Businesses that are able to cut back on transport usage – for instance by conducting more meetings virtually instead of in-person or localising supply chains – are presented an attractive opportunity to reduce greenhouse gas (GHG) emissions. But for companies in the distribution business, a more complex approach is needed.
Zuellig Pharma is a healthcare services business based in Asia with operations spanning across many areas including pharmaceutical distribution, vaccination programmes, data analytics, commercialisation on specialised therapeutic areas, payor services and clinical trials.
Logistics accounts for around 40% of Zuellig Pharma’s total expenditure, including the maintenance of its own transport fleet and relations with more than 300 suppliers, many of which are small, family-owned operations. Reducing its carbon footprint in this area was a particular priority as many of its vehicles are temperature controlled, meaning every mile on the road generates even more emissions than a conventional vehicle would.
Recognising an opportunity to substantially reduce emissions, the company has implemented two important initiatives; one focusing on optimising routes to minimise unnecessary mileage and another involving converting refrigeration units in some vehicles to be solar powered so as to reduce fossil fuel consumption.
Zuellig Pharma’s approach to reducing emissions has centered on two close partnerships with external organisations:
- Transport Management System (TMS): Zuellig Pharma worked with a Singapore-based start-up that specialises in logistics tracking and analytics to create a TMS which was tailored to the specific demands of pharmaceutical distribution. This allowed it to optimise the routes taken by its delivery drivers, reducing overall mileage and idling time which consequently helped to cut emissions.
- Solar Powered Vehicles: Zuellig Pharma partnered with a logistics company from Malaysia to pilot the use of solar panels to power its refrigeration units in delivery vehicles. This reduced the consumption of diesel on each trip.
Building and implementing the TMS
How the TMS works
The TMS provides full visibility of Zuellig Pharma’s distribution network in the countries where it has been implemented, tracking product deliveries in real time. Since 2020 it has been able to analyse this tracking data with proprietary algorithms that could identify optimal truck loads and routes to match up with the company’s 200,000 customers, clinics, and hospitals, ensuring that products are delivered on time in the most efficient manner possible.
This has allowed Zuellig Pharma to minimise the number of trucks in its fleet and thereby reducing emissions for truck maintenance, as well as reducing fuel consumption due to the smaller number of overall delivery routes. As our deliveries involve pharma products that need to be handled with care, the TMS underwent multiple system validations for data accuracy and consistency between Zuellig Pharma and the supplier.
The TMS has been able to standardise and reduce unnecessary routing and allows Zuellig Pharma to plan in the most economical and ecological way. In some markets such as Vietnam, location data are not always accurate, and drivers can waste fuel traveling to the wrong delivery locations. The TMS system has helped to reduce such waste of resources and as a result, emissions, by ensuring more precise GPS location data are provided.
How the tool was built and deployed
Zuellig Pharma’s operations team met with software developers to map its existing physical distribution process to their suppliers’ digital platforms.
After creating a preliminary solution with the most important features, the solution was rolled out to collect data and pilot the system before further development. Today, the system has developed optimisation tools tailored to Zuellig Pharma’s markets.
Today, Zuellig Pharma has successfully implemented the TMS in key markets including Singapore, Malaysia, Vietnam, Thailand, Indonesia, Hong Kong, Korea and the Philippines. Zuellig Pharma’s presence in many markets makes its operations highly complex as each country has different infrastructure levels and local regulations, as compared to the largely homogenous systems across Europe and the US.
Data generated from TMS is then used to build control towers in the countries, which allows the company to react quickly as the COVID-19 pandemic rapidly changed the market landscape.
To monitor the effectiveness of the rollout, Zuellig Pharma tracks a number of key metrics, including the daily average number of trucks used, the number of parcels delivered per truck and the unit price of parcel deliveries. To gain a better understanding of its impact on emissions, it also plans to track the number of parcels delivered per mile and the number of parcels delivered per litre of fuel. For example, in Malaysia, we have seen an 8% improvement in reducing routes and emissions.
Switching to solar power
With many of its products needing to be kept at a cool temperature, Zuellig Pharma uses refrigerated trucks which are powered by the same internal combustion engine that drives the vehicle’s propulsion.
While solar panels may not be seen as a realistic method of powering an entire vehicle, the abundance of sunlight in parts of Asia, like Malaysia, provides an opportunity to harness this method to power the cooling units of delivery trucks used by Zuellig Pharma.
Zuellig Pharma has a longstanding relationship with Malaysia’s largest logistics company and joined forces to pilot this technology. The trucks are topped with three to four photovoltaic cells that harvest solar energy that feeds into a 1,000w battery pack capable of powering the compression system when the engine is turned off – substantially reducing their carbon footprint.
The system had to be validated multiple times by Zuellig Pharma’s quality and operations team to ensure it is sustainable for our business in the long run and meets the strict pharma temperature requirements to safeguard product integrity.
Drivers were provided training to ensure they understand how to operate the new system and their feedback is regularly sought to inform the continual development of the system.
Both the TMS and the solar-powered trucks have contributed substantially to reducing Zuellig Pharma’s emissions, along with several other benefits. Specific results have included:
- From the Transport Management System:
- 20% reduction in emissions from Zuellig Pharma’s distribution operation in the Philippines
- Improved customer service, with customers receiving updates from the system automatically rather than having to phone the drivers themselves
- Improved driver experience, with tablet access to delivery schedules and routes
- Significant reduction of trucks needed, and fuel spend
- Greater ability to manage shifts to improve the work life balance of drivers
- From the solar powered trucks:
- Improved fuel efficiency by up to 22%
- Reduced noise pollution by switching to electrical-powered cooling
- Cooling systems can continue to operate when engines fail, reducing product spoilage
- Two trucks in Malaysia have already been successfully converted to solar powered trucks since October 2020, saving 7,155kg of Co2 emission to date
Zuellig Pharma is continuously looking for a new and innovative way to improve the sustainability of its fleet and reduce its ecological footprint. Initiatives in progress include:
- Exploring the adoption of more efficient electric vehicles for last mile deliveries.
- Discussions with companies using clean technologies to recycle batteries once their lifetime is up to improve the overall impact on potential electrical suspension vehicles.
- Using vacuum insulated vans, which reduces fuel consumption by around 20% as the first commercial use of this recyclable technology globally.
- Installation of advanced driver assistance system in Zuellig Pharma’s transport vehicles to help drivers improve their driving methods to reduce emissions – such as avoiding excessive brake usage.