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Customer-Applied Global Warming

Feb. 15, 2012
You’ll see the word “sustainability” a lot in MH&L. But if you only associate the word with some environmentalist movement, you’ll miss an opportunity.

Sustainability is as much about saving businesses as it is about saving the rain forest. Russ Meller wants to prove it to you. He’s director of CELDi, a joint research effort between universities and industry. With funding from the National Science Foundation, their goal is to make the flow of goods traveling our transportation infrastructure more efficient.

Today, along with that flow of goods is a parallel gush of money that’s streaming down the sewer. That’s because a quarter of the trucks on our roads travel empty. The rest are only about half-full—or half-empty, depending on your philosophy.

Through CELDi, Meller and his partners will propose a way to build fully utilized truck loads. If we could accomplish that, Meller says, we’d reduce the number of miles driven by 83.2 billion, which translates into 16.5 billion gallons of diesel fuel worth $65.8 billion.

That says nothing about the CO2 reduction—and even that is no longer just a fuzzy environmental “nice-to-have.” It’s a hard number. Supply chain leaders are starting to ask for their suppliers’ CO2 numbers, according to research published recently by the Carbon Disclosure Project and Accenture. The CDP is a not-for-profit organization providing a global system for companies and cities to measure, disclose, manage and share their CO2 emissions numbers. According to their report, the proportion of the responding companies that claim they will deselect suppliers who fail to meet formal environmental criteria within five years has more than doubled from 17% in 2009 to 39% in 2011 and two-thirds (63%) of responding companies are also investing in training their procurement staff in supply chain carbon management. This is a dramatic rise from 26% in 2009 and 41% in 2010.

Even more surprising, half of the responding companies have developed, or are developing, contractual obligations for suppliers to include information on their greenhouse gas emissions management in response to requests for proposals.

A conversation I had with a logistics professional on the receiving end of such a request adds credibility to this report’s findings. Grant Opperman, president of D.W. Morgan, a supply chain and logistics services firm, told me that three years ago a Fortune 500 client asked him to start measuring the carbon emissions D.W. Morgan produced in serving its clients. This caused a mini-panic at the firm because there were no standards and no gauge to do such measurements.

“We have facilities all over the world that are very different and we have trucks in different countries, all kinds of different employee profiles,” Opperman said. “But this client didn’t have it figured out yet either, they just wanted us to take a stab at it and start reporting to them and they’d evolve as they went along.”

Today Morgan is compiling emission statistics and having them audited and confirmed by an independent consulting company for reports to clients. By the way, these clients are high-tech firms with critical supply chain needs and time is millions. But today Morgan is not only trying to get the best price for transportation between Philly and Dallas, but it is trying to figure out how to reduce the emissions from that move.

Opperman says this has taught his company how to think about its business in a formalized metrics-driven way and build a competitive advantage upon efficiencies.

The climate’s changing, all right. Hope you’re ready for the heat from your company’s stakeholders.

Follow me on Twitter @TomAndel.

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