Cutting Miles and Inventory Piles

Dec. 1, 2010
Transportation and distribution represent rich opportunities for shared sustainability and profitability among supply chain partners.

Sustainability isn’t new to Kraft Foods – but we’ve sharpened focus on it over the past five years. In fact we’ve built sustainability into our business strategy and established aggressive goals that have yielded the following results:

• 174 million pounds of packaging material eliminated – exceeding our 150 million pound goal two years early.

• 15% reduction in plant energy usage (towards a goal of 25%).

• 17% plant energy-related carbon dioxide emissions (towards a goal of 25%).

• 32% reduction in plant water consumption – exceeded goal of 15%, two years early.

• 30% reduction in plant waste – doubling our goal of 15%, two years early. (Goals to be achieved by 2011 with a base year of 2005.)

On the road, in 2009 we eliminated about 4,500,000 truck miles and the equivalent of approximately 750,000 gallons of diesel fuel and 16,650,000 pounds of CO2. This is the result of partnership with fellow corporate citizens.

Through the EPA-sponsored SmartWay partnership, we’ve adopted new technology like auxiliary power units (APUs) to reduce idling at distribution centers and many plants. We’ve also reduced our governed top speed on all over-the-road tractors from 65 to 62 miles per hour. More than 100 SmartWay certified carriers handle 80% of our freight – up from 70% just in the last year.

With packaging, we’ve come up with new designs that use less material and let us ship more products per pallet, meaning fewer trucks on the road. For example, our redesigned Crystal Light powdered beverage packaging uses nearly 10% less material per package and 25% less material in our shipping trays. That eliminated 250 tons of packaging per year and means we can fit 33% more packages per pallet, meaning fewer trucks on the road.

We’re also making big changes at our distribution centers:

Our 400,000-square-foot Springfield, Mo., warehouse is actually underground – using natural caves to warehouse products. The caves maintain a cool temperature, and help reduce energy. It uses about 65% less energy than conventional warehouses, and reduces CO2 emissions by about 4 million pounds annually.

Our 800,000-square-foot Morris, Ill., warehouse is LEED-CI Gold certified and the largest building in the world of its kind to get this certification for superior design. It uses energy-efficient fluorescent lighting with multi-level lighting controls, resulting in a 60% reduction in lighting energy usage. Its HVAC ventilation system improves air quality and reduces power consumption by 40%, and when it was first built, nearly 100% of construction debris was diverted to recycling centers rather than landfills.

Trucking Alternatives

We ship wheat via waterways to our Toledo, Ohio, flour mill. Now, ships make bigger deliveries less frequently. We’ve saved a million road miles, replaced 10,000 truck shipments and reduced 2,000 tons of CO2 emissions in the process.

Kraft Foods has also taken a leadership role in advocating legislation that would increase the productivity of trucks. Together with International Paper we’ve joined the Coalition for Transportation Productivity – a group of more than 160 shippers, carriers and industry associations committed to increasing gross vehicle weights on interstate highways from 80,000 to 97,000 pounds with an additional axle. This change would improve the utilization of existing equipment and infrastructure without changing the size of the trucks.

High Technology

Through our “Super Truck” initiative, using software provided by Transportation/Warehouse Optimization (TWO), we can optimize outbound replenishment truckloads, maximize weight and cube and ultimately put more products on fewer trucks. The project has been implemented at 20 of Kraft Foods’ largest plants and buffers across the United States and Canada. We’ve already taken the equivalent of about 1,500 trucks off the road, which takes over a million miles off of the U.S. highway system.

Kraft Foods’ private fleet and its top 50 carriers use Oracle Transportation Management to measure truck movements and design new trip segments to minimize “empty miles.” Last year this helped us eliminate more than 500,000 miles.

Between 2005 and 2009, Kraft Foods eliminated more than 50 million truck miles and more than 50,000 trucks. Our success as corporate citizens is based largely on driving fewer miles, reducing inventory piles and eliminating idling trucks. And by collaborating with other corporate citizens, both customers and suppliers, we’re applying high-tech innovations for our trucks and warehouses to reduce energy and CO2 emissions.

Mike Cole is senior director, North America transportation for Kraft Foods. He has been with the company for 12 years, starting as regional director of customer logistics in the Mid-Atlantic area. Before Kraft he was with Frito-Lay for 15 years.