Employees from throughout the worldwide HP organization have joined an aggressive sustainability program that aims to help save the planet while saving the company millions of dollars.
John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
High-tech giant Hewlett-Packard is placing a new emphasis on reverse logistics. And it's not just because of the high return rates that have historically plagued the electronics industry (although that remains an issue). It's also because the more outmoded electronics and print cartridges HP recovers, the closer it comes to its corporate goal of recycling 2 billion pounds of electronics by the end of 2010. Last summer, the company reached a major milestone in its recycling program when it collected its first billion pounds of recycled material, hitting that target a full six months ahead of schedule. Buoyed by its initial success, HP immediately upped the ante, setting a new target of recovering its second billion pounds by 2010.
What HP is doing is turning trash—items that once might have ended up in dumpsters or gathered dust in the corner of a distribution center—into treasure. Instead of automatically shipping the unwanted items off to a landfill, the company mines valuable metals and other materials from them, which it then recycles into new products. In fact, the company's Long Lifecycle Business Desktop PC computer line, unveiled last summer, is made from 95 percent recycled components.
HP's recycling programs are now in effect in more than 40 countries. The programs seek to reduce the environmental impact of IT products, minimize the amount of waste that ends up in landfills, and help customers dispose of unwanted products in an environmentally sound manner. The plastics and metals recovered by HP have been used not just in the manufacture of new electronics, but also in items ranging from auto body parts, clothes hangers, and plastic toys to fence posts, serving trays, and roof tiles. The company says it is the industry leader in recycling. It recovered 187 million pounds of electronics globally in 2006—almost double the 108 million pounds recovered by its closest competitor, IBM.
Green genes
As for what's driving the recycling push, it's all part of an aggressive sustainability program at HP, which has the company using alternative energy at its plants and distribution centers, working with supply chain partners to measure carbon footprints, and placing a major emphasis on design-for-logistics initiatives. HP's team of logistics professionals is at the center of the effort.
"Obviously, recycling such a large quantity of material requires a significant reverse flow for products that can be refurbished for re-use and for those destined for recycling," says Dr. Judy Glazer, director of HP's global, social, and environmental responsibility operations. "So our logistics team has an important role in helping us to identify cost-effective ways to do both of those things."
In addition to supporting the recycling program, the company's logisticians have contributed to HP's sustainability initiatives (and its bottom line) through a few simple changes in packaging. By switching from wood pallets to plastic pallets, for example, HP eliminated 300,000 cubic feet of packaging material annually for shipping laptop computers in Europe.
HP made the change for a number of reasons. For starters, the wooden pallets from Asia that it used previously were poorly built and had to be treated with pesticides, so the wood was not reuseable. In addition, plastic pallets are thinner and more durable than their wooden counterparts, allowing HP to pack more products on a pallet and then to reuse that pallet several times.
The biggest savings have come from the use of plastic pallets for air shipments. "Because [plastic pallets] are thinner, we could get more products into a container, which improved logistics costs dramatically," says Glazer. "When you reduce package size and weight, very good things happen to logistics."
That's obvious when you look at the changes HP made to its process for shipping the more than 1.3 million ink jet cartridges it sells each day. By changing the way those cartridges are delivered, HP eliminated more than 6 million pounds of PVC last year, which Glazer says resulted in a huge financial savings. (The PVC reduction is equal to taking 2,800 cars off the road for a year.) By switching from large clam-shell packaging to a tri-fold cardboard package, HP reduced the weight of the package by 45 percent. "So you can assume there was a pretty significant financial impact for us as well," says Glazer.
The company plans to expand its use of plastic pallets within North America this year. It is currently working with its suppliers and customers to prepare them for the changeover. "We have found some of our distribution partners to be extremely receptive," says Glazer. "Others are open to the idea, but need to work through some of the operational changes that need to be made in terms of handling a pallet with a different shape, and working out how the reverse flow of the pallets happens. We have to work with the people we are handing [product] off to and make sure they can deal with it in their system."
The payoff
Although some of HP's sustainability programs have been driven by internal initiatives, others are the result of customer requests. For example, Glazer reports that over the years, customers have approached HP with requests for energy-efficient equipment. "We have customers that are very concerned about energy use in the data center and are coming to us for help in solving that problem," she says. In July, HP announced a new data center solution aimed at driving energy efficiency to reduce operational costs for customers. "You can imagine that if you meet a customer need like that, the return on investment is very substantial," she says.
