Global الأرشيف

Mobility ecosystems are transitioning as economies recover and move to zero-emission road transport by 2030. The aim of this session is to enhance global collaboration on the path to inclusive and sustainable mobility recovery.

The economic damage and costly business disruption brought on by the global spread of the COVID-19 virus have failed to slow the gathering momentum behind environmental sustainability and the array of efforts to battle climate change.

After decades of doubt on the part of business leaders, sustainability is delivering ROI. Businesses, investors, consumers, governments and others see it as a source of post-pandemic resiliency, efficiency and competitive advantage. Why is it proving durable now?

1. A green recovery could be a stronger one

“A low-carbon recovery could not only significantly reduce emissions, but also create more jobs and economic growth than a high-carbon recovery would,” McKinsey says.

Many industries are doubling down on sustainability investments. Few are backing off. In an Agility survey of 1,200 global supply chain executives, 72% of respondents said their companies will maintain or increase their environmental sustainability commitments coming out of the pandemic.

Want more proof? In May, the International Energy Agency slashed its forecast for the amount of renewable energy capacity to be added worldwide in 2020. But by year’s end, the IEA was forced to backtrack.

“The renewables industry has adapted quickly to the challenges of the COVID crisis. We have revised the IEA forecast for global renewable capacity additions in 2020 upwards by 18% from our previous update in May. Supply chain disruptions and construction delays slowed the progress of renewable energy projects in the first six months of 2020. However, construction of plants and manufacturing activity ramped up again quickly, and logistical challenges have been mostly resolved with the easing of cross-border restrictions since mid-May,” the IEA says.

Sustainability graph — 72% of respondents said their companies will maintain or increase their environmental sustainability commitments coming out of the pandemic.

2. Investors want more

Global asset managers want in on sustainability. In 2020, they poured more than $5 billion into so-called blank-check companies created to invest in businesses that are driven by environmental, social or governance (ESG) principles or formed to bring ESG ideas to market.

“Capital markets are wide open for investment in green businesses in a way that they’ve never been before: Interest rates are at historical lows, technology costs have fallen, and financial regulators are beginning to nudge investors, so the risk-reward equation is beginning to shift,” says Dickon Pinner, who leads McKinsey’s global Sustainability practice.

There were 20 ESG-focused blank-check companies — also known as Special Purpose Acquisition Companies (SPACs) – launched last year, according to Pitchbook. (Agility said in January that it invested $35 million in Queen’s Gambit Growth Capital, a blank-check company that will target businesses offering sustainable solutions in clean energy, healthcare, financial technology, industrials, mobility and emerging technology.)

3. It’s a culture thing now

A report by SAP and media firm Which-50 indicated a “strong shift to sustainability” among the corporations tracked by consultants and research firms such as BCG, Gartner, Juniper and Forrester.

“Sustainability has shifted from a discussion largely driven by compliance to one at the centre of business strategy,” says Which-50.

Companies are taking aggressive steps to stay ahead of the pack. VF Corp., parent of Timberland, North Face and Vans brands, is one of many companies drilling deeper into their own supply chains. VF’s traceability mapping gives the company a view of its tier 1 through tier 4 suppliers. In a show of transparency, VF has posted 46 of 100 anticipated product maps online.

4. Businesses can’t afford to be out of step with consumers

In a recent survey of European consumers, 57% of respondents said they had made significant changes to their lifestyles to ease the environmental impact. More than 60% said they were taking steps to recycle and buy products in environmentally friendly packaging.

“Consumer behavior and changing tastes are all moving in the direction of sustainability and adding pressure on companies and brands to do the same,” says Mohammed Esa, Agility GIL’s Senior Vice President of Global Business Development. “Social media plays a big role because it gives consumers a much bigger voice than they ever had.”

5. There is competition … and cooperation

Thousands of companies have announced ambitious goals. Apple, for instance, vows to be carbon-neutral by 2030.

Fifty-three companies signed the Climate Pledge, co-founded by Amazon, committing to getting themselves to net-zero carbon emissions by 2050 – 10 years ahead of the Paris Agreement. The pledge requires them to adopt rigorous reporting, cut emissions and neutralize remaining emissions with credible offsets. Climate Pledge signatories include Microsoft, IBM, Johnson Controls, Unilever, Canary Wharf Group, Uber, Henkel, Siemens, Mercedes-Benz, Infosys, Real Betis, Daabon Group,

Another group has promised to share best practices for achieving net-zero emissions. The Transform to Net Zero initiative includes Maersk, Danone, Mercedes-Benz, Microsoft, Natura & Co., Nike, Starbucks, Unilever, and Wipro. The initiative makes business plans and other resources available online.

