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Sustainability - Case studiesCase - ITT Water and WastewaterCentralization of distribution systems is recognized as the most important structural change within logistics over the last 15-20 years. However, very few empirical studies have been made that follow up the effects of such a change on transport-related CO2 emissions. Taking a look at a company that has established centralized distribution will reveal some of the issues involved. By centralizing the distribution system for its western European market, ITT Water and Wastewater was able to reduce its logistics costs by 25-30%, reduce express deliveries by 70% and improve its customer service dramatically. However, transport work increased by about 30%, leading to an approximate increase in CO2 emissions of 40%. Nonetheless, centralized distribution does offer new opportunities for sustainability.
The change carried out in this single link in the distribution system compensates for the vast amount of the increase in transport-related emissions incurred by the structural change. In fact, if all the departures in the consolidated link are transferred to the intermodal rail-road set-up, then the centralized systems can be more carbon efficient than the decentralized system despite inducing more transport work. Hence, what ITT Water and Wastewater has succeeded in doing is to understand how to fully make use of its centralized system in order to achieve simultaneous improvements in cost, service and environmental performance.
Case - UPSAn innovative way of reducing transport distance, with the concomitant reduction in transport costs and reduced CO2 emissions, has been introduced by United Parcel Service Inc. (UPS). By implementing routes that would require truck drivers to make only right-hand turns, thereby avoiding waiting and idling in a left-hand turning lane, UPS has shaved 51.5 million kilometres off its North American delivery routes each year and saved more than 11 million litres of gasoline worth about $10 million a year. In addition, this approach reduces the chances of accidents, as the trucks are not cutting across oncoming traffic, and decreases overall delivery times significantly.
Case - Young's seafoodWhat at first glance seems to have negative impact of CO2 emissions on the environment, but actually does not, is offered by Young’s Seafood of Scotland with regard to scampi (langoustine) processing. In the past, scampi was peeled by machine in Scotland but are now sea-freighted to Thailand where they are hand peeled – according to consumer preference – and then shipped back to Scotland for packaging and distribution. Although this may seem crazy, Young’s Seafood has consulted the independent Carbon Trust to assess the impact of this long journey on the environment. The result is that shipping scampi to Thailand for hand peeling is no more damaging to the environment because the CO2 emitted by ships is equivalent to that emitted by the mechanical machines that were used to peel the scampi in Scotland. Peeling scampi in Thailand created several jobs there, although this was at the cost of losing some jobs in Scotland. Nevertheless, one may claim that jobs lost in a country providing good social welfare and employment opportunities can lead to social justice in the form of more jobs created in a poor country with high unemployment and no state welfare support. This case goes to show the difficulty in making trade-offs between environmental, economic, and social issues.
Promoting production sustainabilityThe new buzzwords for production are Design for Sustainability/Environment (DfS/DfE). This is all about developing products in a way that reduces their environmental impact; integrating environmental considerations with good design practice and everyday products. Two outstanding examples of this show how well this approach can succeed.
Case - The new Mirra ChairA German design team comprising two Herman Miller specialists worked with Studio 7.5 to make sure that the design of the Mirra chair would be the best possible solution environmentally. Miller’s DfE applies environmentally sensitive design standards to both existing and new Herman Miller products, utilizing the McDonough-Braungart Cradle-to-Cradle Protocol. This goes beyond regulatory compliance to thoroughly evaluate new product designs in three key areas:
Case - American Apparel
Promoting sourcing sustainabilityPerhaps the most thought through approach to promoting sourcing sustainability is exemplified by the Swiss textile group Switcher, which applies the principle of sustainable development on a worldwide basis. The company aims to permanently create the conditions necessary for sustainable production and distribution of textiles and accessories. Part of this mission is the use of the “whale scale” which is used to grade suppliers, primarily in the lesser-developed world, according to how they comply with Switcher’s program for sustainable development. Switcher works regularly with its suppliers to help them improve their rating on the whale scale. This step-by-step approach ensures that a supplier who is committed to improving a low rating does not get left behind. In other words, Switcher would rather help rehabilitate a supplier than simply boycott him. The company states, “We seek to create a ‘smiling chain’ where all the company’s partners and collaborators are happy in their work and no one feels exploited.”
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For example, the new distribution set-up has provided ITT Water and Wastewater to employ intermodal transport – truck and train – between its main production facility in Lindås, Sweden and its central warehouse in Metz, France. The company has managed to transfer half of its weekly departures to this new set-up and this has enabled the company to drastically reduce the amount of transport-related emissions. The cut in CO2 emissions for those shipments that can be shifted to the new set-up is more than 60% and given that the consolidated flow between the production unit and the central warehouse accounts for two thirds of total transport work for the distribution system as a whole, the change in this single link has an overwhelming positive effect also on a system level.
The US garment company American Apparel (AA) is another good example of promoting production sustainability. This company is a vertically integrated manufacturer and retailer of clothing for men, women, kids and dogs. In this case, integration means that AA has consolidated all stages of production under one roof at its downtown Los Angeles factory - from cutting and sewing, right through to photography and marketing. Ultimately, it is this system that allows AA to stay competitive although it pays high wages for the garment industry. Because the company does not outsource to local or developing-nation sweatshops, the entire process is time-effective, and it can respond faster to market demand. AA offers year-round employment and job security with virtually no staff turnover. This is unusual in an industry dominated by seasonal work. This case study shows that there does not have to be a negative trade-off between producing textile clothing in the US and keeping costs down. It is possible to combine good finances with social responsibility in your own back yard. In an indirect way,American Apparel also contributes to minimizing environmental impact by producing goods locally, thus reducing the need for transports and the consequent CO2 emissions, particularly by avoiding importing goods.