Yogurt maker Stonyfield Farm's initiative to shrink its carbon footprint offers a possible model for other companies that are concerned about their supply chains' greenhouse gas emissions.
How much carbon dioxide does yogurt manufacturing produce? Too much, according to yogurt maker Stonyfield Farm, which has pioneered a program to reduce greenhouse gas (GHG) emissions across its entire company.
For the past four years, the Londonderry, New Hampshire, USA company has worked hard to shrink its carbon footprint —the amount of carbon dioxide (CO2) it produces as a byproduct of its business. Although milk production is the biggest culprit, the transportation of finished products is close behind in the amount of greenhouse gases released into the atmosphere.
That's why the company embarked on a program to cut CO2 emissions associated with the delivery of its finished goods. Stonyfield's carefully planned foray into carbon-footprint mapping offers a possible model for other companies that are concerned about their supply chains' carbon emissions.
MAPing and measuring
As a maker of organic products, Stonyfield Farm has always had a keen interest in programs that help the environment. Founded in 1983, the company makes yogurt, yogurt smoothies, organic milk, cultured soy, frozen yogurt, and ice cream. In the company's early days, it was headquartered in an old farmhouse and the operation consisted of two families and seven cows. Today it's the number one maker of organic yogurt and the third-largest brand of yogurt overall in the United States. Its sales totaled more than US $300 million last year, and the company has averaged a 24-percent annual growth rate over the past 19 years.
In 2001 and again in 2006, Stonyfield Farm conducted an evaluation of its carbon footprint. The audit included virtually every business activity, from business travel to waste disposal, along with packaging, electricity usage, purchasing, the use of ingredients (such as milk, sugar, and fruit flavors), and shipping of raw materials and finished products. After completing those assessments, the company determined that the activities generating the most carbon dioxide were, in rank order, milk production, packaging, and transportation of finished products.
"The first time we did a complete [carbon] footprint [study], we were completely stunned that milk and packaging were our two biggest contributors to climate change," said Nancy Hirshberg, vice president of natural resources at Stonyfield Farm. She noted that the way livestock is raised results in greenhouse gas emissions from a variety of sources, including methane from the cattle's natural digestive process; methane from the manure; energy used to grow and transport the feed; energy used to make fertilizer; and on-farm energy use, such as electricity for cooling the milk. "One molecule of methane is equal to 25 molecules of carbon, so methane is far more potent than carbon," she said. "We've been working on this for many years and have developed programs in each of these areas of impact to try and reduce the emissions from our milk supply chain."
To address environmental issues and help employees achieve the company's environmental goals, including CO2 reduction, Stonyfield Farm set up Mission Action Program (MAP) teams in December of 2006. Director of Logistics Ryan Boccelli was chosen to head up a MAP team that would set goals for cutting carbon dioxide emissions in finished-goods transportation. The team included representatives from marketing, sales, and natural resources as well as from supply chain functions.
The transportation MAP covers shipments from the main plant and distribution center (DC) in Londonderry, where about 99 percent of the company's outbound volume originates. It also includes two co-packers, which produce items for Stonyfield and ship them to the Londonderry DC for nationwide distribution.
The team determined that the goal for the program's first year should be to establish an accurate baseline for greenhouse gas emissions generated by outbound transportation from Londonderry to customers throughout the United States. At this point, the transportation MAP team involved Miami-based Ryder Logistics, which operates a dedicated fleet for Stonyfield Farm and manages the 30 for-hire motor carriers it also uses. (The dedicated fleet carries about 30 percent of outbound shipments while for-hire carriers handle the rest.) Ryder maintained a database of the yogurt maker's shipments by region and by customer — data that would prove to be very helpful in mapping carbon emissions.
To calculate its emissions baseline, Stonyfield Farm used the "FLEET" (Freight Logistics Environmental and Energy Tracking) performance model developed by the U.S. Environmental Protection Agency (EPA). The model assumes that carrying a product one mile by truck or rail emits 1,847.5 grams of carbon dioxide. By multiplying that figure by the number of miles that trucks traveled to deliver its products to customers in the fourth quarter of 2006, Stonyfield Farm developed a baseline number of tons of carbon dioxide emitted in the transportation of finished goods.
