Optimization Creates Lean Green Supply Chains
By Terry Harris, Managing Partner, Chicago Consulting
Chicago, IL January 2008: Chicago Consulting announces it has developed new technology that creates “Lean Green” supply chains—ones that are both environmentally responsible and operate with less expense. “The typical thinking is that ‘green’ supply chains require additional expense to operate,” said Terry Harris, Managing Partner of Chicago Consulting, “however, this is just not realistic.”
Harris went on to say that “Supply chains have vast and dramatic opportunities to reduce operating expenses and to be green.” Examples he cited include:
- Optimal warehouse networks decrease truck mileage. These networks reduce fuel consumption, engine emissions and cost. They have an additional advantage of being close to markets so they reduce lead-times to customers well. (Chicago Consulting publishes its “10 Best Warehouse Networks” every year based on new population statistics.)
- Optimized inventory decreases costs and the need to house, handle, recycle and discard obsolete inventory. This also serves customers better due to the high fill rates achieved through optimization.
- Re-engineered warehouse operations with, for example, optimal zoning and slotting, decreases the distance fork lifts travel which reduces emissions and electric consumption as well as the time warehouse personnel need to pick orders.
- Optimal cartons minimize the packaging material consumed in supply chains. They reduce both the cost of this material and the CO2 emissions stemming from the production of a paper-based forest product made from trees.
An example of the last point is the popular breakfast cereal Wheaties. A 15.6 ounce consumer package of Wheaties measures 7 and 11/16″ by 2 and 11/16″ by 11 and 3/4″ and has a volume of 242.8 cubic inches. An optimally shaped container with that same volume would save 7.2% this packaging material.. The same idea applies to the corrugated carton that contained the 14 Wheaties consumer packs shipped to the grocer. It measures 15.4″ by 11.8″ by 18.8″. Designed optimally it would save 23% of that material. Use a different case-count and the savings go up to 35%!
Harris maintains, “Not only are the ‘physics’ of supply chains compatible with green and lean, linking them is an effective method to accomplish both. It’s a fresh way of motivating supply chain organizations to find new opportunities.”
About Chicago Consulting
Chicago Consulting designs supply chains for manufacturers, distributors and retailers. It orchestrates supply chain components such as procurement, warehouse networks, inventory deployment, transportation and warehouse operations. From offices in Chicago and Shanghai the firm has applied advanced techniques to design supply chains for over 20 years. Further information can be found at www.chicago-consulting.com