Cummins Establishes New Sustainability Goals

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Cummins Establishes New Sustainability

Cummins believes its new Southern Indiana Logistics Center will help make its supply chain more efficient.

Cummins is establishing new goals to address two of the Company’s biggest environmental opportunities, improved efficiency of our products in use and more efficient logistics within Cummins’ own operations.

The new goals are in addition to the goals the Company set publicly for waste, water and energy in 2014. Cummins’ Action Committee for Environmental Sustainability (ACES) has been working on the new goals for the past year, which are timed to 2020.

Here’s a look at the new goals:

PRODUCTS IN USE GOAL

Partner with customers to improve the efficiency of our products in use, reaching by 2020 an annual reduction of 3.5 million metric tons (MMT) of carbon dioxide (CO2), saving 350 million gallons of fuel.

Cummins’ engines in use represent about 99 percent of our CO2 footprint.

The Company has done more than 100 fuel economy projects with Cummins customers using Six Sigma tools since 2004. Those projects saved customers more than 100 million gallons of fuel and prevented the release of more than one million tons of CO2, the primary greenhouse gas emitted through human activity.

The projects included optimizing vehicle specifications and engine operating parameters, fleet and driver training and advanced engine integration with the vehicle. Doing fuel efficiency projects with customers not only can save them money while reducing greenhouse gases (GHGs), it is consistent with the Company’s pledges of dependability and customer support.

Cummins new goal presents an opportunity for the Company’s products in-use team to do its work faster and expand beyond current initiatives. Cummins made significant progress on products in use in 2014, completing initiatives that reduced nearly 700,000 metric tons of CO2.

The products-in-use team has worked to identify opportunities and accelerate fuel efficiency improvement efforts with a project list numbering close to 200 from 2014 to 2020. In the past year, the team also trained more than 450 people to work on fuel efficiency improvements globally.

LOGISTICS GOAL

Use the most efficient method and mode to move goods across the Cummins network to reduce CO2 per kilogram of goods moved by 10 percent by 2020.

Transportation is a key element of the logistics process that impacts the supply chain from suppliers to our customers. Transforming how Cummins moves raw materials and finished goods across the supply chain is at the core of the Company’s transportation, logistics and warehouse strategy as well as an important priority area for our global environmental sustainability plan.

Cummins spends close to $442 million in transporting goods across the Company’s network. In 2014, Cummins adopted a transportation network optimization initiative to get the most out of its transportation efforts as part of the Company’s larger supply chain transformation.

Cummins is now using a global transportation management system to improve the speed and visibility of goods moved and provide better analytics to manage the process. The main focus of the Company’s goal is shipments from suppliers to Cummins facilities and shipments between Cummins’ own facilities, as our own business units supply each other.

The transportation management system will help Cummins reduce the total number of miles goods travel by combining shipments of different products going to common locations. The Company will also be able to reduce the number of less-than-full truckload shipments.

The system will help Cummins’ logistics team choose the most efficient way – whether by road, rail or sea – to ship material. As a result, the Company expects to save $40 million to $64 million annually. Cummins is taking a phased-in implementation approach, which began as a pilot in North America in 2014 followed by a European launch in January 2015, with India integration occurring in the third quarter of 2015.

Working with carriers in India, Brazil and Asia-Pacific is a priority because those are regions where the Company can achieve the biggest CO2 reductions.

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