The transportation MAP team is striving to meet the goal of a 40-percent reduction in the company's total annual carbon emissions by 2014. But rather than think solely in terms of absolute tons, it has been focusing on the amount of carbon dioxide generated per delivered ton of product. (See Figure 1.) By using that metric, Boccelli said, Stonyfield Farm can compare the effect on carbon emissions by customer and by region, regardless of delivery frequency. "If we reduce the amount of CO2 per ton delivered, then the absolute tonnage [of greenhouse gases] should fall even if the volume stays constant."
First steps yield big results
Once it had that emissions baseline, Boccelli's team identified ways to improve equipment utilization and reduce mileage, and hence Stonyfield Farm's carbon footprint. As a first step, the team decided to consolidate less-than-truckload (LTL) shipments into full truckloads. To promote truckload delivery, the yogurt maker established order minimums for customers and began requiring 48 hours' advance notice of order revisions. It also undertook route optimization based on reports it received from Ryder. As a result, the company was able to eliminate more than four million miles and some 2,500 truck trips from 2006 to 2007, reducing its CO2 per ton delivered by about 40 percent. Today, the only place Stonyfield Farm still ships LTL is New York City, because it has not yet found a suitable carrier to deliver multi-stop truckloads in that market.
In 2008, Boccelli's MAP team looked for opportunities to further reduce its transportation-related greenhouse gas emissions. Stonyfield Farm began including environmental considerations in its performancemeasurement scorecards for motor carriers. It also encouraged its carriers to participate in the EPA's SmartWay Program, which works with carriers and shippers to improve air quality and reduce carbon emissions. And the shipper inserted stipulations that motor carriers use new, lower-emission equipment into any new transportation contracts it signed.
Toward the end of the year, Stonyfield Farm conducted a network analysis that examined its distribution patterns, inventory deployment, and customer locations with an eye toward reducing the number of miles traveled during deliveries. Analysts looked at scenarios that included adding new plants and distribution centers to shorten lengthy, nationwide routes.
Although Stonyfield Farm has not yet made any changes to its distribution network, the exercise did identify other steps it could take to reduce its carbon footprint. For example, the analysis suggested that the yogurt maker could —as Boccelli says —"think outside the truck" and ship by rail. In January of 2009, the company began using Railex, a weekly refrigerated railcar service for food products, to move orders to the Pacific Northwest. One slight drawback is that the company needs an additional day's notice to prepare rail shipments, Boccelli noted. Still, the service has been successful enough from both an environmental and a cost standpoint that Stonyfield plans to use Railex to deliver product to customers in California, Texas, and Florida by 2012.
Currently the shipper is working with Ryder to upgrade the tractor and trailer equipment in its dedicated fleet to "greener" models. At this writing, the third-party logistics company had replaced three of the four tractors and four of the six refrigerated trailers in the small fleet. The new tractors have on-board computers that monitor drivers' compliance with curbs on engine idling and with the company's 63- miles-per-hour speed limit. The new units also come with such enhancements as special tires and directdrive transmission for better fuel economy. The fleet is now averaging 6.3 miles per gallon, a big jump from the 5.25 miles per gallon it achieved in the past. As a result of purchasing new equipment, the dedicated fleet has cut its carbon emissions by 10.4 percent.
Ambitious goals
The transportation MAP team has achieved notable results in a short time. Its efforts have contributed to Stonyfield Farm's receiving several environmental awards, including the U.S. EPA's Clean Air Excellence Award, the EPA and U.S. Department of Energy's Green Power Leadership Award, and designation as an EPA SmartWay Transport Shipper, including winning a SmartWay Excellence Award. Yet Boccelli and his colleagues aren't ready to sit back and simply enjoy their achievements. In fact, the team members have set ambitious goals for reducing greenhouse gas emissions even further. They aim to cut emissions per unit of yogurt delivered (compared to the 2006 baseline) by 50 percent by 2010 and 75 percent by 2015. They also have set a goal of cutting absolute annual CO2 emissions by 40 percent off the 2006 baseline by 2014. To realize those goals, Boccelli said, Stonyfield Farm will expand its use of rail service and will have to consider realigning some of its production sites and distribution centers. "The only way that we'll get to our targets is through plant and DC optimization," he said.
