As the world becomes increasingly aware of the impact of climate change and the importance of sustainability, companies are under pressure to become more environmentally conscious. One of the most significant areas in which companies are being called upon to make changes is their supply chain and logistics operations. In this article, we will discuss the top five challenges brands are facing as they try to become more environmentally conscious, and what sustainability initiatives could mean for logistics professionals.
- Lack of Visibility and Transparency
One of the most significant challenges facing companies striving for supply chain sustainability is the lack of visibility and transparency in their operations. The difficulty in identifying areas for improvement and assessing environmental impact hinders the ability to make informed decisions. To tackle this challenge, companies are increasingly investing in tools and technologies that offer greater data transparency and monitoring capabilities. One prime example is optimizing distribution center utilization, resulting in reduced mileage and carbon emissions. This is achieved by choosing the DC closest to the customer and selecting the most environmentally friendly transportation mode, such as rail instead of air freight. By incorporating sustainability considerations into their transportation planning, shippers can achieve their sustainability goals while also improving their bottom line. These innovative solutions are just one example of the ways that companies are addressing the challenge of supply chain sustainability and driving meaningful change towards a more sustainable future.
- Complexity of Global Supply Chains
The complexity of global supply chains presents another challenge for companies looking to become more sustainable. With multiple suppliers, transportation modes, and distribution channels involved, it can be challenging to identify and mitigate the environmental impact of each step in the supply chain. Companies are addressing this challenge by working closely with suppliers to identify sustainable practices and implementing technologies that enable them to monitor their environmental impact across the entire supply chain. Interestingly, returns are an example of a great opportunity here. It’s no secret returns pose an environmental cost, but carriers like FedEx and UPS have been partnering with retailers to reduce the logistical strain with no-box, no-label returns that really have the opportunity to reduce environmental impact by streamlining the process and optimizing returns traffic (instead of a truck for a single return, one truck may carry hundreds).
- High Cost of Sustainable Practices
The cost of implementing sustainable practices is another significant challenge facing companies. While many sustainability initiatives have a positive impact on the environment, they often require significant investment, which can be difficult to justify from a financial perspective. However, companies are increasingly recognizing the value of sustainability in the long term, not just in terms of environmental impact but also in terms of brand reputation and customer loyalty. This is a key brand strategy, too, Apple is well known for their recycle-friendly no-plastic packaging. Not only can sustainable packaging be less costly (say goodbye to oversized packaging), 36% of Americans said in 2020 that a sustainable packaged order would directly lead to a repeat purchase with the brand.
- Lack of Regulation and Standards
There is currently a lack of regulation and standards in the area of sustainability, making it difficult for companies to know what actions they should be taking to improve their environmental impact. While some countries and regions have introduced legislation aimed at reducing carbon emissions and improving sustainability, there is no global standard, which can lead to confusion and inconsistency in approaches. To address this, industry organizations are working to develop standards and guidelines to help companies improve their sustainability performance. For example, The Sustainable Supply Chain Foundation (SSCF) is a non-profit organization that provides education and resources to help companies develop sustainable supply chain strategies. The Global Reporting Initiative (GRI) has developed sustainability reporting standards that provide guidance on how companies can report on their sustainability performance, including their supply chain sustainability. The Carbon Trust, a non-profit organization, provides certification and advisory services to help companies measure and reduce their carbon emissions in their supply chains.
5. Resistance to Change
Finally, companies face resistance to change, both internally and externally. Some employees and stakeholders may be resistant to sustainability initiatives, either because they believe they will be too costly or because they are not convinced of the value of such initiatives. To overcome this, companies must engage in stakeholder education and communication to ensure that everyone understands the importance of sustainability and how it benefits not only the environment but also the company and its stakeholders. As the demand for sustainable supply chain management continues to rise, it’s critical for shippers to identify areas where they can reduce their carbon footprint and minimize their environmental impact. By analyzing transportation data, it’s possible to identify opportunities for modal shifts, optimize routes, and consolidate shipments to reduce emissions and increase efficiency. Organizations should also develop sustainability metrics and reporting tools that allow them to track progress towards their sustainability goals and share their results with stakeholders.
The challenges facing companies as they try to become more environmentally conscious are significant, but not insurmountable. By investing in tools and technologies that allow them to monitor their supply chain and logistics operations, working closely with suppliers to identify sustainable practices, and engaging in stakeholder education and communication, companies can overcome these challenges and reap the benefits of sustainability. Logistics professionals who can lead the way in sustainability initiatives will be well positioned to succeed in a rapidly changing business environment.
Rebecca Wyatt is Director, Marketing & PR at Green Mountain Technology (GMT), a 2023 FedEx Certified Freight Bill, Audit, and Pay (FBAP) provider committed to data accuracy and excellence. She leads the team propelling GMT's marketing efforts to new heights, positioning the company as the brand leader in the transportation spend management category while driving exceptional growth and ROI.
This article originally appeared in the March/April, 2023 issue of PARCEL.
