By Nick Fryer, Vice President of Marketing, Sheer Logistics
Shipping is a major source of greenhouse gas (GHG) emissions, and while it may be a vital practice for our interconnected planet, it also takes a negative toll on our environment and ecosystems. More businesses are implementing planet-positive solutions to reduce waste and combat climate change. Will yours be one of them? It may seem challenging, but with green logistics practices, you could operate more sustainably and improve your supply chain efficiency.
It turns out that being sustainable and being more strategic often go hand-in-hand. In shipping, this is largely attributed to the fact that sustainable practices revolve around optimization, space-saving techniques, and streamlining existing procedures.
In this guide, we explore how green logistics practices can make supply chains more efficient through operational improvements.
What Are Green Logistics Practices?
Green logistics, or sustainable logistics, is a business mindset that aims to reduce waste as much as possible across the supply chain.
Green logistics practices include internal and external operational techniques that help a company be more mindful about the lifecycle of its products and conscious of its environmental impact.
Green logistics practices include:
- Planet-conscious, cost-effective solutions that deliver a higher ROI over time, giving your business the financial perks of being eco-friendly while contributing to a greener Earth.
- Eco-optimization techniques like utilizing recycled and recyclable materials, hybrid or electric vehicles, and strategic inventory positioning to reduce transportation times and carbon emissions.
- Route planning software that helps organizations deliver shipments faster, lowering their fuel consumption and reducing vehicle emissions.
- Efficient cargo loading to reduce the number of trips required to make deliveries.
Improving supply chain sustainability is an ongoing process. Companies will each have their own key areas for improvement, and they will likely change their approach multiple times before arriving at a solution that delivers the desired results.
The good news is that green logistics practices are always improving, giving managers new opportunities to make their supply chains more efficient and eco-friendly.
How to Identify Green Logistics Opportunities
Every company can perform an environmental logistics assessment to determine how their current workflows are impacting the planet. Key metrics to evaluate include fuel consumption, fuel costs, emissions, recyclability of packaging materials, and current recycling or waste-reduction practices.
By identifying the smallest area for change first, companies can start with simple adjustments, then build up to larger, more strategic changes. For example, digitizing paper documents whenever possible can largely reduce how much waste the company produces and how much it spends on paper annually.
Consider speaking with suppliers and carriers about their green practices as well. Often, their existing policies can help your organization identify opportunities for change.
How to Implement Eco-Friendly Transportation Solutions
There are several areas companies can focus on to improve their supply chain sustainability:
Enhance Shipping Practices
Shipping typically has the highest environmental impact due to the heavy consumption of fuel. Shippers can utilize a variety of optimization and consolidation strategies to reduce fuel consumption and GHG emissions. Route optimization ensures direct and multi-stop shipments follow the most efficient, environmentally-friendly route. Mode optimization ensures the right vehicle is used to transport every shipment by matching the shipment to the vehicle based on shipment size, vehicle capacity and fuel efficiency. Shipment consolidation combines two more shipments into a single shipment, reducing the number of miles driven, fuel consumption, and GHG emissions.
Another effective way to make shipping more green is to consider packaging materials. By switching to recycled or biodegradable packing materials, companies can lower pollution without compromising quality or security.
You can also show customers a green option, allowing them to receive their package a few days later to prioritize the environment. While this may not work in every industry, it can be a highly effective way to improve sustainability while lowering fuel costs.
Explore Reverse Logistics
Focusing on the return of items helps businesses reduce waste on products traveling backwards through their supply chain. A 2018 research study of reverse logistics in the Fast Moving Consumer Goods industry found that several aspects of the practice can positively impact sustainability and social performance.
With e-commerce returns alone generating over 15 million metric tons of carbon emissions each year, it’s vital that companies consider the entire lifecycle of their products. Consider how much your own industry produces and how reducing trips or streamlining returns could lower your carbon footprint.
Consider Blockchain Technology
Creating a blockchain ecosystem allows for greater transparency by making shipments completely traceable. Every supply chain partner that joins the blockchain network can see the other’s actions.
The Institute of Sustainable Supply Chain Studies explains that blockchain technology can improve supply chain visibility, which in turn holds partners to higher standards and prevents illegal or harmful business practices that could harm the environment.
Furthermore, having blockchain technology gives companies the ability to collaborate with their partners better and improve operational efficiency.
Risk Assessment — What Are the Costs of Going Green?
The greatest risk a company faces in green logistics is supply chain disruption. Without planning ahead, their newly implemented practices could ultimately make it more difficult for shipments to reach their final destination, or cost the company significant expenses in investments without any measurable ROI.
Any organization that wants to become more sustainable has to first consider where it can do so without negatively affecting its productivity. This requires aligning directives with executives and shareholders to ensure that any green practices your company adopts suit your current resources and objectives.
Upfront costs of more eco-friendly technology or materials can beexpensive; and you may lose revenue as you dispose or phase out old materials or methods that no longer suit the company’s eco-friendly focus.
Having clear standards, goals, and KPIs in place will help your organization minimize losses as it works toward a more sustainable, efficient supply chain.
