3 Steps to Bring Sustainability to Your Supply Chain
According to PwC’s Global Supply Chain Survey 2013, more than two-thirds of supply chain executives said sustainability will play an increasing role in the supply chains of the future. It’s clear that growing consumer demand and increasing legislation have begun to shift the perception of sustainable supply chains from “nice to have” to “need to have.”
There is little doubt that production, transportation and even warehousing of goods are major impacts on an organization’s total carbon footprint. As a result, it is more important than ever for companies to evaluate their current supply chain practices, not only to identify ways to reduce environmental impact, but also to reduce costs through increased efficiencies.
One of the easiest ways a company can do this is by partnering with a third-party logistics provider (usually abbreviated as 3PL, but sometimes as TPL) that can offer expertise on making the entire supply chain more sustainable. The following are three steps companies can take with a 3PL to reduce the environmental impact of their supply chain, ultimately saving them time and money.
1. Measure footprint
One of the main ways logistics partners can help companies to improve the environmental sustainability of their supply chains is by first measuring and assessing current operations. By gaining an understanding of the impact of the current supply chain through the use of tools, such as a carbon footprint analysis, companies will be in a better place to later manage a more efficient supply chain.
An experienced 3PL can work with customers to develop a credible carbon impact analysis, such as one that follows the Greenhouse Gas Protocol. The result of a decade-long partnership between the World Resources Institute and the World Business Council for Sustainable Development, the GHG Protocol is the most widely recognized international tool that helps to identify, measure and manage greenhouse gas emissions. The process sheds some light on a company’s carbon impact, which can help companies to properly report and thus meet regulations on greenhouse gas emissions. Additionally, verification and certification of the analysis by credible third parties provides confidence that numbers provided by carriers are credible.
A 3PL experienced with this tool can help companies through the process more easily and develop insightful recommendations on how to best redesign, reengineer and optimize current processes to create a more sustainable supply chain.
2. Manage operations
Another way 3PLs can help companies to create a more sustainable supply chain is by helping to manage their current supply chain through the implementation of optimization measures. From transportation design to organization and execution, a 3PL can help companies optimize their existing transportation and packaging operations.
Strategies for removing unnecessary legs of transportation could include shifting transportation modes, relocating inventory to optimal locations based on the customer’s requirements or business needs, or co-locating value-adding logistics services (such as kitting and packaging or repair services) in a single location.
When it comes to managing packaging operations, 3PLs can help customers to reduce wasteful shipping materials by providing guidance on package function and design. This can include identifying the most efficient packaging design and materials, or incorporating the use of packaging materials made from recyclable or sustainably sourced materials.
Managing efficiently also means managing warehouses and distribution centers in a more sustainable manner. Energy-efficient warehouse and office lighting, LED technology, warehouse and office occupancy sensors, recycling programs and green space are all elements of sustainable warehousing.
3. Mitigate impact
Finally, 3PLs can help their customers to mitigate their environmental impact in a number of ways beyond measurement and supply chain organization and management. With access to a broad range of technologies as well as transportation and warehousing solutions, some 3PLs can assist customers in implementing sustainable supply chain strategies. This includes access to transportation methods that are less carbon-intensive (such as rail or oceanmodes) or partnering with transportation providers or carriers investing in hybrid or natural gas vehicles within their ground fleets.
From a technology standpoint, 3PLs can work with their customer to incorporate paperless solutions for commercial invoices and billing, as well as customs documents, to reduce overall paper consumption.
One area where a 3PL can make a particularly large impact on supply chain sustainability is by helping customers to set up efficient reverse logistics operations. By implementing processes for recycling, refurbishment or end-of-product life disposal, companies can make a significant reduction in their total carbon footprint. 3PLs that can offer these services at a centralized warehousing or distribution point can make an even bigger impact by reducing the miles traveled at the end of the product lifecycle.
After implementing these efficiencies, companies still will be responsible for some level of carbon impact. Organizations looking to reduce their impact further can work with carriers that offer customers the ability to offset the impact of their shipments by investing in environmental projects.
The value of the right partner
While the idea of creating a more sustainable supply chain may seem overwhelming for some companies, having a knowledgeable and experienced logistics partner to help with the process can make it manageable for nearly any company. To identify a 3PL best-positioned to assist in this area, companies should consider partners whose sustainability practices they look to emulate. They should ask the following questions:
Does the company value sustainability and in turn practice what it preaches? Does it issue an annual company sustainability report? Is it transparent in its sustainability efforts? Will its network and assets provide opportunities for my company to create a more efficient and sustainable supply chain? Does it have access to cutting-edge technologies and tools? Does it have a proven track record when it comes to assisting customers?
Asking these questions and taking the preceding steps with a logistics partner not only will help to ensure your supply chain is meeting the growing demand for increased environmental sustainability, but help to reduce costs and most important — reduce the impact of business on our planet, preserving it for future generations.
Alan is responsible for establishing a global product strategy and drive improvements to profitability and customer value in two key contract logistics businesses: 1) Post Sales services including Critical Order Fulfillment (e.g. service parts), Returns and Technical Services (e.g. diagnostic, repair, 3rd party vendor management, etc.) and 2) Distribution Services integrated with transportation in strategic locations around the globe to support our customers’ manufacturing and Finished Goods Distribution needs.