Green Logistics for Greener Supply Chain Management
September 09, 2022
Environmental issues are no longer distant predictions and forecasts - they're our everyday reality. The environmental impact of every industry is in the public eye but logistics and transportation companies are under scrutiny more than the rest.
Company management and customers alike are aware of things like carbon footprint, sustainable packaging, and biofuel.
The result is that worldwide, logistics activities as such and shipments in particular are getting eco-friendlier. Alternative fuel, electric trucks, eco-packaging, and many other sustainable practices are being embraced by the logistics industry more and more.
In this blog post, we dive into green logistics and environmentally-friendly distribution and supply chain management for the global good.
Read on: Carbon-neutral shipping.
What is green logistics?
First and foremost, let's define the term green logistics.
Green logistics refers to systems and practices implemented in the transportation and logistics industry to promote sustainability, reduce carbon emissions, and come up with environmentally-friendly solutions to industry challenges.
Green logistics can be applied to all types of processes. Inbound and outbound logistics, reverse logistics for returns and recycling, and many other business operations. The important thing is that green logistics serves the environment instead of working against it.
In order to be sustainable not only for the environment but also for the companies making the environmental transition, eco logistics still needs to make sense costs-wise.
Logistics companies that put environmental issues at the heart of all related processes need to make sure they do so at reasonable costs if they want to stay on the market.
Still, the global trend in the logistics sector is a consciousness of energy consumption, packaging, air quality, and the overall impact of business activities on the environment.
In addition to that, logistics costs are always looked at in the context of a greater environment, i.e. supply chains. Let's take a closer look.
What is a green supply chain?
Green logistics strategies work as part of a larger supply chain. In turn, supply chain management needs to be sustainable in addition to efficient in terms of costs.
Let's look at what constitutes a greener supply chain: what kind of practices need to be in place and what kind of technology helps to make the transfer.
Green sourcing in the context of greener supply chains means that raw materials sourced for manufacturing and production are obtained from environmentally-friendly sources and with minimum energy consumption and waste.
Green sourcing is also such that has the smallest environmental impact, e.g. entails no greenhouse gas emissions and uses renewable energy.
Eco sourcing is crucial for green production and distribution - that is why it's a major point in building a green business.
In the context of logistics, green sourcing is local sourcing as it requires the least complex transportation. Local sourcing and local distribution are both trends of the post-pandemic economy. Businesses impacted by broken supply chains favor stability and low risks over cheaper suppliers from overseas.
Green design aka sustainable design is an approach to designing products that produce less waste without sacrificing efficiency. Sustainable design also serves the purpose of supporting consumers' well-being and benefits public health as such.
Green design can refer to the production and development of physical consumer goods, packaging, buildings, and related infrastructure, or services such as deliveries.
Green production is the type of production that uses minimum energy and produces minimum to zero emissions. This means using EV routing, renewable energy, and local economic resources as much as possible.
Green production relies on infrastructure and technology that help reduce the carbon footprint of production and support green supply chain systems and strategies.
Green warehousing, as the name suggests, is a type of inventory and storage that relies on using sustainable urban warehouses. This, in turn, means that warehouses produce minimum emissions, use transport with minimum environmental impact, and handle eco packaging.
Micro warehousing and micro fulfillment can be sustainable because of strategic placement close to the final consumer.
Companies that create warehouses around sustainability are also future-proofing their entire production and distribution processes, as they are ahead of their sector when green practices become mandatory.
Green distribution is the basis for green logistics as it maps out the distribution environment and all major processes. In order to create and measure a sustainable distribution strategy, companies need to pay extra attention to supplier management to reduce the risk of environmental damage from outside the company.
We've spoken about local distribution earlier in this guide. In addition to minimized transportation, local distribution offers more transparency and accountability. Local suppliers need to cultivate loyalty with manufacturers and will uphold the highest standards of compliance.
Distribution guided by sustainability is key to logistics optimization with a focus on greener strategies.
Because freight logistics produces the biggest carbon footprint, it should be avoided as much as possible.
Green shipments refer to how companies build systems of deliveries that are efficient, meaning shipping costs remain low, and sustainable, meaning producing minimum waste and using minimum resources.
To improve logistics efficiency, freight and delivery companies use route planning and route optimization systems. Route planners help keep delivery costs low while also minimizing fuel consumption, optimizing load, and keeping customers in control with features like track and trace.
Last-mile delivery solutions like Track-POD offer full-spectrum solutions to logistics challenges, including reverse logistics.
A major part of sustainable logistics and supply chains is reverse logistics, i.e. returns for the sake of recycling or repairs. A robust reverse logistics strategy is what helps companies process returns and support the recycling of products to reduce waste and promote sustainability.
It's important that reverse logistics solutions are built around the customer as the customer is also a point of contact in the supply chain. Customers need transparent and efficient processes in place to take part in waste reduction strategies.
Green logistics strategies for greener transportation
Now that you have a general idea of what green logistics is, let's explore the transportation strategies that promote sustainability and minimize the environmental impact of transport by reducing overall emissions and waste.
Prescheduled deliveries - as opposed to on-demand deliveries - is an example of how timely planning can reduce greenhouse gas emissions in logistics.
When you plan shipments in advance, you create more efficient routes by combining local dropoff/pickup points for maximum efficiency.
Prescheduled deliveries contribute to more efficient use of your transport and help you be in control of your operations' environmental impact. To plan multi-drop routes and minimize cost per delivery, logistics managers use route planning software.
Read on: Uber Eats lesson for food delivery businesses [prescheduled delivery].
Route planning for multiple deliveries in advance is not the only thing you can do to reduce overall waste and use your transport resources efficiently.
Fleet management at large and fuel management in particular is used by logistics and freight operations to reduce fuel costs or move to biofuel altogether.
Fleet management extends to load checks, fleet optimization depending on the vehicle capacity, as well as safety checks, i.e. proactive vehicle maintenance, to make sure you promote safety for your drivers and customers.
Live tracking & notifications
Live tracking and notifications for the customer is an example of a customer-centric industry standard that comes with many benefits. On the one hand, you cut your customer support costs by automating the process of providing shipping updates.
On the other hand, by sharing with your customers a live tracking link and an ETA, you up your rate of successful deliveries by making sure the customers will be home for their delivery.
In addition to cost-curring benefits for the company, you get environmental benefits as your drivers don't need to make multiple trips to the same delivery point twice.
The logistics industry is going paperless. And there's a good reason for that. Companies that care about their environmental impact and efficiency have long been digitalizing their business processes, and that extends to logistics and freight documentation.
Back in the day, Proof of Delivery used to be a paper document that the customer needed to sign for the business to be considered concluded. Now, any logistics business can move to paperless and contactless delivery with electronic signatures and photo proof.
Build your green logistics strategy with Track-POD
Track-POD is a transportation management system (TMS) that supports green logistics processes with technological backup. From instant routing and route optimization for different vehicle types, including cargo bikes and electric cars, to paperless Proof of Delivery - Track-POD will be the backbone of your green logistics process.
If you're ready to reduce your company's environmental impact and dominate the market by going with sustainable logistical solutions, book a free demo and let's talk eco logistics.