An Eco-Friendly Supply Chain OperationEngineering An EcoFriendly Supply Chain Operation

Designing an environmentally conscious supply chain is the right thing to do and

it can actually save time and money. But engineering the ideal management system
doesnt happen overnight. It requires a company taking the time to assess its
current supply chain design and finding areas for improvement.
The first question a company should ask itself before attempting to implement
efficiencies should be:Just how green is my supply chain operation currently? A
good way to begin this process is by breaking down the different parts of the
supply chain operation by looking at everything from the trucks and other
equipment used to transport goods, to warehouse management operations, to
administrative processes. Once a baseline is established you can then seek more
eco-friendly opportunities.
Lets take a look at a few places you can engineer a little extra green into your
supply chain.
Shipping
The overriding logistics goal is always getting the right product to the right place at
the right time, and for the right price. There are several tweaks, small and large,
that a company can make to ensure further efficiencies and cost savings.
Simply selecting the right shipping partners can be a good step toward further
increasing sustainability within a supply chain. The right shipping partner can for
instance select the type of ship used in the transport of goods, which in some cases
can lead toward an elusive increase in shipping efficiency.
The International Council on Clean Transportation in its 2013 report, Long-term
potential for increased shipping efficiency, places a major emphasis on selecting

newer, more up-to-date ships that incorporate the latest technology, claiming the
right shipping fleet can dramatically increase operational efficiency as well as
reduce emissions intensity.
The findings indicate that industry-leading ships are about twice as efficient as
industry laggards across major ship types, due to new ships technical efficiency
improvements, operational speed practices, and ship size differences, according to
the study.
Ground Transportation
The Rocky Mountain Institute, an independent, non-partisan nonprofit driven
toward efficient and restorative use of resources, identifies the creation of a more
efficient truck and freight industry as one of its main objectives.
The non-profit identifies certain critical steps related to improved engines and
synergistic technologies that allow truck to deliver freight at half or even one-third
as ways of achieving efficiency and cost savings within a supply chain
management operation.
Additionally, ground transportation efficiencies can be achieved by using a 3PL
partner with existing strategically-located distribution centers, or performing a
network study to model an optimal distribution and transportation network. By
optimizing distribution networks around final delivery locations, fuel consumption
and emissions are greatly reduced.
Warehouse Management
But perhaps the best and easiest way to achieve efficiency in your supply chain
operation is through changes in warehouse operational design. These efficiencies
can be achieved through simple every day tasks, such as reducing packaging waste

and reusing or recycling materials. Many times, unnecessary warehouse waste can
be identified through a lean action workout. These lean action workouts provide an
intense focus on safety, quality, and delivery for warehouse staff, and ultimately
result in cost savings thanks to overall improved warehouse efficiency.
Sustainable, green practices are not only an environmentally-responsible
decision; theyre good for the financial stability of a business- which in turn allows
the business to be a vehicle for positively impacting the communities around it. At
LEGACY Supply Chain services, we constantly see that a thoughtful approach to
reducing waste and improving efficiency through supply chain engineering reaps
cost savings. In fact, we are proud to have been deemed a 2014 Green Supply
Chain Partner (G75) in the June 2014 issue of Inbound Logistics. LEGACY won
the recognition for an overall corporate sustainability mission that integrates green
practices into its business model, while positively impacting LEGACYs
employees, their customers, and the communities they operate in.
Here are just some of the ways LEGACY is already helping create eco-friendly
supply chain operations:
Recycling to reduce waste.
Implementing energy-efficient lighting.
Leveraging technology and process design to support paperless
transactions.
Supporting telecommuting to minimize transportation costs.
Conducting LEAN events to eliminate waste.
Residing in LEED qualified corporate headquarters.
View our full Sustainability Mission

Warehouse : How Speaking Up Can Boost Warehouse Optimization

Theres a story told about a Toyota executive who, while touring a plant, asked
about the problems that factory faced. When he was told there were no problems,
he noted that if there were no problems, there was no need for a manager. This oftrepeated story is a great way to illustrate a key management lesson that is
especially applicable in warehouse optimization: if no problems are being reported,
then no improvements of efficiency are being made.
Warehouse optimization is all about continually improving efficiency. A turnback
is anything that causes a deviation from the established system. At LEGACY, we
measure ourselves in performance improvements. In order to address any
inefficiencies, we recommend you tackle them in three parts:
1.

Turnback Collection: Identifying problems or inefficiencies that exist

2.

Turnback Response: Addressing and fixing the problems so they dont

happen again

3.

