SmartWay*
        MENTAL PROTECTION AGENCY 
U.S. ENVIRONMENTAL PROTECTION AGENCY
Route &  Network Optimization for Shippers
A Glance at Clean Freight Strategies
 Trucks for Associated Food
 Stores travel nearly 8
 million miles annually,
 network optimization
 software indicated that it
 should move its distribution
 center so miles north of its
 location. By relocating and
 using route planning, the
 company reduced its fleet
 size by 38 percent. It also
 reduced annual travel by
 400,000 miles, eliminated
 two to three routes daily,
 and improved on-time per-
 formance by 96 percent1. A
 reduction of 400,000 miles,
 assuming about 6.5 miles
 per gallon for tractor/trailer
 combinations,would save
 about 62,ooo gallons of fuel
 annually and reduce carbon
 dioxide by 626 metric tons2.
Route and network optimization can help you manage transportation costs,
lower carbon emissions, and move goods more efficiently.


What is the Challenge?
Shippers establish inbound and outbound lanes and continually adjust the routing of freight as
marketplace conditions change. Fuel availability and cost considerations are key determinants
for establishing routes. By keeping abreast of fuel supply and price within your delivery and
pickup areas, you may lower fuel costs while ensuring  that fuel is available for your vehicles with
minor route modifications. Weather, traffic, construction, and last-minute customer requests are
also reasons why you might alter a route in order to eliminate empty miles, maximize  driver and
equipment utilization, improve service levels, and lower fuel consumption and emissions.
Similarly, the design of your distribution network is influenced by conditions including proximity to
customers, inventory requirements, and access to highways, rail yards, and ports. A new inventory
strategy, the relocation of a customer, changes in freight infrastructure, or rules that affect the
distance a driver can cover in a certain time period  may require a change to your distribution
network. Unlike route optimization, which is sometimes done on the fly for short-term  benefits,
optimizing a distribution network typically requires substantially more planning and financial
commitment.


What is the Solution?
Both route and network optimization can help reduce vehicle miles, resulting in reductions of
greenhouse gases (GHGs) and other pollutants, as  well as fuel savings.
The key issues to analyze include the location of end users, suppliers, and your partners within the
supply chain; the origin of orders; the location of distribution centers and warehouses; and your
fulfillment and delivery capabilities.
Perhaps the most effective tool for both route and network optimization is a Transportation
Management System (TMS)3 working in concert with Enterprise Resource Planning (ERP) software.
These systems can help you optimize your routes, procure the most resource-efficient carriers and
modes of transportation, and make decisions based on meaningful  data.
For example, an  ERP allows you to maintain records of actual weight, dimensions, and volume
for all the products you ship (including the packaging). You can record actual payload (i.e.,
       gross weight, including product, package, and pallet weight), not just an estimate. Using
       your TMS, you can check invoiced miles against the route/mileage software,  compare
         invoice payload against product weight  in the ERP, and compare actual payload
         data  from the carrier against product weight recorded in the ERP As a result, you can
           design routes and orient elements in your supply chain to be more efficient and
              productive.
                In response to shippers who state that GHG emissions are a factor in their
                transport decisions4, TMS providers now include functions that can help you
                 collect, manage, and verify the quality of your supply chain data. This TMS-
                 verified data can be used in a complementary fashion with the SmartWay
                 Tool. These functions further extend the value of your TMS to include
                greater utilization of equipment and more control over your supply chain's
                carbon footprint.
                                                                                                   Continued

                                                 U.S. EPA SmartWay  | EPA-420-F-16-009  | www.epa.gov/smartway

-------
        SmartWay*
        MENTAL PROTECTION AGENCY 
 U.S. ENVIRONMENTAL PROTECTION AGENCY
Route & Network Optimization  for Shippers
A Glance at Clean Freight Strategies  continued
   Costs
   The cost to license and deploy a IMS with routing and
   network optimization features will vary widely depending on
   the scale and complexity of your supply chain, the type of
   goods you move, and your existing IT infrastructure.


   Savings and  Benefits
   The intended benefits of route and network optimization are
   the same: they're tools to help you manage your supply chain
   with greater efficiency and lower cost. Concurrently, utilizing
   both strategies assists with the goal of reducing vehicles
   miles, resulting in reductions of greenhouse gases and other
   pollutants. Some examples include:
        Subway reevaluated its distribution  network and
        made a series of changes that saved more than 9
        million truck miles, 1.6 million gallons of diesel fuel,
        and  nearly 1 7,000 shipments per year. For example,
        rather than send one pallet of ham from  one supplier
        to 60 distributors, the company created redistribu-
        tion points to consolidate outbound shipments. It now
        sources truckloads of ham, consolidates  them with
        other proteins,  and sends full truckloads  of mixed
        goods to  regional locations. It collaborates with sup-
        pliers to make distribution more efficient. For instance,
        a supplier of salad packaging moved a facility 1,000
        miles closer to the company's redistribution center,
        annually saving more than 1  million truck miles and
        reducing carbon emissions by 1,663 metric tons5.
United Parcel Service (UPS) devised route-optimiza-
tion plans to be more efficient, reduce fuel consump-
tion, and enable drivers to get back to their distribu-
tion centers earlier. By minimizing (and in some cases
eliminating) left-hand turns, the company was able to
more than  meet its goals. Since 2004, the company
has saved an estimated 10 million gallons of gas,
and reduced carbon emissions by 1 00,000 metric
tons. That's the equivalent of 5,300 cars off the road
for an entire year6.
Ocean Spray and Tropicana added new manufac-
turing and  distribution centers in Florida and re-
evaluated its national distribution network given the
new facilities. By re-routing existing delivery paths, the
company reduced driving by 4.5  million miles annu-
ally, saving 14,000 tons of carbon dioxide emissions
 a 1 7 percent reduction7.
According to EDF's Green Freight report, the retail
company Tuesday Morning changed its goods move-
ments and  is reaping the benefits. Previously, all
containers  were moved from the Port of Los Angeles
to the company's Dallas  distribution center and then
distributed  to the company's over 800 store locations.
Now, a portion of the product gets shipped directly
to nearly 40 percent of its store locations instead of
being routed through Dallas. The distribution network
changes saved time, cost, and prevented the emis-
sions associated with the Los Angeles to Dallas trip8.
                                   NIEX]  SI-PS
1   Audit your routes and
   network to determine
a baseline performance
level for services and
costs.
2Seek out TMS vendors
                                                                for product demon-
                                                            strations. Determine
                                                            the suitability, return on
                                                            investment, and potential
                                                            impact on  the efficiency of
                                                            your operations.
3For the routing mod-
                         ule, conduct a trial
                      to see how it performs in
                      everyday conditions and
                      extraordinary situations
                      such as heavy traffic,
                      bad weather, and route
                      closures.  For the network
                      module, compare your
                      current network to alter-
                      natives using "what-if"
                      scenarios to determine
                      potential  benefits of using
                      the software.


-------