In managing its logistics processes, CNH Industrial continually strives to find sustainable solutions to combat climate change, conserve natural resources, and safeguard health.
To this end, CNH Industrial’s logistics process management is, on the one hand, incorporated in the value chain, specifically with the functions responsible for manufacturing, sales, and purchasing; on the other, it goes beyond Corporate boundaries, interacting with the operational context to optimize the efficiency of logistics flows and reduce their environmental impact.
As the materiality analysis shows, sustainable logistics is a topic of growing interest owing to its economic, environmental, and social implications, and is one of the 25 aspects material to CNH Industrial. It is important to the Company not only in terms of time and cost efficiencies, but also in relation to emissions reduction, resource use, packaging management, and, not least, its indirect impact on human health and traffic congestion. Stakeholders expect CNH Industrial to demonstrate its commitment to safeguarding this aspect. In LATAM, for example, private sector knowledge and expertise can improve logistics because they foster a proactive role in the building of new infrastructure, railways, ports, airports, and roads to overcome existing inefficiencies. In APAC, companies are required to be proactive in developing infrastructures - especially roads - to improve communications between rural areas and major cities, in order to reduce the environmental impacts and air pollution caused by transport.
In order to coordinate its efforts for logistics improvements effectively, CNH Industrial disclosed its Green Logistics Principles. Available on the Corporate website, the document was published by Fiat Industrial in 2011, and adopted by CNH Industrial in September 2013 following approval from the Board of Directors.
The Green Logistics Principles are intended to coordinate the Company’s sustainable behavior initiatives and help the various Corporate functions, together with suppliers, to effectively monitor their performance and ensure improvement targets are met.
CNH Industrial’s approach focuses on four areas:
- increasing low-emission transport
- adopting intermodal solutions
- optimizing transport capacity
- minimizing non-reusable packaging and protective materials.
Initiatives and projects developed to reduce the environmental impact of logistics processes are described below.
The active engagement of suppliers is an integral and key aspect in achieving effective and sustainable logistics.
CNH Industrial directly involves suppliers in most of these projects and initiatives, promoting and encouraging the development and implementation of the best solutions for meeting the Company’s environmental impact reduction targets. For example, in partnership with the new Iveco Daily steering wheel supplier, a container was developed that reduces transport volumes by 57%, with annual savings of over $210 thousand.
As further proof of this commitment, some suppliers of logistics processes were involved in the CDP Supply Chain project (see also page 160), aimed at monitoring the CO2 emissions of selected suppliers and at promoting initiatives to reduce them through joint actions and partnerships. This involvement will continue in 2015.
The Company’s main sustainable logistics improvement targets are to reduce CO2 emissions derived from the handling of components and finished goods, and to minimize the use of non-reusable packaging materials. These targets are all set voluntarily and included in the Corporate Sustainability Plan (see also pages 39-40). Target achievement is monitored quarterly and, if necessary, corrective measures are implemented. The results are made available to stakeholders annually through the Sustainability Report and Corporate website.
In addition, in 2014, individual improvement targets were included in the Performance and Leadership Management system (see also page 83) for the managers of the main projects included in the Sustainability Plan.
The Group Executive Council (GEC) has the highest responsibility for initiatives aimed at reducing the environmental impact of logistics processes at CNH Industrial.
The logistics system is managed according to World Class Logistics (WCL) standards that, based on World Class Manufacturing (see also page 164), define the logistics processes concerning plants and supplier network planning, while pursuing safety, ergonomics, eco-compatibility, and transport flow optimization. WCL standards facilitate lean processes both within and outside plants, involving all employees in the improvement processes.
With the active participation of all parties, inventories are significantly reduced, production volumes and mix are evened out, and logistical expertise at plants is improved. The systematic reduction of both internal and external handling is another significant aspect of WCL, achieved by integrating the production and distribution networks.
This approach ensures effective management, and that projects are evaluated according to defined standards.
Through World Class Logistics, CNH Industrial shares and spreads its best practices, tried and tested across all plants, to improve process management with internal benchmarking that is continually updated.
Inbound flow management (i.e., the transport of components and materials to Company plants) is either handled by external transport providers engaged by CNH Industrial, or managed directly by the material suppliers themselves, whereas the outbound flow (i.e., the distribution of finished goods from plants to the dealer network) is handled by external transport providers.
Spare parts are managed by CNH Industrial Parts and Services, and their inbound distribution (to warehouses and distribution centers) is handled either by external providers engaged by CNH Industrial or directly by suppliers.
For Agricultural Equipment and Construction Equipment, outbound flows (including to dealerships) are managed by specialized transport providers, for Commercial Vehicles by external companies coordinated by a logistics operator, and for Powertrain by designated external providers.
For aspects concerning business travel, see page 100.