Implementing Change: Learning from your experience by

implementing sustainable
improvements

Warehouse Optimization: Turnback Collection

Start with the Leadership
Managers should be constantly on the lookout for turnbacks. While the workers in
the warehouse are usually the ones best suited to notice an immediate problem, it is
the managers job to be vigilant in finding these problems.
Workers Speaking Up
Lets take a look at a common turnback in a typical warehouse: While a worker is
packing a box, they notice there is an item missing, and they leave their station to
locate it. Since this search is a deviation from the established process, this would

be considered a turnback. A vigilant manager would notice this deviation and ask
what had caused the turnback, but ideally, the worker would report the missing
item before starting his or her own search for it.
LEGACY Core Value: INTEGRITY
If you see that something is not being done right, have the integrity to say
something and report it.
It makes it a better process and place for everyone.
Methodology
There are many methodologies in collection turnbacks.
1.

Andon: A common term in Lean warehouses, Andon is a system of

signals or lights that indicate when something has gone wrong that needs to be
addressed. Depending on your warehouse setup and size, this might be an
effective way to flag and address problems, especially if a single warehouse
manager in responsible for overseeing a large number of workers.

2.

5S: The 5S methodology is an organization method that many Lean

manufacturing and other warehouses use to organize their workspace for
maximum efficiency: Sort, Straighten (or Streamline), Shine, Standardize, and
Sustain. Its easy to incorporate a reporting methodology into the 2nd S,
Straighten/Streamline, and the remedy/response portion would fall under the
4th S, Standardize.

3.

White Boards: Sometimes it works best to keep your warehouse

optimization methodology as simple as possible, especially at the beginning.
Some of our Supply Chain Engineering client warehouses have found white
boards to be very effective as a very straightforward visual way to keep track
of problems, or turnbacks, reported, and their progress. Appearing on the white
board can also act as a great incentive for people to reports problems they find.

Warehouse Optimization: Turnback Response

Reporting Encouraged
When workers do report these problems, its very important to encourage the
behavior by recognizing the integrity demonstrated, and acting quickly and
proactively to manage and resolve the problem causing the turnback. The very act
of solving the problem and implementing a change as a part of your warehouse
optimization process acts as a positive reinforcement of problem-reporting
behavior, in that the changes result in tangible improvements. Conversely, the
inverse reinforcement is true when nothing is reportedthe lack of change
perpetuates a culture of shrugging off inefficiencies by indicating the feeling that
it wont matter.
Culture of Support
Its easy enough to implement a rule that problems should be reportedits
another thing altogether to create and maintain a culture in which speaking up
about inefficiencies is accepted and encouraged. Many workplaces may say that
theyd like to know about inefficiencies, but may in effect punish workers who
bring turnbacks to their attention by ignoring them or even blaming them for the
problem.
Culture of Flexibility
The culture of the warehouse also has to be flexible enough that reporting a
problem is not only acceptable and encouraged, but is also a process that is realistic
and solvable during the course of a typical day. If a warehouse prioritizes
completing quotas above all else, workers will take a system into their own hands

to complete their quotas at all costs, instead of being able to build an optimized
warehouse through teamwork, making the most efficient system for the long run.
LEGACY Core Value: BEING THE BEST
We are committed to getting as much waste as possible out of a warehouse or
logistics system. This means looking beyond each package to the long termthings
can always be improved, always be better. And we are committed to creating a
warehouse where that is possible by encouraging and leaving room for turnback
collections.
Identifying the Problem
Once a turnback is reported, its important to analyze the problem and discover its
source. Why is this happening? Is it a substandard ID system? Is there a
discrepancy in the order forms, or human error? Is there lack of oversight during
picking? Once the problem is identified, the solutions can be formulated that can
change future outcomes. You can download a case study example of how
LEGACY helped a Fortune 100 Energy Provider with warehouse optimization
through Lean practices here.
Warehouse Optimization: Implementing Change
There is an obvious and fundamental difference between warehouse operations that
talk about Lean on a project or function level, and a company like LEGACY in
which values improving lives and processes is a part of their culture.
LEGACY Core Value: Make a Difference
Its not just about removing waste from the warehouse. We also view turnback
collection and remedy as removing waste from peoples lives. Removing wasteful
time from our employees lives helps us to make a difference in the lives of our
workers.

In a true Lean warehouse, reporting problems is seen as a good thing an

opportunity for improvement and an important part of warehouse optimization.
Many companies will talk about Lean practices in terms of standalone functions
like reducing head count, cutting costs, etc., and the results are clear: dissatisfied
customers. Its easy to see the difference between lip service and a true cultural
commitment to continuous improvement.
Transportation : What Shippers and Supply Chain Managers Need to Know About
International Compliance
In the ever-changing landscape of international compliance, supply chain managers
and international shippers of imported and exported goods can use all the expert
assistance they can get. In an earlier post Does Your Company Have An
International Trade Compliance Program? we described the basics of
international compliance and discuss why its important to have a system in place
to deal with the many hoops and hurdles involved with international trade.. Here
are some more resources for international shippers:
As an international shipper, you have unique international compliance
requirements to meet, and its your responsibility to be aware of all current Export
Administration Regulations, including:
Restricted party screening Restricted Party Screening (RPS) refers to
all possible trade entities listed as denied persons in international trade
dealings. The reason for appearing on this list may be for a variety of
reasons, so always check new partners against the most current list to
reduce the likelihood of being surprised with any unexpected delays.
Licensing Certain product(s), but not all, require an export license for
international trade. Before shipping a new type of product or material,

