22 Apr 2020 Operations in the era of sustainable logistics
Sustainable development is a typical concept that has redefined business priorities. This subject is notably fueled by the growing social movement of consumers. In this perspective, many business leaders become attentive to directing their governance towards green practices and involve in their decisions the operational directions of organizations. This is the case for the logistics departments, all designated to be part of activities with high potential for sustainable development.
It would therefore be enough to decide, plan and implement actions in a supply chain by meeting criteria of sustainable development to tend towards a better use of its resources. Therefore, it is essential to define sustainable development in the context of your business before setting an action plan.
The concept of circular economy
When we think of the circular economy, we think of Reduce, Reuse, Recycle commonly known as the 3 R. From this principle arise three main objectives:
- Review the process to reduce the consumption of raw material
- Reuse materials
- Reengineering products to increase their lifespan
These goals help reduce upstream resource extraction and discard products downstream. This logic can therefore be applied to all logistics functions in order to align operational decisions with sustainable strategic objectives.
Procurement & Sourcing
In terms of purchases, it is important to question the origin of the products purchased. Both environmental and social aspects are important to consider during this process. Where does the product come from? Was it made responsibly? Does it come from an ethical production environment? Would we have been able to source this same product locally? These are all questions that can guide strategic decision making when it comes to sourcing the business.
The warehouse and its operations
The concept of green warehouse is becoming more and more known in the world of logistics. Whether through LEED construction, today’s warehouse is increasingly conforming to the social movement for sustainable development. Likewise, warehouse operations are also changing. The use of renewable energy plays a big role in the ecological footprint. In addition, minimizing lighting and optimizing heating influences this footprint and helps reduce operating expenses.
Online commerce is gaining momentum in today’s market. Consumers are placing more and more importance on this mode of purchase and like to have everything personalized. It is important for businesses to respond well to this demand while being aware of the environmental impact it can have. Awareness of overpackaging should be taken into account by the marketing and operations departments.
Optimization of transport and routes
The main goal of a sustainable business is to reduce CO2 emissions. We should not just think of different modes of transport such as rail, road, multimodal. To achieve this, several processes can play an influencing role. Revising the packaging of products can increase the density, which optimizes the use of transport and, at the same time, the filling factor.
In addition, the use of transport software (TMS) is part of the company’s sustainable development movement and helps reduce transport costs. This software optimizes delivery routes, which considerably reduces the number of kilometers traveled, thereby reducing CO2 emissions and transport costs. It is even possible to reduce its truck fleet as well as the personnel required to operate the transport function of the company thanks to the optimizations carried out. Finally, this software can help improve the planning and execution of operations in order to reduce complaints and customer feedback at the same time.
Conditions for the success of a sustainable business
Sustainable development thus promotes three main principles which, when combined, ensure the continuity of the business:
- The search for financial profitability (economic criterion)
- Preserving the planet (environmental criterion)
- People’s well-being (social criterion)
The preservation of the environment and the well-being of people are objectives that complement each other, when one might think that that of financial profitability is the black sheep of the group. That said, implementing actions linked to the idea of sustainable development does not necessarily mean an increase in the company’s expenses. It leads to a change of perception inside and outside organizations, which thus expresses an innovative, creative and dynamic image. This may even constitute a preferred criterion in the search for new markets or partnerships, particularly with public and government services. Finally, it also allows companies to stand out among end consumers whose environmental awareness is growing day by day.