OPERATIONS

Logistics

Timeliness, quality and cost are the focus of our global logistics operations at EMC, as our customers expect our product to be delivered on time, in perfect condition and at a competitive price. Working to reduce our carbon impact helps us execute on these objectives. For example, choosing a transport route or mode with a lower carbon footprint often leads to lower cost.

By consolidating routes, optimizing mode of transport and engaging our logistics carriers, we are able to reduce GHG emissions from product shipping. In 2015, EMC Global Logistics reduced our absolute carbon footprint by 16 percent over 2014, and our carbon intensity by 19 percent from a 2013 baseline.

We also recognize the strong connection between logistics and packaging. Reducing excess packaging materials, moving from single to bulk packs and increasing the number of units packed per pallet also reduce our overall carbon footprint and freighting costs. During 2015, we began piloting a packaging framework that will enable us to identify, manage, track and report on packaging optimization projects more systematically, for important environmental improvements and cost savings. To learn more, visit Packaging.

Logistics Carbon Footprint and Intensity Approach and Performance

EMC partners with our carriers to optimize individual route designs and mode choices for greater efficiency and lower GHG emissions. Optimizations include merging shipments in transit, and shifting from truck to rail and air to ocean or ground transport where possible. EMC’s global logistics operations generated approximately 76,989 MT CO2e in 2015, a 16 percent reduction in absolute carbon footprint from 2014.

While we track our absolute carbon footprint, this metric alone does not give us enough insight into how our decisions regarding mode, scheduling and shipment consolidation impact our GHG emissions. For a more complete understanding, we are also tracking our carbon intensity, measured as kilograms of CO2e emitted per metric ton-kilometer transported. Understanding the carbon intensity associated with our logistics operations worldwide, as well as that related to each of our carriers, allows us to systematically prioritize lower-carbon routes and modes where these make sense for our business and our customers. Using 2013 as a baseline, we have set a 2020 goal to reduce by 20 percent the carbon intensity associated with our global logistics operations. In 2015, our carbon intensity had already achieved a reduction of 19 percent from our 2013 baseline.

We can attribute this reduction to various factors including our continuous efforts to shift to lower-emitting modes of transport. During 2015, we shifted more than 300,000 kilograms of inbound material from air to ocean. Changes to our supply base also enabled us to increase the use of rail. In addition, we made important changes to our U.S. warehouse replenishment model that allowed us to ship material via ground rather than air. These and other improvements led by our Global Logistics organization have resulted in important reductions, not only in our logistics emissions profile, but also in our overall logistics spend.

During 2016 we will focus on reviewing our inbound shipments from Asia to the U.S. and Europe to identify additional opportunities to shift material from air transport to ocean as feasible when taking increased inventory carrying costs into account, and continue to optimize our delivery models.

The following graphics illustrate EMC’s carbon footprint and carbon intensity for our global logistics operations.

Caption: Carbon Footprint and Intensity1

1 The footprints presented here include our inbound, outbound, interplant, and customer service transportation and logistics operations, except for in-country goods freighting for Brazil, Japan, and Russia.

To calculate these numbers, we collected from our logistics partners job-level reports that include weight of goods transported, as well as route and mode data where available. We then applied associated standard emissions factors and calculation methodologies using Defra’s 2013 freighting goods guidance. The footprints presented here represent 96, 93 and 92 percent of our logistics spend for 2013, 2014, and 2015, respectively. Total emissions were extrapolated proportionately based on the data received.

Partnering with Our Carriers

We have continued our membership in the U.S. Environmental Protection Agency (EPA) SmartWay program as a shipping company. This program helps freight carriers and their customers improve efficiency and decrease greenhouse gases and air emissions. In 2014, more than 98 percent of our U.S. domestic freight was transported by U.S. Environmental Protection Agency (EPA) SmartWay-member carriers. This percentage is being restated from last year (up from 94 percent). We will provide the 2015 information once we submit our report to EPA based on the 2016 SmartWay schedule.

Sustainability is part of the quarterly business reviews with our logistics partners, where they also present on their companies’ sustainability programs and goals. In addition, major carriers provide activity-level data on the freight they carry for EMC that enable us to estimate our logistics carbon emissions. During 2015, we enhanced this collaboration by holding focused-meetings with our logistics partners to identify opportunities to further improve data quality, reduce the emissions from our logistics operations, and bring new initiatives to light.

Leveraging Technology to Reduce Emissions

During 2015 our logistics partner in the United Kingdom and Ireland completed the development and implementation of a new application to increase visibility and control of products between depots across the United Kingdom. With this functionality, transports between distribution centers are now forecasted days in advance. This added flexibility enables warehouse control to consolidate and move items in a way that maximizes volumetric space, and makes the operation more effective, efficient and sustainable. As a result of this initiative, our partner anticipates reducing their environmental impact by decreasing the use of 1.75 trailers per week, reducing approximately 36,000 miles per year, and avoiding the emission of 55MT of CO2e.

Following on Progress

The Automated Delivery Process (ADP) that we implemented with one of our partners in the United Kingdom during 2014 was so successful that we rolled it out to all EMC partners and direct business in mainland Europe during 2015. The ADP, illustrated in the figure below, enables more efficient scheduling and routing, maximizes vehicle utilization and reduces fuel consumption, all of which have a direct impact on carbon emissions reductions. In 2015, 77 percent of all customer orders in Europe followed the ADP. In 47 percent of those orders, customers accepted the automatically generated Earliest Delivery Date, resulting in the benefits described above.

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