make sure to check with whichever federal department or agency has

jurisdiction over the product or type of material to see if it requires any
special clearance.
Is your product a controlled item? Do you know the Export Control
Classification Number (ECCN)? The ECCN will be needed in finding
out whether licensing or a licensing exemption is applicable for your
product.
Are there any Hazardous Materials? If your materials are classified as
hazardous, they will need to comply with Federal Hazardous Materials
Regulations. The current Federal Motor Carrier Safety Regulations
provides detailed information on specific requirements.
If your product is being shipped by air, are you on TSAs Known Shipper
list? Or are any of the parties involved in the transaction? The
Transportation Security Administration (TSA) regulates a list of known
shippers on their Known Shipper Management System. This system:
provides a systematic approach to assessing risk and determining the
legitimacy of shippers by allowing TSA to identify and approve the
Known Shipper status for qualified shippers located in the U.S.
In addition to preparing and monitoring the status of licenses and required
compliance paperwork, a supply chain manager must also maintain constant
visibility of all shipments along the supply chain.
A tool that is integral to this process is the shipment or freight auditing aspect of
your transportation management system, or TMS.
A Tier 1 Freight Forwarding System is equipped to:

 Provide Visibility by giving you updated booking status, shipping and

Customs clearance status, and even purchase order level detail into your
in-transit freight
Automate Processes through customizable international transportation
workflow
Centralize Documentation with online document management,
including bill of lading, air waybill, Customs documents and
pickup/delivery receipts
Increase Flexibility by easily identifying if a shipment is behind or
ahead of schedule, alternatives can be planned for ahead of time
Increase Productivity through integrated workflows and streamlined
visibility, a transportation manager can focus on more strategic areas that
drive value in the supply chain
As an international supply chain and transportation manager, you should ask
yourself the followingquestions:
Do you have the resources necessary to handle the transportation, or
should you outsource part or all of your transportation to a 3PL?
Cost is always a predominant factor but where are the opportunities
to add value in the supply chain?
Does your warehousing and distribution infrastructure support your
import and export transportation function?
Does using an FTZ make sense for any or all of your transportation
and/or manufacturing process?

3PL : Should You Outsource Distribution to a 3PL?

More companies are outsourcing their supply chain functions to 3PL providers.
According to recent studies from Armstrong & Associates:
86% of Fortune 500 Companies are outsourcing to 3PLs, up 7% from
2012
Projected 2010-2015 Compounded Annual Growth Rate (CAGR) for
North American 3PL market 5.5%
And for good reason outsourcing supply chain management allows you to focus
on providing your customer with the best service and high-quality products.
Outsourcing also allows you to leverage a 3PLs core competencies: improving
supply chain operations, driving efficiencies across logistics channels, built-in
infrastructure including technology, labor and real estate, as well as expertise of
global market conditions.
Here are three reasons to consider outsourcing to a 3PL:
Tier 1 Technology (TMS and WMS)
Complex supply chain operations require the visibility and efficiencies gained from
Tier 1 warehouse and transportation technology to forecast, plan, manage labor,
reduce inventory and deliver on time. ATransportation Management System
(TMS) provides real-time visibility of cargo while in transit, and allows shippers to
optimize their transportation networks by providing least-cost shipping
options.Warehouse Management Systems (WMS) offer inventory visibility,
optimization and automation of warehousing and distribution processes.
A full-service 3PL will be equipped with Tier 1 Technology, which oftentimes can
be a significant barrier for a company to acquire, learn and manage on its own. A
full-service logistics provider will have these systems established and will be able

to integrate your logistics operations to provide 24/7 visibility, and business

intelligence otherwise not available.
Supply Chain Engineering
The business of supply chain management is a science that increases performance
and efficiencies wherever possible, through thoughtful and strategic engineering.
Bottlenecks and pain points need to be assessed, and systems built to handle them
and resolve inefficiencies.
It takes a supply chain engineer with years of experience to not only develop
solutions to optimize current operations, but also strategically design logistics
networks that mitigate supply chain risk.
Network engineering should include network analysis and planning, optimization
of multi-mode transportation, analysis of facility locations, relocation services if
necessary, distribution network mapping and design, and reverse
logistics. Warehousing and distributions solutions such as labor and staffing
optimization should be taken into account, alongside facility design and space
optimization. A thorough analysis of the slotting and pick analysis will also yield
increased areas for improvement.
Supply Chain Best Practices
With decades of experience in supply chain, a 3PL will be able to implement best
practices, built on analytical and engineering expertise. Ask a potential 3PL
provider about the following capabilities and experience:
KPI development
Lean and Kaizen events
Implementation & Development of QMS
Dedicated continuous improvement and cost out project teams

 OSHA regulations and standards

Environmental Health & Safety (EHS) Best Practices