Employees from throughout the worldwide HP organization have joined an aggressive sustainability program that aims to help save the planet while saving the company millions of dollars.
John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
High-tech giant Hewlett-Packard is placing a new emphasis on reverse logistics. And it's not just because of the high return rates that have historically plagued the electronics industry (although that remains an issue). It's also because the more outmoded electronics and print cartridges HP recovers, the closer it comes to its corporate goal of recycling 2 billion pounds of electronics by the end of 2010. Last summer, the company reached a major milestone in its recycling program when it collected its first billion pounds of recycled material, hitting that target a full six months ahead of schedule. Buoyed by its initial success, HP immediately upped the ante, setting a new target of recovering its second billion pounds by 2010.
What HP is doing is turning trash—items that once might have ended up in dumpsters or gathered dust in the corner of a distribution center—into treasure. Instead of automatically shipping the unwanted items off to a landfill, the company mines valuable metals and other materials from them, which it then recycles into new products. In fact, the company's Long Lifecycle Business Desktop PC computer line, unveiled last summer, is made from 95 percent recycled components.
HP's recycling programs are now in effect in more than 40 countries. The programs seek to reduce the environmental impact of IT products, minimize the amount of waste that ends up in landfills, and help customers dispose of unwanted products in an environmentally sound manner. The plastics and metals recovered by HP have been used not just in the manufacture of new electronics, but also in items ranging from auto body parts, clothes hangers, and plastic toys to fence posts, serving trays, and roof tiles. The company says it is the industry leader in recycling. It recovered 187 million pounds of electronics globally in 2006—almost double the 108 million pounds recovered by its closest competitor, IBM.
Green genes
As for what's driving the recycling push, it's all part of an aggressive sustainability program at HP, which has the company using alternative energy at its plants and distribution centers, working with supply chain partners to measure carbon footprints, and placing a major emphasis on design-for-logistics initiatives. HP's team of logistics professionals is at the center of the effort.
"Obviously, recycling such a large quantity of material requires a significant reverse flow for products that can be refurbished for re-use and for those destined for recycling," says Dr. Judy Glazer, director of HP's global, social, and environmental responsibility operations. "So our logistics team has an important role in helping us to identify cost-effective ways to do both of those things."
In addition to supporting the recycling program, the company's logisticians have contributed to HP's sustainability initiatives (and its bottom line) through a few simple changes in packaging. By switching from wood pallets to plastic pallets, for example, HP eliminated 300,000 cubic feet of packaging material annually for shipping laptop computers in Europe.
HP made the change for a number of reasons. For starters, the wooden pallets from Asia that it used previously were poorly built and had to be treated with pesticides, so the wood was not reuseable. In addition, plastic pallets are thinner and more durable than their wooden counterparts, allowing HP to pack more products on a pallet and then to reuse that pallet several times.
The biggest savings have come from the use of plastic pallets for air shipments. "Because [plastic pallets] are thinner, we could get more products into a container, which improved logistics costs dramatically," says Glazer. "When you reduce package size and weight, very good things happen to logistics."
That's obvious when you look at the changes HP made to its process for shipping the more than 1.3 million ink jet cartridges it sells each day. By changing the way those cartridges are delivered, HP eliminated more than 6 million pounds of PVC last year, which Glazer says resulted in a huge financial savings. (The PVC reduction is equal to taking 2,800 cars off the road for a year.) By switching from large clam-shell packaging to a tri-fold cardboard package, HP reduced the weight of the package by 45 percent. "So you can assume there was a pretty significant financial impact for us as well," says Glazer.
The company plans to expand its use of plastic pallets within North America this year. It is currently working with its suppliers and customers to prepare them for the changeover. "We have found some of our distribution partners to be extremely receptive," says Glazer. "Others are open to the idea, but need to work through some of the operational changes that need to be made in terms of handling a pallet with a different shape, and working out how the reverse flow of the pallets happens. We have to work with the people we are handing [product] off to and make sure they can deal with it in their system."
The payoff
Although some of HP's sustainability programs have been driven by internal initiatives, others are the result of customer requests. For example, Glazer reports that over the years, customers have approached HP with requests for energy-efficient equipment. "We have customers that are very concerned about energy use in the data center and are coming to us for help in solving that problem," she says. In July, HP announced a new data center solution aimed at driving energy efficiency to reduce operational costs for customers. "You can imagine that if you meet a customer need like that, the return on investment is very substantial," she says.
