Operational Cost Savings through Measuring Carbon Emissions and Costs of Downstream Transportation
Mike Knowles, Partner – Consulting
Emilie Gawronski, Manager – Consulting
Project OverviewAn innovative home care products company engaged Frank Rimerman Consulting to measure and manage greenhouse gas (GHG) emissions related to transportation logistics. This company is well known for its green product lines and has built considerable brand equity around its green image; managing GHG emissions allows the company to protect and enhance this image. The company uses third party providers to transport products from the manufacturing site to the customer site using various modes of transportation. As a result of the project, the company is able to measure the carbon intensity of various transport modes used in its supply chain and is positioned to manage it in the future.
ApproachFrank Rimerman Consulting used a systematic approach to baseline GHG emissions employing our Scope3 Solutions methodology which includes setting a baseline, identifying carbon hot spots, running scenarios and developing a plan for carbon reduction. We first defined the project by identifying boundaries in the logistics process to focus on emissions for which the company was directly responsible. Transportation data was extracted from the company's Transportation Management System (TMS) and tested against independent data sources. Certain data points, however, were not tracked within the TMS system and assumptions had to be developed for missing information such as the weight capacity of full trucks, the exact routing of LTL (less than full truck load) shipments, and rail distance from the distribution center and the rail dock. Where available, we estimated the GHG emissions for each shipment using World Resources Institute's GHG protocols; where not available, protocols were developed through consultation with industry experts to establish best practice methodologies. In addition to calculating carbon intensity for each mode of transport, FRC also developed a simple and user-friendly tool to augment TMS. The tool measures both the cost and carbon impact of various shipping alternatives enabling the company to manage carbon emissions going forward.
ResultsOur analysis provided GHG emissions data for any shipment by mode of transport and by route. With this information, management is able to evaluate the impact of variables such as weight, distance and mode of transportation on carbon, resulting in more informed shipping decisions. Armed with this knowledge and Frank, Rimerman Consulting's Scope3 Solutions methodology, management is able to set and achieve targets for reduction of both cost and GHG emissions.
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