India is behind as far as the world is concerned on low-carbon growth.
Carbon emissions is an increasingly important challenge for auto-makers – one that soon may involve very real costs. While most carbon impact comes through the combustion of fossil fuel when using the car, an innovative new project bringing together Wallenius Wilhelmsen Logistics (WWL), Indian automaker Tata Group and energy consulting group Xyntéo examined how to reduce carbon emissions through supply chain optimisation, from the time cars leave the factory in Pune, India, to their arrival at dealers in South Africa. They discovered that, overall, carbon emissions and costs could be reduced by as much as 17% and 8% respectively by implementing some changes in the supply chain.
The project itself was part of the Tata Group’s ongoing efforts to address the increasing challenges of greenhouse gas emissions. “India is behind as far as the world is concerned on low-carbon growth,” says Dr. J.J. Irani, Director, Tata Sons. “Scandinavian companies have been more conscious about environmental challenges, and we are looking for the experience of other global conglomerates. We are not shy about learning!”
The partners apparently also were not shy about taking on a very challenging project schedule.
“The idea was initially launched at the Global Leadership and Technology Exchange (GLTE) programme, which both the Tata Group and Wilh. Wilhelmsen are members,” says Nils Lie of WWL in Norway, and the manager of the project. “But an idea is only an idea until someone acts on it, and the first detailed discussions with Tata Motors were in March 2009. We started gathering data in late April and presented the basic findings to Tata in June.”
The goal of the project was to design a model for measuring the supply chain – not only in traditional terms of cost, time, and quality, but also its environmental impact in terms of CO2 emissions – and to collect detailed information on Tata’s -supply chain from the Pune factory to South African dealers. The team physically examined data for every leg of the supply chain on the ground, ran alternative scenarios and presented various solutions to Tata Motors.
The team concluded that it was not a matter of changing one single factor. Instead they identified a number of short, medium and long-term opportunities for Tata Motors to reduce its carbon impact, and costs.
For example, instead of fully tanking new cars, they could be filled with just enough fuel for pre-shipment movements; reducing lead times for delivery; and improving capacity on trucks hauling cars to ports. The team even identified factors such as implementing more aerodynamic trucks – something that concerns sub-contractors as well, and which also provides emissions benefits to the entire supply chain.
In addition, the research highlighted that improved planning and scheduling for shipping would reduce the length of time cars needed to be stored at the port of Mumbai. This would reduce storage costs and the risk of handling damage.
Looking long-term, the project team noted that a switch to rail from Durban to the major markets of Johannesburg and Cape Town would provide a huge reduction in carbon impact and costs. And, while some scenarios such as this would require not only Tata Motors’ action but that of other companies or governments as well, the company is already moving on the report’s findings.
“We are in the process of implementing one of the short-term improvements – reducing fuel filling - right now, and are investigating other potential implementations,” says the Tata Motors’ S. Ravishankar, a member of the project Steering Committee. “We had very good interaction with the other partners, and a very productive exchange of information, and we will now share the project findings with all companies in the Tata Group.”
Even though WWL does not in fact operate a service from India to South Africa, it still embraced the chance to work on this project with Tata Motors. “During this project, we developed a very robust carbon calculator, covering all types of transport modes globally,” says Lie. “We can now use this model to optimise supply chains based on carbon emissions,” he adds. “We also developed a strong relationship with Tata and learned a lot about India through this innovative project. We both have high ambitions to reduce carbon emissions and we hope that we can continue to work together on these goals in the future.”
“Now we will take the technology we have developed, and offer similar supply chain optimisation studies – and potential CO2 and cost benefits – to other customers as well.”
1. Improved truck design (aerodynamic).
2. Several lead time reduction initiatives.
3. Reduce fuel filling of each vehicle.
4. Improved back-haul utilisation from factory to port.
5. Improve forecasting process to to increase vessel capacity optimisation.
6. Apply knowledge transfer from this project to other domestic/export supply chains to share the benefits of the findings.
7. Enhance truck driver training through social engagement.
8. Replace own wheels transport with truck transport Durban Port to VPC.
These steps will give an estimated short-term saving of approx 6% of CO2, and 4% of costs per unit (based on 3,000 units – the actual volume of the product line used for this study).
There is also a significant long-term saving potential. By replacing trucking by rail transport for units from Durban to Johannesburg and from Johannesburg to the Cape Town area, it is possible to save 17% of CO2 and 8% of costs per unit.