A multi-year transportation initiative is paying off in a big way for Kraft Foods, delivering both significant dollars to the bottom line, as well as a powerful story about going green in its supply chain, showing how, joined at the hip, both types of green can be gained for savvy companies.
Kraft started its drive to reduce transportation costs and reduce carbon emissions in 2005. One part of that effort, Project MOST (Management of Optimized Sustainable Transportation), was a finalist for the Supply Chain Innovation award at this year’s CSCMP annual conference in Denver.
The list of Kraft’s success with its overall program and project MOST is impressive.
Modal Changes:
- In North America, Kraft saved more than a million miles, replaced 10,000 truck shipments and reduced 2,000 tons of CO2 emissions by shipping wheat via waterways to its Toledo, Ohio, flour mill. Now, ships make bigger deliveries less frequently.
- In Brazil, employees saved nearly 250,000 miles and reduced 300 tons of CO2 emissions by using boats to send products to distribution centers. In just six months, the change saved more than 125 truck shipments.
- In Germany, Kraft transports coffee beans from Bremen to its Berlin roasting plant, saving about 1.8 million miles (2.8 million km) and eliminating 2,300 tons of CO2 emissions. And the project took 7,000 trucks off the road.
- In Austria, Kraft saved more than 150,000 miles by sending products in refrigerated containers on railcars, eliminating 400 truck shipments and reducing 250 tons of CO2 emissions.
- In the United Kingdom, the company now sends products to one of its key customers by train instead of truck, saving more than 40,000 miles and eliminating 120 truck shipments.
New Transportation Strategies:
- In Europe, Kraft Foods is modernizing its transportation network by establishing a single hub in Bratislava, Slovakia to make 20 percent fewer trips between its European plants and distribution centers. And in the Philippines, the company now uses a national distribution center so customers receive shipments 20 percent faster than before, saving miles and fuel.
 In North America, Kraft Foods has purchased 11 hybrid, direct-store delivery vehicles for frozen products. The hybrid power train and electric refrigeration technology use up to 30 percent less fuel than a traditional truck. And in Mexico, the company has pioneered a double-decker transport system that allows trucks to safely carry up to 56 pallets in one load - twice as many as before- Kraft Foods has been working with the U.S. Environmental Protection Agency to benefit from the latest technology and share best practices. Earlier this month, the EPA awarded Kraft Foods for its environmental excellence, innovation and creativity. As part of its participation in the EPA's SmartWay Transport Partnership, the company has adopted no-idle engine policies at its shipping locations, piloted a hybrid, frozen-delivery truck program and increased its use of intermodal (rail and barge) transport.
New TMS and Load Optimizer Software:
- Kraft is using Oracle Transportation Management to create Project MOST (Management of Optimized Sustainable Transportation), Kraft Foods measures truck movements and designs new trip segments to minimize "empty miles," eliminating more than 500,000 miles (800,000 km) last year. Now, Kraft Foods' private fleet and its top 50 carriers use the software.
- Kraft's 20 largest plants and distribution centers in North America use software from Transportation/Warehouse Optimization to maximize product per truckload, taking the equivalent of 1,500 trucks off the road and more than a million mile off the highway system.
At CSCMP, Michael Cole, Director of North American Logistics Operations Planning for Kraft, said not only has the new TMS allowed Kraft to have better optimization of existing freight moves, but really opened the door to use of more continuous moves within its own network and create backhaul opportunities with its suppliers and retail customers.
He said the approach has even acted as a sales tool for Kraft, as retailer customers see the type of technology that Kraft is using that can save logistics costs for both of them and allow more collaborative transportation planning.
“Collaborative Transportation Engineering” is another term Kraft uses, and Cole said that when retailers see the technology that Kraft has developed to power that approach, they are very impressed.
“We don’t have anything like that,” Cole, at the CSCMP conference, said retailers will tell him.
"We think about miles, piles and idles when moving our product," said Steve Yucknut, Vice President, Sustainability at Kraft. "We're finding ways to drive fewer miles, reduce inventory piles and eliminate idling trucks. We're collaborating with customers and suppliers. And we're using a number of high-tech innovations for our trucks and warehouses to reduce energy and CO2 emissions.”
What’s your reaction to Kraft’s aggressive approach to transportation management? Do more/most companies have similar opportunities? Let us know your thoughts at the Feedback button below.
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