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Streets ahead

Streets ahead

While most businesses are still formulating plans for emissions trading, Linfox can already price carbon into its system.

Semi-trailers barrelling up and down Australia’s highways and city streets are not the kinds of things eco-warriors look upon with warmth. In fact, it’s no doubt comforting for greenies to know that transport and logistics operator Linfox Logistics is among the first of several hundred companies that must reveal just how much pollution they produce. But Linfox’s group manager for environment and climate change, David McInnes, isn’t worried at all. Tracking emissions is old hat for his company, which launched its CO2 monitoring program in 2007 – well before the National Greenhouse Emissions Reporting Scheme came into effect. What’s more, Linfox is one of the few Australian companies that has already given itself the ability to price carbon into its finance system, a key step in preparation for any emissions trading scheme.

“The SAP system now reports not only in dollar terms but in carbon terms,” McInnes says. “So we can do monthly reports now on key performance indicators for carbon.”

The modification is just one outcome of a pledge the transport company made two years ago to cut its carbon dioxide emissions by 15 per cent by the end of 2010-11. It was a promise made at the behest of the company’s chairman, Peter Fox, and one that a key group of executives within the business, include ing McInnes, has set about making a reality – with relish.

Linfox has already slashed its CO2 output by 9 per cent, but McInnes says it’s not simply a matter of tearing big chunks out of emissions until it reaches its ultimate target. Instead, he says cutting carbon output is something that is often achieved in little steps. Having good information is key to making incremental gains and Linfox has used supply chain management technology from Infor to rigorously map the movement of its trucks and the carbon footprint the company’s activities produce.

McInnes says viewing and analysing business processes in terms of the carbon they create is an experience that has blown some common logistics industry assumptions about efficiency out of the water. Chief among them is the idea that it’s always better to cross-dock, which is shipping items into a central distribution hub from their point of origin, before sending them out again to their ultimate destination.

“We’ve started to optimise routes in terms of carbon footprint, whereas previously they may have been routed purely in terms of time taken or cost,” McInnes says. “There have been a few things that using the Infor software has highlighted to us.

“Cross-docking has become almost a mantra within the industry … but we’ve proved that in carbon terms it isn’t always the best way. If we have a customer on one side of town who happens to be near the manufacturer, rather than cross-docking it to a point on the other side of town with everyone else’s load, it can be better to run direct to their premises.”

McInnes says it’s the type of shift in thinking that can sometimes seem obvious, but is often difficult for large organisations with complex operations to make. He notes that putting in information systems to help track and monitor emissions is just part of the challenge facing businesses that want to reduce CO2 outputs.

Changing ideas

Although Linfox can now use its Infor supply chain platform to plot the most carbon-efficient routes for drivers to take, McInnes says cultural change is something that is arguably far more important to effect.

“Driver behaviour is the most obvious, the highest yielding and the simplest to understand, but it’s complex to have observed consistently,” he says. “Most drivers know how to drive but for one reason or another – they’re in a hurry, or they’re a bit frustrated, or they’re not thinking – they don’t always observe what we call eco-drive behaviours.

“They don’t always accelerate gradually, they don’t always anticipate the traffic flow as well as they might, they don’t always keep the mass of the vehicle rolling. So what we’re doing through training is re-emphasising these habits and starting to measure the results of these improvements on a contract-by-contract basis.”

McInnes says it’s important for Linfox to facilitate its drivers’ progress by ensuring the company has information systems that map the most carbon-efficient routes. He says if it invested heavily in additional technology, Linfox could give itself the ability to monitor driver habits.

But McInnes believes that heavy-handed enforcement using IT isn’t the best way to achieve results. Instead, Linfox has introduced what it calls its Green Fox program, which encourages employees to contribute towards the company’s goal of slashing carbon dioxide emissions by 15 per cent. The program includes training and rewards schemes and is designed to make the issue of carbon emissions more tangible to its workforce than simply talking about a colourless gas.

Linfox has also made it clear, McInnes says, that employees should park any scepticism they have about climate change when they arrive at work. It’s an approach the company considers necessary to overcoming the still-divergent views on carbon pollution that many Australians have. “We’ve adopted what we call our six-point beliefs about how Linfox responds to climate change and the environment,” he says.

“So we say to people, ‘When you’re at home, when you’re in the pub, when you’re wherever you are except at work, you can believe what you like. But when you’re in this workplace we happen to believe climate change is real … and we think reducing greenhouse gases is good for the environment and good for the business’.”

Improved results

From a technology standpoint, cutting emissions has proved beneficial to the business. The company has now implemented carbon pricing in its information system, providing an early example to Australian businesses of how change can be made. McInnes says it took 12 months for the logistics operator to implement carbon pricing but that it wasn’t the traumatic experience some have predicted for industry, as the government’s emissions trading scheme evolves.

He believes most service-based companies shouldn’t find it any harder than Linfox has, even though it operates a fleet of pollution-producing trucks. However, he notes that industries like mining and manufacturing will probably have a tougher time. “We have a relatively simple emissions profile. The majority of our emissions come from two sources – either diesel or electricity – both of which are metered and … are very clear in their emissions profile.

“The formulas are very well known. We have put in our SAP system a table of values that corresponds to each of those sources and when the volume of energy is recorded in SAP it simply refers to the relative value in the table and spits out an equivalent carbon emission.

“That’s not been without some considerable work … but we’ve taken the long-term view that in the end this level of detail is going to be essential.”

Where things become more complicated is where businesses don’t have simple emissions profiles – for example, where someone turning a key or flipping a light switch triggers a pollution event.

“[Miners and manufacturers],” McInnes says, “have a more complex experience because their sources of emissions are varied. Sometimes, for example, a miner will just dig a hole in the ground and emissions of methane will start to come out and they haven’t done anything yet except dig.

“In a manufacturing plant, from an industrial process, you might mix various things together and you give off a whole range of greenhouse gases that are kind of fugitive emissions. You have to measure those, you have to analyse what they are and what their components are, so it’s a much more difficult task,” he says.

He is thankful that Linfox moved early to tackle emissions reporting and carbon accounting and notes there are other benefits to being one of the first. For example, the logistics company is now providing carbon consulting advice to its customers, in a move it thinks gives it an edge over its trucking and transport competition. “We’re finding now that customers are approaching us about issues of planning future facilities, and asking us to map the carbon footprint of that future facility, before they make the investment in relocation of either plant or distribution centres,” McInnes says.

“We’re able to talk to customers and do scenario planning using the Infor software. Customers are really asking for that so they can apply what they might envisage is a future carbon price to their decision-making process. That’s something that’s very new.”

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Tags change managementcosttransformationCIO roleGreen technologysustainability

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