All companies have a Corporate Social Responsibility (CSR), not only to their shareholders and stakeholders but to all of society in which they operate including the public and the global environment. More than ever companies are realising the need to take action to acknowledge how their operations affect and impact on the surrounding and global environment. A focus on green logistics can, in part, not only help reduce the company’s impact on the environment but can also increase the company’s profit margin.
The terms ‘Green logistics’ and ‘Green supply chain management’ are not new concepts by any means – the terms started to appear in the 1980s as company’s became more environmentally aware. Just as a company has an environmental policy for minimising company waste and environmental impact, green logistics focuses on the storage and movement of goods, either between companies, or across the whole supply chain.
How to implement green logistics
A full review of the company international supply chain can highlight your company logistics processes illustrating how, when and why they occur at each stage. Be sure to review your supply chain in its entirety, up and down stream, and do not forget any warehousing or reverse logistics processes. Using this review, note which logistics you can directly control, can influence and have no control over. The logistics steps your company controls directly and can influence (by discussing with suppliers and customers) should be your focus for green logistics project.
Efficiency is a key element in green logistics. Being efficient in howyou ship and when you ship can have an immediate and dramatic effect on saving fuel and in turn reducing costs and the environmental impact.
The How and When
Are you moving your goods in the most efficient way? An obvious question that many companies would like to answer positively but it’s not always the case. Logistics is not just about the physical movement of goods. Administrative processes such as forecasting with warehouse and stock management should have a direct impact on the howand whenregarding the company logistics processes. Increased forecasting and efficient warehouse and stock management will give you greater control over your company’s logistics options. The more control and time a company can gain due to efficient and accurate forecasting the more shipping options the company has.
Look at why each logistics process take place, what initiates them and highlight the cause-and-effect. Interrogativeanalysis tools such as a 5-Whys analysis can highlight other options that may not have been obvious or considered previously.
- Why is so much stock held?
- Why is so little stock held?
- Why do we use this packing material?
- Why do we ship via airfreight each week?
- Why do the drivers take the route they do?
Examining each process in such an interrogativeway can very quickly show any inefficiencies. Even small process improvements at this stage can be beneficial when extrapolated over the following months and years.
Greener Options and techniques
Consider all the other shipping options available for international shipments. If your company has the available timeframe to ship goods via sea freight instead of air freight it can benefit from the reduced environmental impact as well as the inherent cost saving.
According to Network for Transport and the Environment, transporting the 2008 volume of 1.3 billion metric tons of cargo via containership generated approximately 13 billion grams of CO2 per kilometre. If that same volume had been transported by airfreight instead, carbon dioxide emissions would have increased by 4,700% to some 611 billion grams of CO2 per kilometre.
Shipping by rail freight provides an international option which is quicker than sea freight while still minimising the impact on the environment compared to road and air freight. According to the Association of American Railroads, cargo trains on average, move one tonne of freight more than 470 miles per gallon of diesel fuel. If 50% of lorry traffic moving at least 750 miles moved by rail instead the CO2 emissions would fall by approximately 26.2 million tons. That’s the equivalent of 5.1 million cars being taken off the roads or 397 million trees being planted.
All goods will travel via road freight at some point or another. In 2017 the UK department for transport recorded over 1.4 billons tonnes of goods moved via GB-registered heavy goods vehicles (HGV’s) with 18.6 billion kilometres travelled.
Road freight vehicle fuel efficiency can be improved by a number of techniques:
- Efficient route planning to minimise inefficient, wasted and unnecessary journeys
- Regular vehicle and tire maintenance ensure the vehicle is running as fuel efficiently as possible
- Motorway driving techniques, such as platooning, can reduce fuel consumption by up to 9.7%.
- Prevent unnecessary idling during loading, unloading and breaks by utilising start/stop vehicle technology and/or tacho breaks. An idling vehicle can consume up to on gallon of fuel per hour.
Metrics and Return on Investment
Like all systems, data will need to be collected and costs will need to be monitored and recorded. This will enable sustainable targets to be set and illustrate the progress of your green logistics system. Monitor costs such as vehicle fuel costs, freight invoices and site utility bills. Fuel consumption figures will enable the company to calculate environmental factors such as CO2 emissions. Burning a litre of diesel produces around 2.62kgs of CO2, whereas petrol has a lower carbon content and produces about 2.39kgs. With increased logistics efficiency and planning the reduced environmental impact will have a direct correlation to the company’s reduced overheads and costs.
Changing to more fuel or energy efficient system can involve an initial investment, such as upgrading warehouse lighting from traditional incandescent to LED. The amount of energy and costs saved can be calculated to show how quickly this change will cover its own cost and benefit the company. For example: upgrading a typical warehouse from 250w per unit incandescent lighting to 81w led lighting equivalents can save £950 per year in electricity1. With the LED light units costing £3759 to install the return on investment (ROI) would take 3.9 years. After this period the company would continue to save £950 per year on electricity.
With a focus on:
- Process and Supply Chain Efficiency
- Reducing fuel and energy consumption
- Energy efficient equipment investments
- Setting sustainable targets
Not only can your company implement an effective Green Logistics system to benefit the environment but also increase company profitability – good environmental sense is good economic sense.
1 For 18 low bay lights on 8 hours per working day charged at £0.15 per Kilowatt hour. (KwH)