Logistics Planning and System Design
Is Subway's effort aimed at "greening" the supply chain compatible with "bottom line" objectives? (Explain)
First, greening is defined as the path that companies take in order to arrive at a certain level of benefits. Subway took the same path to green in its supply chain strategies. Their scope of green strategy includes an idea that going green encompasses going beyond reducing carbon footprints in order to contribute to zero environmental degradation. In order achieve that goal. Subway has to rethink their purchasing and logistical strategies since the company delivers and outsource all the components for the products they sell. Having this plan will ensure the future of Subway that pushes further into supplier and manufacturing in reducing the waste and consumption on the materials that makes up their end product. On the other hand, the other companies define the level eco-responsibility as a measurable and realistic approach to execute. For other organizations, transportation efficiencies will deliver the greatest returns in terms of GHG (green house gas) reduction.
Greening the supply chain is compatible to bottom line objectives because formalizing the baseline will result to improvements that will manifest in energy consumption reduction and lower energy consumption cost. This is because greening means reducing the GHG emission and it translates to lesser use of fossil fuel and lower frequency of trips that the company has to do when distributing supplies and materials. Theoretically, the lesser the use of fuel means lower energy cost. However, Subway will face another challenge when transportation and fuel and use are reduced and that is the problem on efficient and timely supply distribution. The best solution to meet the two objectives at the same time is to calculate the full truckload and carbon footprint baseline. Evaluation of multiple scenarios will also help the company to measure the difference between the cost of GHG emission and implications to logistical operations.
Describe the major logistics strategies and tactics associated with Subway's approach for aligning logistics operations with environmental initiatives
One of the most effective strategies that Subway used to align their logistics operation with environmental initiative is through challenge inventory that came from rethinking the way proteins be produced and distributed. This idea paved way for the company to reduce carbon emission because by means of working with largest suppliers and relocate their cold storage facilities adjacent to the suppliers facilities. Therefore, the entire process of slicing, packing and processing can be done all in one place. This strategy directly hits the goals of the two initiatives. One is to reduce carbon emission by cutting miles by as much as 342,840. The number translates to lesser need to transport the supplies from the suppliers to the cold storage warehouse because they are both situated in the same location. In addition to reducing the miles, Subway could also leverage on this approach in terms of reducing the cost of energy. The lesser the need to transport the goods from one place to another, the lesser the need to fuel the trucks for delivery. Implementing the strategy suggests that Subway has one thing in mind and that is to continue to evaluate the strategic placement of facilities and pair it with environmental impacts along with financial savings.
Opening more facilities near the supplier means having an average savings of 597,000 miles a year and it means more financial savings for the company in the long run. Assuming that the price of fuel in the United States is $3.394 per gallon or 3.79 liters and each truck consumes 9.5 liters per 62 miles. The 597,000 miles savings when translated to dollars would mean a total fuel cost savings of $85,168 each year. The company is taking steps to initiate a plan that would not only sustain their environmental objectives, but will also reflect significant financial savings. The company continues to formalize its programs by partnering with groups such as Produce Marketing Association and Conserve to focus their environmental sustainability initiatives.
Assess the transferability of Subway's logistics plan applied to other businesses within and outside the food sector.
Subway’s logistical plan reflects a convergence of two shades of greens, one is to reduce fuel cost and secondly to reduce transport emission. This initiative can be applied to other business within and outside the food sector in many ways. For example, a restaurant with a commissary facility that processes their food products may integrate Subway’s approach by strategically placing their commissaries close to the supplier. If the restaurant is importing tuna fish from an offshore supplier they can actually place a processing facility close to the port where the Tuna meat can be processed into several ready to cook food stocks. That way, the restaurant would be able to save fuel cost of transporting the whole tune fish to a distant processing facility and another trip to the restaurant distribution channels. Subway’s logistical plan is applicable to most businesses not only in the food sector. If a computer manufacturer for instance is getting their spare parts from another country, they could further reduce fuel cost and transport emission by means of contracting another manufacturer that is close to the supplier to assemble the parts. The final products can be shipped directly to the consumers from the assembling facility and the computer company will save money in transporting their products from parts supplier to the assembly line and eventually to the consumers. Subway also considers modal conversions, meaning from air-to-ground or ground-to-rail or multi-stop. This strategy will also save the company from large fuel cost and transport emission because converting the mode of transport means passing over the cost to another carrier. Instead of shouldering the cost of fuel by running all the delivery trucks and cover the distances from one source to another, companies could make use of modal conversion by sending the goods to another carrier that will cover the rest of the miles needed to transport the goods. This would mean cutting the miles needed by truck to cover, reduce the fuel needed to run the truck and ultimately to reduce emission.
References
Fitzgerald, T., & Stewart, E. (2009). Subway's Journey to Green, Logistics Management (2002). Highland Ranch, 48(4), 22.