HP's internal sustainability programs may not do as much to drive sales, but they nonetheless make a substantial financial contribution. "The vast majority of the projects that have been internally driven have delivered a significant cost benefit as well as an environmental benefit," Glazer reports. "That's very much true in the whole packaging and transportation area, where many of the things you look at that reduce waste and increase efficiency also deliver a lower cost because they have less environmental impact. You are either using less fuel per product shipped or less material per product shipped. We have many examples of packaging changes and design-for-logistics efforts that have delivered just that."
The company is saving greenbacks in other ways as well. HP expects to trim $750,000 from its energy budget over the course of a 15-year renewable energy contract it signed with SunPower to provide renewable energy to HP's R&D and manufacturing site in San Diego. The $8 million contract will include 5,000 solar panels atop five of the seven buildings at the San Diego campus. The panels will convert the sun's energy into 1.6 million kilowatt-hours of electricity—enough to provide more than 10 percent of HP's energy use at the campus.
HP is currently enlisting its suppliers in its green crusade. As part of its contracting process, HP is working with suppliers on measuring their carbon footprint, and asking them to participate in initiatives like the government-sponsored SmartWay program, a collaboration between the Environmental Protection Agency and the freight industry to increase energy efficiency while significantly reducing greenhouse gases and air pollution. The company is also in discussions with key carriers and industry peers on how to reduce the environmental impact made by freight carriers in and around the Port of Los Angeles.
"Environmental responsibility is good business," said Mark Hurd, HP's chairman and chief executive officer in a July 2007 statement detailing HP's progress toward its recycling goals. "We've reached the tipping point where the price and performance of IT are no longer compromised by being green, but are now enhanced by it."
the savings keep rolling in …
It uses only organic cotton in its sportswear, pledges 1 percent of its sales to environmental causes, and was the first outdoor apparel retailer to sell fleece made from recycled soda bottles, so it's probably no surprise that Patagonia's newly expanded DC represents the last word in green. When the company built a 170,000-square-foot addition to its DC in Reno, Nev., it used the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) standards to guide its design and construction. Last March, the retailer learned that its efforts had paid off. The council granted the expanded facility a gold certification— making it only the second distribution center in the United States to earn that designation.
The DC, which incorporates building materials with recycled content, includes features like waterless urinals, waterefficient landscaping, and a system for managing stormwater runoff. It also boasts radiant heating systems, energyefficient fluorescent lighting, and skylights, which have helped hold down energy costs in the DC, which now measures 340,000 square feet. And although it wasn't factored into Patagonia's application for LEED certification (which is based on a point system), even the center's material handling equipment is contributing to a greener operation.
Take the new package sorter and conveyor system that were installed during the DC expansion project, for example. The C-L100 package conveyor, which was supplied by systems integrator Dematic Corp., features the ability to turn itself off when it's not needed. That alone has the potential to generate big energy savings. "Traditional belt conveyor is a heavy consumer of electricity and often runs 24/7, even when there is no product on it," says Gregg Vandenbosh, product manager for conveying products at Dematic Corp.
Along with that "green" feature, the C-L100 offers a number of other advantages. For one thing, it's designed to be easy to assemble: The conveyor is a modular solution and can be assembled by snapping pieces together like Legos. For another, the conveyor is engineered so that each section has its own control logic and internal wiring. That feature eliminates the need for the time-consuming electrical cabling typically associated with conveyor implementations.
In addition, the C-L100, which is able to handle goods of different sizes and weights, has intelligent controls that allow specific sections to speed up or slow down. As a result of the improvements, Patagonia is able to process outgoing orders with 3.5 fewer workers than in the past. At the same time, accuracy has soared, and returns have been minimized.
Working in conjunction with the new conveyor is a new narrow-belt package sorter from TGW-Ermanco. The sorter, which can accommodate a wide variety of package weights and sizes as well as difficult-to-convey items, can process a bag or box every 2.2 seconds. It's not hard to guess what kind of impact the unit will have on the DC's operations. "There's no way a person can operate that quickly," says Dave Abeloe, Patagonia's distribution center director.
