A modern distribution system has to satisfy multiple requirements. First, it must ensure that products are available for customers throughout the year in sufficient quantities. It must also be able to meet the short lead times required by retailers and maintain a high level of delivery service. As part of our “Optimization of Transport and Warehouses” (OTTAWA) project, we are continuing to improve the efficiency of our logistics concepts in Europe and throughout the Company as a whole. We aim to reduce the complexity in the transportation and storage of Henkel’s finished products, to ensure that they always reach the customer by the most efficient route. Centrally coordinated purchasing of logistics services, as well as the greatest possible consolidation of laundry detergent and cosmetics warehouses should help to achieve synergistic effects. For example, the reorganization and relocation of our Turkish detergent production site from Izmir to Ankara will enable us to reduce the mileage for deliveries to our customers by 1,360,000 kilometers. This is equivalent to about 445,000 liters of diesel fuel per year.

In 2007, we were already able to achieve significant synergistic effects. For example, we have concentrated the warehousing operations in Germany for our Laundry & Home Care business sector in six large regional warehouses, and aim to reduce this number still further to just three warehouses by 2009. We supply the warehouses mainly by rail. We also increased shipments of raw materials by rail from our Düsseldorf site to the production facility in Genthin by 15 percent in comparison with 2006. Furthermore, we have switched the transport of laundry detergent exports from Düsseldorf to Sweden from road to rail. Currently, the greater part of the freight-car loads of exports go to Switzerland, then by combined road and rail transport to Italy. A new central warehouse at the Vienna production site now supplies our customers in Austria, the Czech Republic, Slovenia and Slovakia. In 2007, the centralized shipping of our laundry detergents, household cleaners and cosmetics reduced transport mileage by 200,000 kilometers. This corresponds to 70,000 liters of diesel fuel per year.

Intelligent transport functions best in networks, with partners. We therefore prefer to work with transport companies that already cooperate with other transport companies. We also make use of opportunities to transport our products together with those of providers of similar products, as the consignees are often identical. In Germany, for example, we arrange the distribution of our cosmetic products in cooperation with other leading manufacturers of consumer goods.

In France, too, we have consolidated our retail distribution logistics with those of two other manufacturers of consumer goods. As a result, truck capacity utilization is now 100 percent rather than the former 75 percent. The number of trucks needed and the number of transport kilometers traveled will fall by 20 percent as a result.

Throughout Europe, we fill several hundred million PET, PE and PD bottles with liquid laundry detergents and household cleaners each year. PET, for example is a versatile, easily formable, unbreakable plastic, which can be recycled after use. To avoid long transports with consignments of empty plastic bottles for filling, many of the bottles required are manufactured locally – usually by specialized suppliers located close to our production sites. Because production is carried out locally, only the raw material has to be delivered, which can be up to twenty times more compact than the finished bottles. Overall, this saves 37,000 truck transport trips throughout Europe, thus avoiding some 13,500 metric tons of carbon dioxide emissions.

Through organic growth and acquisitions, the production structures of the Consumer and Craftsmen Adhesives business sector in Europe became highly complex. In the past, the emphasis has been on measures aimed at improving the efficiency of the individual sites rather than that of the system as a whole. We have now analyzed the production of sealants and assembly adhesives throughout Europe with the aim of reducing complexity in purchasing, production and distribution. With the help of a computer-aided simulation program, we have optimized the entire system of suppliers, products, packaging, production sites, warehousing and logistics – for example, by harmonizing products and formulations. The sites now form a production network. By organizing the production sites into competence centers, we have significantly increased our competitiveness on the basis of market proximity, know-how, and product groups.

In Hannover, for example, we produce joint sealants. We now transport these jointing compounds in tank trucks instead of disposable steel drums.  This saves us about 160,000 euros in raw material costs each year. Furthermore, less waste is generated, and cleaning costs are lower.

Liquid laundry detergents and household cleaners are popular with European consumers. Henkel fills several hundred million plastic bottles each year throughout Europe. A large proportion of these plastic bottles are manufactured right at Henkel production sites - usually by a specialized supplier. This simplifies production logistics and avoids unnecessary transportation. Instead of empty bottles - containing a lot of air - only the raw material, 20 times more compact, is delivered. The significance of on-site production is illustrated by two current projects in Genthin, Germany, and Nemours, France. Around 3,000 truck transports annually will be eliminated at the Nemours site. With a distance of 250 kilometers per trip, this means savings of almost 500,000 liters of diesel fuel. For the detergent plant in Genthin, the equivalent figures are almost 250,000 liters and 3,600 truck transports. In addition, fewer trips means less road congestion, much reduced exhaust fumes, and cost cuts for Henkel and its packaging supplier.

Henkel Technologies produces industrial adhesives, predominantly water-based, at its site in Châlons-en-Champagne. For delivery to customers, some 8,200 standardized 1,000-liter containers used to be needed each year. In 2004, a project aimed at optimizing the site’s logistics was launched. For customers for whom this was technically possible, the amount of adhesive in each container was increased by 10 percent. In fact, acting upon Henkel’s advice, some customers decided to dispense with containers completely and switch to delivery by tank truck. A total of 500 containers fewer are now needed, thus saving about 20 metric tons of plastic and 10 tons of metal each year. Optimization of handling, warehousing and transport logistics has resulted in overall savings of approximately 60,000 euros annually. In May 2005, the French Ministry of the Environment recognized Châlons with the “Label de la Semaine du Développement Durable” [Sustainability week award].

"Ecological? It’s only logical!" As long ago as 1994, under this slogan, Henkel introduced a new distribution concept for laundry detergents and household cleaners in Germany. Since that time, a large proportion of long-distance freight has been shipped from the Düsseldorf and Genthin sites by rail and transported to eight regional warehouses. Each year, around 220,000 metric tons of laundry detergents and household cleaners are thus carried by rail instead of road. Only half as much energy is needed to ship them and emissions to the air and noise nuisance have been clearly decreased. Henkel also profits from this logistics concept. Thanks to the optimal utilization of transport capacity, favorable rail transport prices, and improved loading conditions, the Company saves about one million euros each year.