final stage was handled by a light truck classified as Euro 2 under the EU's emission regulations. (Under the previous setup, the PAA moved from Villers-Saint-Paul to Rotterdam in heavier Euro 5-class trucks.)
By itself, Phase 1 resulted in a 36-percent reduction in CO2; a more consistent lead-time, due to the fact that trains are less affected by cold weather than ships transiting the Gulf of Finland, and a more responsive supply chain. But Dow and Haesaerts weren't done. In Phase 2, they obtained from the EU a "cross-border" designation for their trucks, allowing payloads to be increased by 23 percent, to 27 metric tons. That led to a further 42-percent drop in CO2 emissions.
Phase 3 bumped the payload up to 28 metric tons through extensive redesign of the equipment. Dow and Haesaerts introduced lightweight intermodal containers and trailers on the route. They boosted insulation efficiency through the use of steam pipes, reducing energy consumption by 20 percent. The new tank and chassis design also addressed "work-at-height" safety guidelines for drivers and other operators.
Finally, the partners spurned the use of AdBlue, a fuel additive used in European heavy trucks, in favor of selective catalytic reduction (SCR) technology to cut down on engine emissions. The increased payload allowed Dow to reduce its total number of shipments by 4 percent, although the use of a more powerful truck engine resulted in a net neutral impact on CO2 levels.
In Phase 4, Dow and Haesaerts turned to the problem of excess buffer inventory being stored at the Novo terminal, as well as energy loss caused by delays in the unloading of pre-heated containers. The introduction of new process controls led to creation of a "control tower" application for tracking product during the last mile of delivery. The tool gave all parties real-time visibility of shipments and product at the site.
In addition, Haesaerts installed a mobile container-heating unit near the customer's premises, cutting wait time at the unloading point from 48 hours to an average of just four hours. For its part, P&G no longer needed to keep operators on site to monitor equipment over the weekend. The change led to a 28-percent reduction in labor costs.
A Greener Fuel for Trucks
In Phase 5, the partners zeroed in on truck transit from Villers-Saint-Paul to the railhead at Antwerp. The opportunity for improvement on that leg wasn't immediately clear. In 2011, though, Volvo introduced a truck that was fueled both by liquefied natural gas and diesel.
There were doubts about the new technology. It was "untested in a real-life environment," according to Dow and Haesaerts. Operators were reluctant to apply LNG fuel to commercial trucks. LNG filling stations in the Villers-Saint-Paul-Antwerp lane were non-existent. A special license had to be obtained for the trucks. And the economics weren't favorable.
Dow and Haesaerts solved at least some of those problems by pursuing a dual-fuel design. They benefited from the eventual realization by EU authorities that "LNG is the most realistic alternative fuel for long-distance trucks." In addition, they implemented a number of risk-mitigation measures to offset any delivery failures caused by lack of access to LNG.
In the end, they achieved a 22-percent reduction in C02 on the pre-carriage leg, with a substitution ratio of 70 percent. Bottom line: reductions of 45 percent in CO2 emissions, 30 percent in energy use and 25 percent in supply-chain cost to serve.
The partners see additional opportunities for greening the transport of PAA. Dow's 2015 Sustainability strategy calls for the maintenance of all greenhouse gas emissions at 2006 levels, and a 25-percent reduction in energy "intensity" from 2005 to 2015. As for Haesaerts, it's working toward a 20-percent decline in 2014 emissions over 2009, a 12-percent drop in waste volume between 2009 and 2012, and an average equipment-utilization factor of 97 percent.
"Sustainable supply chains are not fiction," Dow and Haesaerts assert, "but can be achieved by a combination of vigilant focus, implementation of the latest technologies, long-lasting partnerships, purpose and perseverance."
Dow Chemical Company
Procter & Gamble
Keywords: supply chain, supply chain management, international trade, inventory control, global logistics, transportation management, logistics management, supply chain planning, green supply chains, sustainable supply chains
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