Economic activity in the logistics industry expanded in January, growing at its fastest clip in more than two years, according to the latest Logistics Managers’ Index (LMI) report, released this week.
The LMI jumped nearly five points from December to a reading of 62, reflecting continued steady growth in the U.S. economy along with faster-than-expected inventory growth across the sector as retailers, wholesalers, and manufacturers attempted to manage the uncertainty of tariffs and a changing regulatory environment. The January reading represented the fastest rate of expansion since June 2022, the LMI researchers said.
An LMI reading above 50 indicates growth across warehousing and transportation markets, and a reading below 50 indicates contraction. The LMI has remained in the mid- to high 50s range for most of the past year, indicating moderate, consistent growth in logistics markets.
Inventory levels rose 8.5 points from December, driven by downstream retailers stocking up ahead of the Trump administration’s potential tariffs on imports from Mexico, Canada, and China. Those increases led to higher costs throughout the industry: inventory costs, warehousing prices, and transportation prices all expanded to readings above 70, indicating strong growth. This occurred alongside slowing growth in warehousing and transportation capacity, suggesting that prices are up due to demand rather than other factors, such as inflation, according to the LMI researchers.
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
As commodities go, furniture presents its share of manufacturing and distribution challenges. For one thing, it's bulky. Second, its main components—wood and cloth—are easily damaged in transit. Third, much of it is manufactured overseas, making for some very long supply chains with all the associated risks. And finally, completed pieces can sit on the showroom floor for weeks or months, tying up inventory dollars and valuable retail space.
In other words, the furniture market is ripe for disruption. And John "Jay" Rogers wants to be the catalyst. In 2022, he cofounded a company that takes a whole new approach to furniture manufacturing—one that leverages the power of 3D printing and robotics. Rogers serves as CEO of that company, Haddy, which essentially aims to transform how furniture—and all elements of the "built environment"—are designed, manufactured, distributed, and, ultimately, recycled.
Rogers graduated from Princeton University and went to work for a medical device startup in China before moving to a hedge fund company, where he became a Chartered Financial Analyst (CFA). After that, he joined the U.S. Marine Corps, serving eight years in the infantry. Following two combat tours, he earned an MBA from the Harvard Business School and became a consultant for McKinsey & Co.
During this time, he founded Local Motors, a next-generation vehicle manufacturer that launched the world's first 3D-printed car, the Strati, in 2014. In 2021, he brought the technology to the furniture industry to launch Haddy. The father of four boys, Rogers is also a director of the RBR Foundation, a philanthropic organization focused on education and health care.
Rogers spoke recently with DC Velocity Group Editorial Director David Maloney on an episode of the "Logistics Matters" podcast.
Q: Could you tell us about Haddy and how this unique company came to be?
A: Absolutely. We have believed in the future of distributed digital manufacturing for a long time. The world has gone from being heavily globalized to one where lengthy supply chains are a liability—thanks to factors like the growing risk of terrorist attacks and the threat of tariffs. At the same time, there are more capabilities to produce things locally. Haddy is an outgrowth of those general trends.
Adoption of the technologies used in 3D printing has been decidedly uneven, although we do hear about applications like tissue bioprinting and food printing as well as the printing of trays for dental aligners. At Haddy, we saw an opportunity to take advantage of large-scale structural printing to approach the furniture and furnishings industry. The technology and software that make this possible are already here.
Q: Furniture is a very mature market. Why did you see this as a market that was ripe for disruption?
A:The furniture market has actually been disrupted many times in the last 200 years. The manufacturing of furniture for U.S. consumption originally took place in England. It then moved to Boston and from there to New Amsterdam, the Midwest, and North Carolina. Eventually, it went to Taiwan, then China, and now Vietnam, Indonesia, and Thailand. And each of those moves brought some type of disruption.
Other disruptions have been based on design. You can look at things like the advent of glue-laminated wood with Herman Miller, MillerKnoll, and the Eames [furniture design and manufacturing] movement. And you can look at changes in the way manufacturing is powered—the move from manual operations to machine-driven operations powered by steam and electricity. So the furniture industry has been continuously disrupted, sometimes by labor markets and sometimes by machines and methods.
