Fleet Efficiency Is a "Double Bagger" Tactic, Lower Cost AND Sustainability


November 7, 2011

A tactic must address multiple tactics. Fuel Efficiency is a "double bagger" tactic, in that it addresses the strategies of lowering costs and improving environmental sustainability.

I like two-fers. They are almost as good as trifectas.

When you consider the size of Walmart's private fleet, it becomes obvious that there is only so much they can do to improve efficiency and reduce their carbon footprint. From 2005 to 2008 Walmart increased the fuel efficiency of their private fleet by 38 percent, mostly by using technology and more aerodynamic trucks. They looked at alternative fuels, auxiliary power units, and aerodynamic fairings on both tractors and trailers. Walmart relentlessly looks at the little costs that add up.

Walmart understands that every truck is equipped with a resource that can be upgraded and retrained – the driver. An early adopter of Electronic On-Board Recorder units (EOBR), Walmart uses the technology to track the location of the rigs, track the fuel burn, and monitor the driver’s right foot, gear selection, and other decisions. Altering driver behavior is the next frontier in improving fuel efficiency.

Walmart’s published goal is to double the efficiency of its truck fleet by October of 2015, so in five years they expect to almost double what they achieved between 2005 and 2008. The savings impact is like compound interest—it builds on past savings. More efficient equipment and driver performance is a partial solution.

There are many ways to skin the fuel-efficiency cat. One obvious way is to run fewer empty miles. Walmart is working to optimize how merchandise is stacked in trailers. More freight on the truck means fewer trucks and fewer miles. Their private fleet logged 87 million fewer miles in 2008 while transporting 161,000 more cases, allowing the company to save 15,000,000 gallons of diesel fuel. This is real progress; with relentless focus on driving more value of goods per load—which is a metric every business should use—Walmart is working hard to reduce packaging by 5 percent by 2013.

When packaging changes affect value density, more is needed. As product mix changes and the cost of products continues to fall, Walmart is challenged to get even more product into less space. This effort not only affects transport, it helps warehousing and store space. Examples are detergent formulations that reduce the water content, package redesigns that change the shape of the cartons to increase the count loaded onto the truck, and carton designs that reduce the “dead space” around the product but still provide the protection needed. All these efforts will directly reduce costs and reduce Walmart’s carbon footprint.

In order to drive down costs and fuel consumption, Walmart is making a cross-functional effort to reduce packaging, improve load capacity, and reduce the total number of trucks used. These are tactical efforts that support multiple strategic goals.

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