'Milk run' is miles better

By Rod Newing
Published: October 9 2008 03:00

Five years ago, Jaguar Land Rover did not know the carbon footprint of its supply chain. Now, it has been measured, reduction targets have been set, measures are being taken and the results are being monitored.
"Our total supply chain carbon dioxide footprint in January 2008 was 186,076 tonnes a year," says Kevin Wall, the company's material, planning and logistics director. "We are on target to reduce this by 2,621 tonnes this year and we have a 10-year plan to eliminate 90m road miles."
Jaguar Cars is one of the world's premier makers of luxury cars and Land Rover's four-wheel drive vehicles are world-famous. Together the two companies, which were acquired by Tata Motors from Ford Motor earlier this year, manufacture 290,000 vehicles a year in he UK.
About five years ago Jaguar Land Rover set up an integrated Europe-wide supply chain to collect components from 380 suppliers based in the UK and Europe. The aim of this "milk run" is to maximise the full capacity of a trailer, by consolidating five or six suppliers in a similar geographical area. This has reduced average road miles per week from 59,280 to 30,780, a 52 per cent saving.
Although created to reduce costs, it has also eliminated CO 2 emissions of 1,772 tonnes a year. The third-party logistics contract has just been rebid and next-generation truck engines were specified, to reduce emissions and improve economy by 10-12 per cent. Other projects include reduced pallet pool balancing between Europe and the UK, which has saved 1,265 tonnes a year, and reduced inter-site movements that have saved 151 tonnes a year.
"Ten years ago our supplier base was mainly in the UK, but now it is truly global," says Mr Wall. "You can't look at the purchase price any more, you have to look at the total landed cost, including freight, packaging, customs and the cost of returning any unique containers. It is difficult to calculate, but we have used this basis for several years and it takes into account both the financial and environmental implications of global sourcing."
The company has been trying to switch vehicle delivery from road to trains. Finished vehicles for the US, Australia and Japan go to Southampton by rail. This has eliminated 777,925 road miles a year, equating to 1,188 tonnes of CO 2 .
"It has been extremely difficult to get through the bureaucracy," says Mr Wall. "The business case requires a minimum number of carriages and a minimum journey of 100 miles to make it beneficial."
From Southampton, vehicles are transported by Wallenius Wilhelmsen ships. In partnership, the two organisations have optimised fleet utilisation, streamlined routes and run vessels - where possible - at more economical speeds.
Most significantly, instead of normal bunker fuel, the company pays extra for the ships to use low-sulphur fuel, which contains 1.3 per cent of the mineral, compared with an International Maritime Organisation target of 4.5 per cent. Between 2001 and 2007, this low-sulphur fuel saved 98,500 tonnes of sulphur dioxide emissions, a reduction of 43 per cent, and has cut CO 2 emissions by 17 per cent.
Future projects include reviewing vessel steaming speeds. A two-knot reduction saves 244kg of CO 2 per transported unit, 21 per cent less than present.
JLR is also exploring Wallenius Wilhelmsen's Orcelle project for a lightweight environmentally sound ship that can carry 10,000 cars. Using solar, wind, and wave power, it does not release any emissions into the atmosphere or the ocean.
"The Jaguar and Land Rover logistics professionals have long understood their role in moving freight from road to rail and sea, where practical," concludes Mr Wall. "It has now taken on a whole new emphasis in educating colleagues in the engineering and purchasing areas to ensure that a common approach is applied, with environmental measures underpinning all the actions that ultimately will lead to cost benefits."
Copyright The Financial Times Limited 2008