Logistics Procurement

Logistics Procurement

Logistics procurement

In conjunction with Fuji Xerox Co Ltd and Fuji Xerox Asia Pacific Pte Ltd, Fuji Xerox Australia applied the Fuji Xerox Logistics Corporate Social Responsibility program to tier-one supply chain providers in 14/15. This covered international freight, warehousing and domestic equipment transport. All areas achieved compliance levels of more than the required 90 percent compliance threshold.

Managing carbon with our logistics providers

carbon

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Carbon remains the environmental impact focus with our logistics suppliers, both internationally and locally. Enhanced forecasting and inventory planning, as well as modal shifts from air to sea freight, are key management strategies to achieve cost and carbon efficiency with international freight. However, circumstances within the supply chain mean that air freight will always be a component in the transport mix.

There was a 14.8% increase in logistics carbon emissions during 15/16 due to an increase in freight volume and air freight. Air freight was the dominant source of logistics emissions with a 39 percent increase over 14/15. This was primarily driven by the need to react to significantly increased sales of equipment. As supply was brought into line with demand, air freight volumes were reduced to 14/15 levels during the latter part of the financial year. Governance was implemented to control the use of air freight, with all air freight orders requiring senior management approval.

The decrease in emissions from sea freight was due to less product being sourced from Europe and the decrease in emissions from inland distribution is attributable to initiatives implemented to reduce the number of dedicated vehicle deliveries and the move to a shared service model.

Inland distribution has been a focus since we engaged DHL as our lead logistics provider (LLP) in April 2014. The objective has been to integrate carbon emissions data into the business performance dashboards ensuring that carbon metrics are viewed alongside financial and operational performance at regular department meetings. The expected outcome is better business decisions and improved transport optimisation, expressed in both financial and carbon impacts.

Work to date has involved Fuji Xerox Australia and DHL thoroughly reviewing calculation methodologies and defining inclusions and exclusions before recalculating our logistics data for the 14/15 period to align with the newly agreed method1. Approximately 95 percent of the inland distribution data is managed by DHL as per our supplier agreement. There are small transport journeys that they may not manage, such as product movements from the port to warehouse, and Fuji Xerox Australia continue to calculate the carbon emissions from these legs. The carbon calculation methodologies for inbound and export (air and sea freight) have not changed and continue to be managed by our Supply Chain Services (SCS) division. Further improvements in data accuracy were coordinated with SCS to ensure correct emission factors were used in our carbon logistics calculation tool.

Outlook on managing carbon with logistics suppliers

14/15 objectives How did we do?
Operational implementation of lead logistics provider services structure. In progress – The LLP was successfully implemented.
Achieve 5 percent cost saving and allied carbon emissions reduction in domestic transport. In progress – LLP implementation has resulted in substantial cost savings since 15/16, with further savings expected in 16/17.
Some key projects that have been delivered include:
Transition from dedicated couriers to a standard (shared) courier service for engineer parts deliveries.
Reduction in the number of dedicated vehicle deliveries for equipment with transition from dedicated vehicle deliveries to shared service deliveries for non-metro areas for equipment.
Local recycling of packaging material in Western Australia and pallets in Victoria to reduce transport requirements to New South Wales.
Optimising transport of materials recovered from the field for use in remanufacturing operations.
Increase efficiency of consumables delivery and reduce waste. Met – Implementation of consumables reverse logistics has been completed. Local sorting and consolidation has removed double handling and the product goes directly to end source.
15/16 objectives
Finalise continuous improvement framework to incorporate carbon impact reporting into current management review processes. In progress – A framework for continuous improvement projects was implemented in late 15/16. The end result was a simple approach to managing continuous improvement projects in our supply chain.
A total of 84 projects targeting cost and carbon emission savings were initiated in 15/16, with 70 of these completed. To date this has delivered AUD$4,300,000 in benefits.
Develop a guide for future project savings calculations by ratio of dollar savings and carbon emissions. In progress - A comprehensive cost savings methodology is in place to measure and track the delivery of benefits. Provision for carbon emissions has been included in the project concept document, however, further work is required to calculate and report carbon emission savings.
Incorporate sustainability report in Supply Chain Senior Management Pack. In progress – Carbon emission measures have been included in supply chain senior management performance reporting. Further work is required to quantify savings.
16/17 objectives
Reduce imports of commodity paper supplies, in turn reducing logistics costs and carbon emissions.
Maintain the reduction of air freight through improvements in demand forecasting and planning, and identifying any opportunities to source alternate modes of transport where air freight is the default.
Improve service level outcomes for customers.
Explore options to reduce the footprint of facilities, particularly in relation to the reduction in paper supplies focus.

1The variance in results using Fuji Xerox Australia's and the LLP's calculation methodology was only slight meaning comparisons between the 13/14 and 14/15 periods remain valid. 

2Carbon emissions are quoted in tonnes of CO2e