Given how tough it is to secure capacity, is it worth it to add another requirement to the carrier procurement process?
"In our experience, it is," says Ron Guzzi, senior manager of transportation at The Home Depot. "The values of SmartWay—operating efficiently, sharing information, improving performance in terms of sustainability—are shared values within our company. For us, maximizing our ratio of SmartWay-registered carriers makes sense because it can help us meet our corporate goals for sustainability.”
Since 2004, some 3,000 organizations have registered with SmartWay, a market-driven program that helps logistics and transportation managers benchmark environmental performance in the supply chain. Through voluntary reporting of emissions data, SmartWay gives organizations that ship freight a set of tools to measure their supply chain’s carbon footprint and make better decisions about how to reduce it.
Here are four steps you can take to incorporate SmartWay into your RFP, bidding, and on-boarding activities:
1. Request (or require) SmartWay registration from carriers and 3PLs
Make it clear from the outset that sustainability is on the same list of priorities as rates, capacity, safety, and on-time performance.
Jason Eitel, who manages the prospective carrier process for Best Buy, says his company has language in its RFPs that encourages SmartWay registration.
“We no longer ask a carrier, ‘Are you SmartWay-registered, yes or no?’ We ask for its SmartWay registration number so we can determine the extent to which the carrier participates in the program,” says Eitel.
If a carrier is not part of SmartWay, “we clearly explain why SmartWay registration is important to us as a company," says Eitel. "In addition to all of the other factors, helping us collect good data and manage sustainability is part of the equation when we’re evaluating who should handle our freight.”
2. Reward SmartWay performance
SmartWay collects data on emissions of carbon dioxide, oxides of nitrogen, and particulate matter across the supply chain. Carriers are scored according to their emissions per mile and per ton-mile, and are grouped into operational categories (truckload, less than truckload, dray, expedited, etc.) and by equipment type (dry van, refrigerated van, flatbed, tanker, etc.) so it’s simpler to compare a carrier’s performance relative to its peers. These scores are publicly available and in a digital format that’s easy to import and manage.
Some shippers configure their transportation management system to analyze SmartWay emission scores and favor carriers with better performance.
“We think it’s important to provide an incentive for carriers to participate in SmartWay,” says Guzzi. All other things being equal, The Home Depot's bid program will give a best-in-class SmartWay carrier an advantage. Carriers know that if they can improve their standing within SmartWay, it will help them in terms of their potential to win new business.
3. Communicate your expectations
Communicate your expectations on carbon emissions but leave it to each carrier to find ways to meet them.
“What makes SmartWay so good is that it’s completely voluntary and a carrier can choose whatever practice works best,” says Harry Haney, associate director of customer development at Kraft Foods Group. “We’re not going to tell carriers how to do their business. Our goal is to communicate our requirements clearly so each carrier can show us how it’s going to meet those requirements in the most effective, competitive way possible.”
In their bid presentations, ask carriers to explain what they’re doing to reduce emissions and fuel use. Pay attention to how they quantify their performance—for example, is it specific, measured in grams per mile or grams per ton-mile?
At the same time, be prepared to talk about your own efforts. For instance, if you have a “no idling” policy or offer preferential loading and unloading times and docks to SmartWay fleets, you can include that language in your RFP and freight contracts.
You can also support carriers by enlisting the EPA for technical expertise and training. “We’ve had representatives from SmartWay at our carrier meetings to explain the program and share best practices,” Haney says. “It’s a free service when you’re part of SmartWay.”
4. Convey the importance of accurate, valid data
Use your RFPs to outline your expectations about reporting emissions data—not only requesting that carriers be SmartWay-registered, but to be in good standing and submitting accurate emissions information to the program on time.
Start by including criteria for data integrity. Outline your standard operating procedures for collecting, storing, and reporting SmartWay data. Explain your processes for verifying information, potentially including site visits and audits.
Finally, talk to carriers about your efforts to help them accurately assess their carbon footprints. SmartWay is a two-way street: quality-driven carriers want access to information that helps them ensure that their own reporting is consistent, reliable, and timely. What kind of data can you provide to help SmartWay carriers?
As you start to develop your RFPs for 2015, check out the variety of free resources that SmartWay provides to help shippers encourage carriers and 3PLs to report accurate emissions data.
Source: EPA SmartWay
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