HP's internal sustainability programs may not do as much to drive sales, but they nonetheless make a substantial financial contribution. "The vast majority of the projects that have been internally driven have delivered a significant cost benefit as well as an environmental benefit," Glazer reports. "That's very much true in the whole packaging and transportation area, where many of the things you look at that reduce waste and increase efficiency also deliver a lower cost because they have less environmental impact. You are either using less fuel per product shipped or less material per product shipped. We have many examples of packaging changes and design-for-logistics efforts that have delivered just that."
The company is saving greenbacks in other ways as well. HP expects to trim $750,000 from its energy budget over the course of a 15-year renewable energy contract it signed with SunPower to provide renewable energy to HP's R&D and manufacturing site in San Diego. The $8 million contract will include 5,000 solar panels atop five of the seven buildings at the San Diego campus. The panels will convert the sun's energy into 1.6 million kilowatt-hours of electricity—enough to provide more than 10 percent of HP's energy use at the campus.
HP is currently enlisting its suppliers in its green crusade. As part of its contracting process, HP is working with suppliers on measuring their carbon footprint, and asking them to participate in initiatives like the government-sponsored SmartWay program, a collaboration between the Environmental Protection Agency and the freight industry to increase energy efficiency while significantly reducing greenhouse gases and air pollution. The company is also in discussions with key carriers and industry peers on how to reduce the environmental impact made by freight carriers in and around the Port of Los Angeles.
"Environmental responsibility is good business," said Mark Hurd, HP's chairman and chief executive officer in a July 2007 statement detailing HP's progress toward its recycling goals. "We've reached the tipping point where the price and performance of IT are no longer compromised by being green, but are now enhanced by it."
the savings keep rolling in …
It uses only organic cotton in its sportswear, pledges 1 percent of its sales to environmental causes, and was the first outdoor apparel retailer to sell fleece made from recycled soda bottles, so it's probably no surprise that Patagonia's newly expanded DC represents the last word in green. When the company built a 170,000-square-foot addition to its DC in Reno, Nev., it used the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) standards to guide its design and construction. Last March, the retailer learned that its efforts had paid off. The council granted the expanded facility a gold certification— making it only the second distribution center in the United States to earn that designation.
The DC, which incorporates building materials with recycled content, includes features like waterless urinals, waterefficient landscaping, and a system for managing stormwater runoff. It also boasts radiant heating systems, energyefficient fluorescent lighting, and skylights, which have helped hold down energy costs in the DC, which now measures 340,000 square feet. And although it wasn't factored into Patagonia's application for LEED certification (which is based on a point system), even the center's material handling equipment is contributing to a greener operation.
Take the new package sorter and conveyor system that were installed during the DC expansion project, for example. The C-L100 package conveyor, which was supplied by systems integrator Dematic Corp., features the ability to turn itself off when it's not needed. That alone has the potential to generate big energy savings. "Traditional belt conveyor is a heavy consumer of electricity and often runs 24/7, even when there is no product on it," says Gregg Vandenbosh, product manager for conveying products at Dematic Corp.
Along with that "green" feature, the C-L100 offers a number of other advantages. For one thing, it's designed to be easy to assemble: The conveyor is a modular solution and can be assembled by snapping pieces together like Legos. For another, the conveyor is engineered so that each section has its own control logic and internal wiring. That feature eliminates the need for the time-consuming electrical cabling typically associated with conveyor implementations.
In addition, the C-L100, which is able to handle goods of different sizes and weights, has intelligent controls that allow specific sections to speed up or slow down. As a result of the improvements, Patagonia is able to process outgoing orders with 3.5 fewer workers than in the past. At the same time, accuracy has soared, and returns have been minimized.
Working in conjunction with the new conveyor is a new narrow-belt package sorter from TGW-Ermanco. The sorter, which can accommodate a wide variety of package weights and sizes as well as difficult-to-convey items, can process a bag or box every 2.2 seconds. It's not hard to guess what kind of impact the unit will have on the DC's operations. "There's no way a person can operate that quickly," says Dave Abeloe, Patagonia's distribution center director.
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."