What's happening now is that we're seeing changes in the way that labor is applied in furniture manufacturing. Furniture has traditionally been put together by human hands. But today, we have an opportunity to reassign those hands to processes that take place around the edges of furniture production. The hands are now directing robotics through programming and design; they're not actually making the furniture.
And so, we see this mature market as being one that's been continuously disrupted during the last 200 years. And this disruption now has a lot to do with changing the way that labor interacts with the making of furniture.
Q: How do your 3D printers actually create the furniture?
A:All 3D printing is not the same. The 3D printers we use are so-called "hybrid" systems. When we say hybrid, what we mean is that they're not just printers—they are holders, printers, polishers, and cutters, and they also do milling and things like that. We measure things and then print things, which is the additive portion. Then we can do subtractive and polishing work—re-measuring, moving, and printing parts again. And so, these hybrid systems are the actual makers of the furniture.
Q: What types of products are you making?
A: We've started with hardline or case goods, as they're sometimes known, for both residential and commercial use—cabinets, wall bookshelves, freestanding bookshelves, tables, rigid chairs, planters, and the like. Basically, we've been concentrating on products that don't have upholstery.
It's not that upholstery isn't necessary in furniture, as it is used in many pieces. But right now, we have found that digital furniture manufacturing becomes analog again when you have to factor in the sewing process. And so, to move quickly and fully leverage the advantages of digital manufacturing, we're sticking to the hardline groups, except for a couple of pieces that we have debuted that have 3D-printed cushions, which are super cool.
Q: Of course, 3D printers create objects in layers. What types of materials are you running through your 3D printers to create this furniture?
A: We use recycled materials, primarily polymer composites—a bio-compostable polymer or a synthetic polymer. We look for either recycled or bio-compostable [materials], which we then reinforce with fibers and fillers, and that's what makes them composites. To create the bio-compostables, we marry them with bio-fibers, such as hemp or bamboo. For synthetic materials, we marry them with things like glass or carbon fibers.
Q: Does producing goods via 3D printing allow you to customize products easily?
A: Absolutely. The real problem in the furniture and furnishings industries is that when you tool up to make something with a jig, a fixture, or a mold, you tend to be less creative because you now feel you have to make and sell a lot of that item to justify the investment.
One of the great promises of 3D printing is that it doesn't have a mold and doesn't require tooling. It exists in the digital realm before it becomes physical, and so customization is part and parcel of the process.
I would also add that people aren't necessarily looking for one-off furniture. Just because we can customize doesn't mean we're telling customers that once we've delivered a product, we break the digital mold, so to speak. We still feel that people like styles and trends created by designers, but the customization really allows enterprise clients—like businesses, retailers, and architects—to think more freely.
Customization is most useful in allowing people to "iterate" quickly. Our designers can do something digitally first without having to build a tool, which frees them to be more creative. Plus, because our material is fully recyclable, if we print something for the first time and find it doesn't work, we can just recycle it. So there's really no penalty for a failed first printing—in fact, those failures bring their own rewards in the form of lessons we can apply in future digital and physical iterations.
Q: You currently produce your furniture in an automated microfactory in Florida, with plans to set up several more. Could you talk a little about what your microfactory looks like and how you distribute the finished goods?
A: Our microfactory is a 30,000-square-foot box that mainly contains the robots that make our furniture along with shipping docks. But we don't intend for our microfactories to be storage warehouses and trans-shipment facilities like the kind you'd typically see in the furniture industry—all of the trappings of a global supply chain. Instead, a microfactory is meant to be a site where you print the product, put it on a dock, and then ship it out. So a microfactory is essentially an enabler of regional manufacturing and distribution.
Q: Do you manufacture your products on a print-to-order basis as opposed to a print-to-stock model?
A: No. We may someday get to the point where we receive an order digitally, print it, and then send it out on a truck the next day. But right now, we aren't set up to do a mini-delivery to one customer out of a microfactory.
We are an enterprise company that partners with architects, designers, builders, and retailers, who then distribute our furnishings to their customers. We are not trying to go direct-to-consumer at this stage. It's not the way a microfactory is set up to distribute goods.
Q: You've mentioned your company's use of recycled materials. Could you talk a little bit about other ways you're looking to reduce waste and help support a circular economy?
