What can renewable fuels learn from Amazon.com? Turns out, a lot.
By Bill Levy, CEO, Pacific Ag, special to The Digest
In a few days the US Department of Energy will convene the best and brightest in the biomass industry to Washington, D.C. to continue work on an update to its “Billion Ton Biomass” study to guide the feedstock supply to meet the goals outlined in the Renewable Fuel Standard.
The DOE is rightfully examining the sources of biomass to ensure that the supply can meet the demand. In parallel, scientists, researchers and entrepreneurs are developing incredible biotechnology to optimize the conversion of that biomass into valuable, low carbon fuels and other bio-products.
Amazon.com and industrial biotechnology
At Pacific Ag, we believe there’s a third leg to that stool that needs just as much attention – and that’s the supply chain logistics system. To understand our point, you need to look no further than one company – Amazon.com
That’s right – the US bioconversion industry can learn a lot from the Amazon story. Amazon has become the world’s largest retailer by winning at logistics. They simply found (and keep finding) ever more efficient ways to meet demand with supply. And that’s the name of the game in bioenergy.
Think of the parallels: the thousands of independent farmers and hundreds of large agribusinesses are not unlike the retailers with goods to sell. And the soon to be dozens if not hundreds of biorefineries are not unlike customers that need these goods. Along the way, a complex web of product availability (harvest), transportation & logistics (feedstock delivery), payment and credit (to both farmers and the system host) must be planned, integrated, managed, tracked and reconciled.
The US needs nothing other than an Amazon-like approach to building and managing a supply chain and logistics system to get the hundreds of millions of tons of biomass off the fields and into biorefineries in a cost effective and hyper-efficient system.
The DOE study outlines where the country can source the feedstock, from crop residue, to dedicated energy crops to waste forest biomass and other sources. The study shows that by 2030, there should be in excess of 1 billion tons of biomass sustainably available for conversion into biofuels and other bioproducts.
That’s great – but it invites an even bigger question: how do we get 1 billion tons of biomass to refineries?
To see what happens when capacity expands without significant planning, we need to look no farther than the impact that crude by rail has had on the overall system. In 2014, BNSF Railway ran out of locomotives and crews as a result of the spike in demand for oil shipments. The shortage resulted in delays up and down the food chain.
At the time, Steve Sharp, president of Consumers United for Rail Equity, a group representing agriculture companies, manufacturers and utilities suggested that the backlogs could wind up costing shippers hundreds of millions of dollars.
Today, the industry still struggles not only with logistics, but also safety concerns about the tanks carrying the oil. The biofuels/biomass industry can – and should – take a lesson from the crude oil industry and begin planning now.
At Pacific Ag, we’ve invested heavily in our own proprietary system, PowerStock Pro™, a turnkey tool for seamlessly integrating grower contracting and relationship management, innovative equipment operations, utilization, and logistics with inventory storage and management as well as a suite of reporting capabilities.
This system manages every aspect of the complex feedstock supply chain from grower contracts to GIS enabled field mapping to equipment deployment, harvest results and inventory management. The effect of PowerStock Pro™ is to eliminate most of the risk and variability in feedstock supply, quality and cost for commercial scale projects.
We don’t profess to be nearly as advanced as Amazon when it comes to supply chain management: in fact we believe the most valuable aspect of our approach is our ability to earn the trust and business of growers to source the feedstock in the first place.
But if, as a nation, we are to reach the goals set by the Renewable Fuel Standard through the harvesting, transport and processing of a billion tons of biomass, we’re going to need a concerted multi-industry and government approach to make sure we get it right.
What do you say Mr. Bezos?