More than ever, the world's largest and most sophisticated shippers are using logistics technology to drive efficiencies in their supply chains and meet corporate sustainability goals.
Consumers, employees and board members have become more aware of climate change and the carbon footprint of goods consumption. In response, many companies have issued ambitious sustainability targets to reduce greenhouse gas emissions, physical waste and water usage.
In 2018, Anheuser-Busch Inbev (NYSE: BUD) announced its sustainability goals for 2025, which include using 100% recycled or returnable packaging materials, investing in renewable electricity, implementing sustainable farming practices, reducing water usage in breweries, and investing in local watersheds. The goals also call for a 25% reduction in carbon emissions across the company's entire value chain. As part of that initiative, A-B has come to focus on Scope 3 emissions, which include indirect emissions in the supply chain from suppliers and transportation partners.
Anheuser-Busch's transportation needs are vast: The company operates more than 100 facilities in North America, from agricultural production sites to breweries, packaging plants and distribution centers. A-B moves roughly 800,000 shipments per year across 12,000 unique lanes. The beverage giant uses a large private fleet and is working toward a 50-50 balance between its own assets, which focus on dense, short-haul portions of the network, and purchased transportation for over-the-road legs.
Asset-based carriers, traditional brokerages, managed transportation solutions and intermodal providers all play a role in moving Anheuser-Busch's beer and other beverage products to its customers. I spoke to Angie Slaughter, vice president of sustainability, logistics, SVC and capabilities procurement. Slaughter, an environmental and chemical engineer by training, has spent her entire career at A-B, where she started in 1997 as an engineering manager in brewing and utilities.
"Transportation is key to our long-term 2025 sustainability goal of reducing carbon emissions throughout our entire value chain by 25%," Slaughter explained. "Transportation is 9% of that. In addition to our consideration of alternative fuels — we're working with Nikola and Tesla to make our entire dedicated fleet zero emission — we are also looking first at optimization, reducing emissions through picking the right mode of transport in the first place, and ensuring that all backhauls are full."
Filling Anheuser-Busch's backhauls poses a challenge and a massive opportunity for efficiency gains and reduced environmental impact. Every year, Slaughter said, A-B has 20 million empty miles in its dedicated fleet that need to be filled with freight.
In 2016, A-B began working with Convoy, the Seattle-based digital freight network, on its supply chain.
"As our relationship with Convoy has grown, we've learned a lot from them in terms of what they can do with data transparency and visibility," Slaughter said. "We deepened that partnership over time and now they assist us not just with shorter, complex lanes but also denser, more consistent OTR lanes."
The data that Convoy generates for Anheuser-Busch goes well beyond visibility, which Slaughter said was a minimum expectation for all of its carriers. Convoy's real-time insights into transportation market cost and capacity availability help A-B buy smarter, Slaughter said.
A-B already has a strong data culture where key performance indicators are constantly measured and ranked so that opportunities for improvement can be targeted, Slaughter said. In particular, Anheuser-Busch benchmarks all of its facilities, stacking them from worst to best, looking for outliers, and calculating how much could be gained if laggards were brought up to average performance and benchmarks. Convoy furnishes A-B with monthly facility reports based on carrier reviews, enabling A-B to identify hot spots within its network, understand the cost of operating inefficiently and rapidly implement changes.
"When you collaborate with your freight partners and combine your data, you build trust and stronger relationships," Slaughter said. "You're able to look more strategically at the total cost of shipping and the real value you get from your partnerships."
Convoy's Automated Reloads program has started to make progress in solving A-B's 20 million empty miles challenge. With Automated Reloads, Convoy "batches" round-trip routes, booking headhaul and backhaul loads at the same time to keep trucks rolling and asset utilization high.
"On the digital freight matching side, batching loads and getting those full-turn shipments contracted is where we're going to see the biggest gains in the future," Slaughter said.
Asset utilization in Anheuser-Busch's private fleet became even more challenging when the coronavirus pandemic affected part of A-B's business. Restaurants, bars, hotels and live sporting events, which represented a significant portion of A-B's sales, were restricted. Anheuser-Busch still had to move a substantial amount of volume, Slaughter said, but had to do so in a different way.
With little insight into how the crisis would evolve and how consumer behavior would change, Anheuser-Busch needed transportation partners that could offer agility and creativity as events unfolded. A-B's planned distribution was disrupted as products that would have been allocated to restaurants and bars were shipped instead to grocery stores and supermarkets, requiring adjustments in purchased transportation well before the typical summer surge.
"COVID-19 tested the agility in our supply chain," Slaughter said. "It's been disruptive to a lot of people, and we have to be there for our consumers and ensure our customers are able to go to the grocery store and find their favorite beer at the right time. Where Convoy helps is being that partner that is still delivering, still meeting expectations and still coming to us with ideas for improvement. We expect them to challenge us and bring us new ideas and new thoughts about how we can improve."
The good news, Slaughter said, is that consumer behaviors are starting to normalize as the economy reopens. But one pandemic trend that won't reverse itself is the technology adoption forced on supply chain managers and the transportation industry.
"The whole industry was forced very quickly to take on more technology adoption that won't reverse now," Slaughter said. "This crisis accelerated the digitization of freight and made it come faster." API integrations with strategic partners that provided real-time pricing as A-B raced to shift freight across its lanes were a critical element in managing the impact of the crisis.
At Anheuser-Busch, the work never stops in building the most efficient transportation system for the business while also meeting A-B's ambitious sustainability goals.
"We want world-class operational excellence continuously driving efficiencies across our operation and our value chain — everything we touch in logistics — and that translates into cost savings, reduced emissions, improved driver experiences, all the way down the line," Slaughter said. "Ultimately what we want is our happy customers finding their favorite beers exactly where they're supposed to be."
This article is published jointly with our partners at Convoy. To view more Future of Freight content, click here.
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