A: Yes. Sustainability and a circular economy are really something that you have to plan for. In our case, our plans call for moving toward a distributed digital manufacturing model, where we establish microfactories in various regions around the world to serve customers within a 10-hour driving radius of the factory. That is a pretty large area, so we could cover the United States with just four or five microfactories.
That also means that we can credibly build our recycling network as part of our microfactory setup. As I mentioned, we use recycled polymer stock in our production, so we're keeping that material out of a landfill. And then we tell our enterprise customers that while the furniture they're buying is extremely durable, when they're ready to run a special and offer customers a credit for turning in their used furniture, we'll buy back the material. Buying back that material actually reduces our costs because it's already been composited and created and recaptured. So our microfactory network is well designed for circularity in concert with our enterprise customers.
Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.
That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.
To solve those problems, chief supply chain officers (CSCOs) deploying GenAI need to shift from a sole focus on efficiency to a strategy that incorporates full organizational productivity. This strategy must better incorporate frontline workers, assuage growing employee anxieties from the use of GenAI tools, and focus on use-cases that promote creativity and innovation, rather than only on saving time.
"Early GenAI deployments within supply chain reveal a productivity paradox," Sam Berndt, Senior Director in Gartner’s Supply Chain practice, said in the report. "While its use has enhanced individual productivity for desk-based roles, these gains are not cascading through the rest of the function and are actually making the overall working environment worse for many employees. CSCOs need to retool their deployment strategies to address these negative outcomes.”
As part of the research, Gartner surveyed 265 global respondents in August 2024 to assess the impact of GenAI in supply chain organizations. In addition to the survey, Gartner conducted 75 qualitative interviews with supply chain leaders to gain deeper insights into the deployment and impact of GenAI on productivity, ROI, and employee experience, focusing on both desk-based and frontline workers.
Gartner’s data showed an increase in productivity from GenAI for desk-based workers, with GenAI tools saving 4.11 hours of time weekly for these employees. The time saved also correlated to increased output and higher quality work. However, these gains decreased when assessing team-level productivity. The amount of time saved declined to 1.5 hours per team member weekly, and there was no correlation to either improved output or higher quality of work.
Additional negative organizational impacts of GenAI deployments include:
Frontline workers have failed to make similar productivity gains as their desk-based counterparts, despite recording a similar amount of time savings from the use of GenAI tools.
Employees report higher levels of anxiety as they are exposed to a growing number of GenAI tools at work, with the average supply chain employee now utilizing 3.6 GenAI tools on average.
Higher anxiety among employees correlates to lower levels of overall productivity.
“In their pursuit of efficiency and time savings, CSCOs may be inadvertently creating a productivity ‘doom loop,’ whereby they continuously pilot new GenAI tools, increasing employee anxiety, which leads to lower levels of productivity,” said Berndt. “Rather than introducing even more GenAI tools into the work environment, CSCOs need to reexamine their overall strategy.”
According to Gartner, three ways to better boost organizational productivity through GenAI are: find creativity-based GenAI use cases to unlock benefits beyond mere time savings; train employees how to make use of the time they are saving from the use GenAI tools; and shift the focus from measuring automation to measuring innovation.
According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.
The two acquisitions follow Arvato’s purchase three months ago of ATC Computer Transport & Logistics, an Irish firm that specializes in high-security transport and technical services in the data center industry. Following the latest deals, Arvato will have a total U.S. network of 16 warehouses with about seven million square feet of space.
Terms of the deal were not disclosed.
Carbel is a Florida-based 3PL with a strong focus on fashion and retail. It offers custom warehousing, distribution, storage, and transportation services, operating out of six facilities in the U.S., with a footprint of 1.6 million square feet of warehouse space in Florida (2), Pennsylvania (2), California, and New York.
Florida-based United Customs Services offers import and export solutions, specializing in remote location filing across the U.S., customs clearance, and trade compliance. CTPAT-certified since 2007, United Customs Services says it is known for simplifying global trade processes that help streamline operations for clients in international markets.
“With deep expertise in retail and apparel logistics services, Carbel and United Customs Services are the perfect partners to strengthen our ability to provide even more tailored solutions to our clients. Our combined knowledge and our joint commitment to excellence will drive our growth within the US and open new opportunities,” Arvato CEO Frank Schirrmeister said in a release.
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.