Boccelli remains confident that his team will meet with success, in large part because he has a determined crew and the program enjoys support from Stonyfield Farm's top executives. "Two years ago, we didn't think we could reach [the initial] goals," he said. "My team has not failed yet. And we have a leadership team that's willing to listen if we have to do something radical."
Ron Marotta of Yusen Logistics listens to Rick DiMaio of Ace Hardware talk about the steps Ace is taking to keep its store stocked after Hurricane Helene and during the East and Gulf Coast Port Strike.
The East and Gulf Coast port strike was the top discussion point during a panel discussion of shippers and logistics providers at the Council of Supply Chain Management Professionals (CSCMP) annual EDGE Conference this morning. The session, which was supposed to be focused on providing an update to CSCMP’s “2024 State of Logistics Report,” quickly shifted to addressing the effect that the strike by nearly 50,000 dockworker at 36 ports in the Eastern half of the U.S. could have on supply chains.
“The seriousness of this action cannot to be taken lightly,” said Ron Marotta, vice president of the freight forwarder and supply chain service provider Yusen Logistics (America). “It has not happened since 1977. Our lives depend on sustaining a smooth global supply chain.”
Marotta warned that for every day that the ports were not open, it would take four to five days to recover from the impact. One added concern is how the port closures would affect recovery efforts for Hurricane Helene. “There’s a huge amount of item that would normally be replenished by importers and retailers,” Marotta said.
Rick DiMaio, executive vice president and chief supply chain officer, for Ace Hardware Corp., commented that the hardware retail cooperative was doing okay for now keeping stores in stock, although he did expect the company would be “chasing generators for awhile.” “But in this recovery phase [from the hurricane], we certainly don’t need a strike right now,” he said.
The port closure will also have a knock-on effect on other transportation modes. For example, Andy Moses, senior vice president of sales and solutions for logistics services provider Penske Logistics, expects to see some companies turn to air freight as a result of the strike. This will, in turn, cause air freight capacity to tighten up and rates to rise. Furthermore, the longer the ports are closed, the more likely inflation is to rise again, according to Moses.
Nor will the effects of the strike stop at the U.S. border, according to Marotta. Many Caribbean Island nations depend on food import from the U.S. that move through East Coast ports. Additionally, some medical supplies typically are exported through the ports to Europe.
On a positive note, however, many companies took actions earlier in the year to prepare themselves for a potential strike. Ammie McAsey, senior vice president of customer distribution experience for the pharmaceutical distributor McKesson, said the pharmaceutical industry has brought in enough extra inventory that there will not be a short-term impact on the U.S. health care system due to the strike.
Government intervention?
Marotta hopes that the U.S. government takes the step of invoking the Taft-Hartley Act to stop the strike and send the International Longshoremen’s Association (ILA) and the port management group, United States Maritime Alliance (USMX) back to the negotiation table. In 2002, for example, President George W. Bush used the Taft-Hartley Act to end an 11-day lockout of union workers at West Coast ports. President Joe Biden, however, told reporters on Sunday that he would not do this.
“I hope that cooler heads prevail and that the executive branch realizes that it’s not just a labor issue, it’s also a humanitarian issue,” Marotta said.
Confronted with the closed ports, most companies can either route their imports to standard East Coast destinations and wait for the strike to clear, or else re-route those containers to West Coast sites, incurring a three week delay for extra sailing time plus another week required to truck those goods back east, Ron said in an interview at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
However, Uber Freight says its latest platform updates offer a series of mitigation options, including alternative routings, pre-booked allocation and volume during peak season, and providing daily visibility reports on shipments impacted by routings via U.S. east and gulf coast ports. And Ron said the company can also leverage its pool of some 2.3 million truck drivers who have downloaded its smartphone app, targeting them with freight hauling opportunities in the affected regions by pricing those loads “appropriately” through its surge-pricing model.
