Sustainability changes in supply chains happen faster when there are also cost savings.
Companies that want to implement sustainability goals face challenges when an incremental cost is involved. However, it is much easier to achieve sustainability objectives when cost savings are associated with, for example, Scope 3 emissions reductions.
Here is a path to cost savings that can also drive Scope 3 emissions reductions: mathematical load optimization and level loading replenishment. Restocking into customer-facing distribution centers accounts for over 30% of freight costs for large shippers.
Additionally, replenishment is a significant cause of waste and non-attributable Scope 3 emissions in the form of dead-head-miles for carriers.
91% of trucks need to be more utilized—more payload = lower costs and fewer emissions. However, optimizing truckloads involves additional considerations, such as managing product-specific requirements and ensuring compliance with state-specific axle weights and placement. Our load-optimizing software AutoO2 combines advanced mathematics and heuristics (rules of thumb) to create near-optimal loads. AutoO2 understands how to construct loads that fill the truck, are axle legal, ensure the highest priority items go first, are accessible for the dock to execute, and preserve existing IT investments.
Another Scope 3 emission is the deadheading of carriers going to pick up replenishment loads. The more volatility in the number of loads per day, the more incremental deadhead miles are driven. Reducing this deadheading requires eliminating some of the variability caused by the inherent bullwhip effect in the deployment process. Using the supply planning system data, LevelLoad looks out over the next ~30 days and smooths deployment. Smoother deployment gives carriers a more predictable load pickup schedule, enabling them to drive fewer deadhead miles.
Implementing AutoO2 mathematical load optimization and LevelLoad optimized replenishment level loading drives cost savings that enhance sustainability.
Companies can reduce their carbon footprint, increase operational efficiency, reduce waste, and improve on-shelf presence and on-time shipping performance. Indeed, AutoO2, LevelLoad, and sustainability are a great menage’a’trois.
Many large companies have already recognized the significant benefits of load optimization. About a third of Gartner’s 25 top supply chains have already implemented our software.