It’s one thing to reach a goal, stop and toast your success. But in the case of Walmart’s announcement yesterday, the finish line became a mile marker and now the company is looking at how much farther it can go.
In 2005, we worked with Walmart to set its first long-term freight goals – to increase its fleet efficiency by 25 percent by 2008 and then to double it by 2015. Walmart cleared the first goal with room to spare and announced yesterday that it has not only doubled fleet efficiency but is now on track to go further – and in the process, will avoid almost 650,000 metric tons of CO2 and save nearly $1 billion in this fiscal year alone.
It’s a testament to the holistic approach Walmart’s taken to improve the efficiency of its fleets. The Walmart sustainability team started by choosing a specific metric of cases shipped per gallon burned in 2005 – shipping the most cases of goods the fewest miles using the most efficient equipment – and then attacked the problem from all sides to get it done.
As companies work to increase the efficiency of their freight moves – taking steps on their Green Freight Journey – it’s tempting to choose one area to work on at a time. But by choosing a few key areas to focus on – developing innovative solutions for loading, routing and driving techniques, and collaborating with tractor and trailer manufacturers on new technologies – Walmart was able to bolster freight efficiency along its supply chain at multiple points.
No Trailer Left Half-Full
One strategy – which we’ve covered here frequently – is ensuring that trailers are loaded as effectively as possible to move the most cases of goods at a time. Walmart worked to lightweight and streamline both packaging and shipping containers, enhanced multi-stop delivery capabilities, and coordinated and consolidated shipments to minimize total truck trips.
Shrinking Distances, From Distribution to Delivery
Walmart also worked to decrease the number of miles its goods traveled by working with its associates to find the most effective strategies for moving them between stores and distribution centers. This included finding the “best” (i.e., most efficient) distribution center between suppliers and stores, eliminating empty miles (i.e., trucks traveling empty) and mapping routes to increase fuel efficiency, for example, by avoiding areas with excessive hills or congestion.
Finding Efficiency Through Technology, Collaboration, Innovation
Lastly, Walmart integrated more efficient technologies and practices into how it moved freight. For example, It adopted more fuel-efficient trucks, ensured they were calibrated and maintained to ensure they were performing well, and incorporated improvements to make them lighter-weight and more aerodynamic. Also, operating today’s technology is different from how most drivers learned to drive so Walmart’s logistics team applied a mixture of techniques, training, reporting and competition to motivate drivers to improve their performance.
Greening Freight Takes – And Needs – Many Kinds of Effort
As mentioned above, with these new efficiencies, in this fiscal year alone, the company expects to save nearly $1 billion compared to a 2005 baseline, and avoid almost 650,000 metric tons of CO2 emissions. Although it can be assumed that improving fuel efficiency of its equipment would be the most impactful effort, it turned out that the operational side of filling the trailer and reducing miles was just as important in meeting Walmart's goal.
The takeaway from Walmart’s efforts is that all three types of intervention are important in setting and meeting ambitious goals on freight, but its suppliers and vendors play a significant role in helping achieve them. Loading and routing companies, for example, can control a lot of factors on their own, but making sure they serve a company’s larger efficiency or sustainability goals requires close coordination.
Also, as we’ve seen over the last few years, companies are already capable of developing innovative technologies that can double current truck fuel efficiency, but for them to scale up in the market, the whole industry has to get behind a boost in fleet efficiency, in the form of strong federal standards that will set a floor for new trucks. We’ve already seen how the first round of heavy truck standards, which first took effect in 2014, triggered huge market demand for more efficient trucks, and opened up a key opportunity to help Walmart and others meet their fleet goals.
Our advice to companies: pay attention to Walmart’s efforts, see how they can apply to your own sustainability roadmap and internal targets, and help drive innovation in how we get goods to market. In the long run, it’ll help your company cut costs, fuel use and climate impacts – and as we’ve seen here, it can happen faster than you think.
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