“If this [strike] continues a month, we will see severe disruptions,” Ron said. “So we can offer them alternatives. We say, if one door is closed, we can open another door? But even with that, there are no magic solutions.”
Turning around a failing warehouse operation demands a similar methodology to how emergency room doctors triage troubled patients at the hospital, a speaker said today in a session at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
There are many reasons that a warehouse might start to miss its targets, such as a sudden volume increase or a new IT system implementation gone wrong, said Adri McCaskill, general manager for iPlan’s Warehouse Management business unit. But whatever the cause, the basic rescue strategy is the same: “Just like medicine, you do triage,” she said. “The most life-threatening problem we try to solve first. And only then, once we’ve stopped the bleeding, we can move on.”
In McCaskill’s comparison, just as a doctor might have to break some ribs through energetic CPR to get a patient’s heart beating again, a failing warehouse might need to recover by “breaking some ribs” in a business sense, such as making management changes or stock write-downs.
Once the business has made some stopgap solutions to “stop the bleeding,” it can proceed to a disciplined recovery, she said. And to reach their final goal, managers can use the classic tools of people, process, and technology to improve what she called the three most important key performance indicators (KPIs): on time in full (OTIF), inventory accuracy, and staff turnover.
CSCMP EDGE attendees gathered Tuesday afternoon for an update and outlook on the truckload (TL) market, which is on the upswing following the longest down cycle in recorded history. Kevin Adamik of RXO (formerly Coyote Logistics), offered an overview of truckload market cycles, highlighting major trends from the recent freight recession and providing an update on where the TL cycle is now.
EDGE 2024, sponsored by the Council of Supply Chain Management Professionals (CSCMP), is taking place this week in Nashville.
Citing data from the Coyote Curve index (which measures year-over-year changes in spot market rates) and other sources, Adamik outlined the dynamics of the TL market. He explained that the last cycle—which lasted from about 2019 to 2024—was longer than the typical three to four-year market cycle, marked by volatile conditions spurred by the Covid-19 pandemic. That cycle is behind us now, he said, adding that the market has reached equilibrium and is headed toward an inflationary environment.
Adamik also told attendees that he expects the new TL cycle to be marked by far less volatility, with a return to more typical conditions. And he offered a slate of supply and demand trends to note as the industry moves into the new cycle.
Supply trends include:
Carrier operating authorities are declining;
Employment in the trucking industry is declining;
Private fleets have expanded, but the expansion has stopped;
Truckload orders are falling.
Demand trends include:
Consumer spending is stable, but is still more service-centric and less goods-intensive;
After a steep decline, imports are on the rise;
Freight volumes have been sluggish but are showing signs of life.
CSCMP EDGE runs through Wednesday, October 2, at Nashville’s Gaylord Opryland Hotel & Resort.
The relationship between shippers and third-party logistics services providers (3PLs) is at the core of successful supply chain management—so getting that relationship right is vital. A panel of industry experts from both sides of the aisle weighed in on what it takes to create strong 3PL/shipper partnerships on day two of the CSCMP EDGE conference, being held this week in Nashville.
Trust, empathy, and transparency ranked high on the list of key elements required for success in all aspects of the partnership, but there are some specifics for each step of the journey. The panel recommended a handful of actions that should take place early on, including:
Establish relationships.
For 3PLs, understand and get to the heart of the shipper’s data.
Also for 3PLs: Understand the shipper’s reason for outsourcing to a 3PL, along with the shipper’s ultimate goals.
Understand company cultures and be sure they align.
Nurture long-term relationships with good communication.
For shippers, be transparent so that the 3PL fully understands your business.
And there are also some “non-negotiables” when it comes to managing the relationship:
3PLs must demonstrate their commitment to engaging with the shipper’s personnel.
3PLs must also demonstrate their commitment to process discipline, continuous improvement, and innovation.
Shippers should ensure that they understand the 3PL’s demonstrated implementation capabilities—ask to visit established clients.
Trust—which takes longer to establish than both sides may expect.
EDGE 2024 is sponsored by the Council of Supply Chain Management Professionals (CSCMP) and runs through Wednesday, October 2, at the Gaylord Opryland Resort & Convention Center in Nashville.