Imagine a long line of jugglers rapidly rearranging themselves into a circle with dozens of balls in the air. And they don’t drop one. It sounds impossible.
That’s not a word our logistics team understands. They engineered a wholesale shift in the geography of our manufacturing and distribution capacity to serve multiple environmental, capacity, customer service and financial goals. And they did it while achieving a 32% drop in greenhouse gas (GHG) emissions per case of product shipped from the beginning to the end of the year.
To achieve these emissions reductions, Seventh Generation studied the changing needs of our retailers and worked backward to determine how our logistical network could best serve them. We calculated that a decentralized approach provides the best opportunity for us to cut our product travel miles, reduce emissions, maintain quick delivery times, and keep costs down. This logistical work began in 2008 when we opened three new manufacturing facilities in Mississippi, Toronto, and Washington. In 2009, we added two more manufacturing partners in Idaho and in Tennessee. We also created an array of five distribution centers strategically located close to our retailers.
As these changes were completed midway through 2009, the truest measure of the effectiveness of this strategy can be obtained by comparing the old system (early 2009) to the new one (late 2009).
New and Old Warehouse and Distribution Center Arrays Compared
(Early 2009 to Late 2009)
|Old Distribution Center Array||New Array||Percentage Change|
|Ton-miles per case of product||7.3||5.3||27%|
|GHG emissions per case of product||2.8||1.9||32%|
This new system allowed us to improve customer service as we decreased the lead time from order to delivery from 10 to 5 days. While our decentralized network is helping us slash product travel times, greenhouse gas emissions, and freight and energy costs, our storage and handling costs have increased. We now have more distribution centers to manage and we carry more inventory. Our more complicated operations require significant time, money, and experience to manage. Despite these costs, warehousing and delivery factors dropped by over 1.25% of sales, comparing Q1 2009 to Q1 2010.