Near and far, logistics providers and shippers are renewing their focus on sustainability to build the manufacturing giants of tomorrow. As explained by Bob Trebilcock, sustainability in logistics initiatives are ranked as “very important” for up to 40.6 percent of supply chain organization. Furthermore, most supply chain entities, approximately 64.2 percent, report having implemented sustainable solutions within the last two years. As the push towards sustainability in logistics continues, those involved in modern manufacturing and shipping, especially shippers, must understand why this trend is taking place, its potential costs, obstacles, and benefits, and what it means for the future of manufacturing and logistics.
How Important Is Sustainability in Logistics?
Some argue sustainability initiatives are solely the result of increasing government regulations, but Modern Materials Handling Staff reports another cause, consumers. In fact, consumers are willing to pay an additional 5 percent for a product that is being processed by shippers that have implemented sustainability in logistics measures. Furthermore, 76 percent of consumers are willing to wait an extra day for climate-friendly transport options. Essentially, sustainability in logistics is important to government, supply chains, consumers, and any other party involved in the process. As a result, shippers and logistics service providers cannot forgo implementing and hastening the development of Sustainable Solutions.
What Is Needed For Sustainability in Logistics?
Sustainability comes with many requirements, but transparency and integrity are fundamental building blocks in achieving sustainability in logistics, explains Logistics Management. Essentially, an organization cannot gain the trust of the entire supply chain network and its consumers if the organization fails to reveal all processes within the manufacturing and transportation network. In other words, sustainability measures are only as good as the information about the respective companies’ work with sustainability. Furthermore, these companies must have a high level of integrity. If a company withholds information or changes the truthfulness of such information, the entire process breaks down.
Is Sustainability in Logistics Cost-Effective?
The largest arguments against sustainability in logistics rest on its cost-effectiveness. A recent SCMR editorial identified how three, large-scale organizations, including governmental organizations, were able to demonstrate the cost-effective nature of sustainable measures.
In France, officials in the Ministry of Education implemented a program to reclaim used toner cartridges, which were then refilled and reused within the educational system. While the initial change seemed minimal, the ministry lowered their Purchase cost of remanufactured toner cartridges by up to 40 percent, with reverse logistics aiding in sustainability measures.
In another example, Hong Kong began switching conventional traffic lighting to more energy efficient LED traffic lighting. As a result, Hong Kong was able to save $48, 500 annually of electric costs for operating traffic lighting.
On a larger scale, Bayer managed to improve sustainability measures by creating a supplier code of conduct, which included specific environmental categories of monitoring. In fact, this simple reporting resulted in a 7 percent decrease in the use of water resources by Bayer in 2012. By 2014, the decrease had risen to 15 percent.
The key to each of these examples rests on the fact that companies were able to remain profitable, disproving misconceptions about the cost-effectiveness of sustainability in logistics.
What Are the Obstacles to Sustainability in Logistics?
As explained in the aforementioned examples, money is one of the most common perceived obstacles to sustainability. Although sustainability measures require an initial investment, the long-term savings could easily outweigh the costs. Of course, other obstacles will continue to exist. These obstacles include the following:
- Packaging – In recent years, shippers have strayed from the use of foam as a shipping protector, but these companies and organizations have turned towards plastic air pillows, asserts Josh Bond, and this change towards sustainability for protective packaging is expected to grow by 5 percent annually until 2019.
- Capacity – An organization’s capacity is one of the biggest obstacles to sustainability in logistics, but it is not an impossible feat. Rather than decrease the capacity of existing fleets, shippers and logistics providers must work to ensure all current capacities are operating at a 100-percent efficiency. For example, the use of transportation consolidation programs can help an organization take advantage of capacity limitations to reduce emissions and move towards a more sustainable future.
- Reluctance to change – Shippers have grown accustomed to how things are done in the modern world. Unfortunately, this has led to a reluctance to change current processes, which have shown to be profitable, in favor of sustainable ventures. Yes, Society is becoming more aware of the environment and energy consumption. LShippers do not have a decision but a duty to embrace change.
The rise of the Internet has caught the attention of millions, and logistics providers and shippers are caught in the cross-hairs of an awareness of global crises for the environment and energy consumption. By understanding how sustainability in logistics measures impact production and benefit such companies, shippers can work towards a better, sustainable tomorrow.