Logistics network optimisation

Key Facts

• The CAST CO2 product set is a supply chain modeling tool which, among other things, can model and optimize the Carbon emissions of a logistics network.
• 
  The tool is built on top of the models and standards promoted by the Green House Gases protocol.
  
  CAST CO2E has the ability to conduct modeling using a complex set of parameters including:
  

  • Transport Modes
  • Distribution centre/customer locations
  • Transit routes
  • Carbon intensity of energy within each geographic location
  • Others

  
  Using this information the tool then computes not only the most carbon efficient mode of operation but also ensures that any future mode of operation is cost effective (and more often than not with a positive ROI).
  
  Experience to date indicates that the tool works extremely well in situations where partnerships are formed between suppliers of logistics services, software services (eg: Barloworld/CAST CO2) and logistics users.
• The project took 12 months to implement
• For the overall solution, the likely ROI is largely customer dependant however in many cases the implementation of a carbon efficient supply chain does have a very strong ROI. This is likely to improve further with the rising cost of energy. Recent implementations of the tool are expecting to see 8-10% reduction in energy costs within distribution centers and up to a 30% reduction in overall logistics cost. CAST CO2 also has a strong ROI for logistics solution providers. The improvement to the efficiency modeling process can be a major differentiator between two supplier bids.
• As noted approximately an 8% energy reduction on recent large implementations and up to a 30% cost reduction on annual logistics budgets.
  
  Additionally the CO2 optimization features have resulted in Barloworld Logistics receiving an award for its environmental credentials at the logistics achiever awards in South Africa in 2009.  This is a significant benefit to the marketing and sales of other Barloworld Optimus products
• The actual (or likely) cost of the project is £10K-£100K+ depending on scope of the logistics operation
• The actual (or projected) savings from the project are 10-15% of supply chain operating costs.

What was the impact?

• Did you use a specific methodology or third party to calculate CO2e or KWh savings?

  Green House Gases Protocol. Standards from other sources can be incorporated in the tool.

• Comments on energy savings

  KWh savings vary by customer but 8% has been sited in a recent example
  
  

• Notes about Carbon savings/calculations

  Varies by customer.  But models of large customer networks show that reductions over 1000t CO2e/10% reduction in overall emissions are achievable

• Comments on fuel savings

  Varies by customer and transport mode. Typically 10-15%. Major savings are available through modal shift. Air to truck or truck to rail or short sea shipping.

• Comments on Carbon or Energy savings

  It is important to consider the impacts of refridgerants, packaging material and shrinkwrap in the orerall calculation of a companies carbon footprint.

• Comments on other resources saved

  We are seeing an increasing emphasis on a reduction in waste and water use in a supply chain.
  
• The project has independent verification for results

Making it Happen

• The following regulations or incentives allowed the business case to be more attractive

  Improvement of corporate social credentials, minimization of fuel and energy costs in the supply chain and optimization of delivery modes to meet customer SLAs. There are very few significant government lead financial incentives for the implementation of these networks

• Barriers experienced during the initiation of the project

• Comments regarding barriers

  In general (ie: not specific to this project) the key barriers preventing the implementation of this type of project are:
  

  • Availability of capital for the implementation of the project and procurement of tools (eg: CAST CO2)
  • The ‘non-core business’ nature of Carbon reduction and management often leads to a gap in the knowledge of individuals within the organization. This gap often needs to be bridged if projects are to be successful

• Other comments regarding barriers preventing the successful completion of the project

  Knowledge of the appropriate tools is a key challenge that slows the implementation and design of optimized (ie: modeled) CO2 efficient logistics networks.
  

• How were they overcome?

  The implementation of training programmes and the addition of 3rd parties with expertise in efficient logistics planning is a key to over coming many of the implementation barriers.
  

• What were the key lessons learnt?

  leveraging partnerships organizations can make significantly larger C02e savings then by acting on emissions in isolation