6. Technology is making it easier

TextileGenesis, based in Hong Kong and India, is one of many apparel companies adopting blockchain so it can track the sourcing of raw materials through to production and shipment of finished garments.

The fashion and apparel industry is moving to introduce sustainable materials such as recycled cotton, lyocell (made from wood pulp) and viscose (made from wood) in place of less environmentally friendly fibers like polyester and nylon, which contain petroleum, coal and chemicals. Blockchain would help apparel manufacturers source, track and certify their use of the new materials.

Piramal Glass, an Indian company that makes bottles and glass packaging for the pharma, cosmetics and perfume industries, is using blockchain to get supply chain transparency and auditability.

Another important advance is the use of digital or virtual twinning.

The flood of data available from the Internet of Things (IoT) and cloud computing makes it possible and cost effective to create digital “twins” that model and simulate processes with potential to deliver environmental benefits.

“This pairing of the virtual and physical worlds allows analysis of data and monitoring of systems to head off problems before they even occur, prevent downtime, develop new opportunities and even plan for the future by using simulations,” says Forbes.

The Port of Rotterdam is using digital twinning to model automation, design and sustainability features that are part of its push to become “the world’s smartest port.” Twinning gives port planners the ability to virtually test use of autonomous ships, “digital handshakes” for documentation exchanged between vessels and the port, and emissions-lowering port call practices.

Without digital twinning, port officials would have no way to test the transformational processes without disrupting operations at a sprawling port that handles 8.8 million containers and 15 million twenty-foot equivalent units a year.

“In a virtual environment, we can verify and validate solutions before the real tests begin, maturing solutions much faster. We also don’t have the safety risks or hazards we would in real-life tests and that’s why this digital environment is better and faster for development and validation work,” says Karno Tenovuo, CEO of Awake.AI, the Finnish company that is Rotterdam’s smart-port development partner.

Tenovuo says ports will able to lower CO2 emissions 10% by adopting the features and optimization methods that will be harnessed in Rotterdam.

7. The ocean industry is racing to catch up

Slow to embrace sustainability, the maritime logistics industry is now an area to watch.

Leading container lines and ports are working on standards for a just-in-time port call process that would eliminate wasteful delays and dwell times. JIT port calls would allow ships to optimize steaming speed, lower fuel use, cut CO2 emissions, and avoid getting stranded outside ports waiting for berthing slots.

Singapore’s futuristic Tuas port is being built to handle 65 million TEUs a year. By consolidating existing container-handling facilities at a single location, Singapore will cut inter-terminal trucking hauls and emissions. Reused and recycled materials make up half of the land reclamation work, and the port is moving sensitive coral colonies that would have been damaged by the construction.

Maersk, the world’s largest container line, is accelerating development and deployment of the world’s first carbon-neutral container ship. Maersk says the vessel, a smaller ship known as a feeder, will run on biomethanol, made from paper-mill waste and other byproducts. It will join the Maersk fleet in 2023.

RightShip, a maritime risk-management company, created a ratings system to compare the efficiency of different cargo ships, along with operational performance used to score ships on safety. RightShip ratings allow shippers to choose vessels with lower CO2 footprints, better fuel efficiency, and higher safety ratings.

8. There are carrots to go with sticks

European Union companies that rely on imports from South Asia are promising broader market access, training and gap assessments for Sri Lankan exporters whose products can meet international sustainability standards.

The initial group of Sri Lankan companies are providers of rubber, apparel and food products, but a German and EU business delegation has agreed to help Sri Lanka extend the project to its critical tourism sector.

Banks and venture capital firms are offering preferential terms to companies that agree to meet environmental criteria, such as reporting CO2 emissions and implementing emissions-reduction strategies.

9. The sticks are real

In early 2020, BlackRock, the world’s largest asset manager, notified hundreds of listed companies in its portfolio that it had started to factor environmental issues and performance into its investment decisions.

A year later, BlackRock told its own investors that it had voted against the management of 53 companies – including some of the biggest global names in manufacturing and industrial supply – because those companies failed to “make sufficient progress regarding climate risk disclosure or management.”

Too many companies still rely strictly on internal data to get a picture of their supply chains. To strengthen their post-pandemic supply chains and drive sustainability, many realize they need to exchange data with suppliers and customers.

10. There’s nowhere to hide

Seventy-percent of shippers look at sustainability as part of RFPs, and more are requiring their vendors to report on sustainability metrics on a regular basis. They want to know about fuel efficiency; CO2 emissions; alternative fuel use; personnel & staffing devoted to sustainability; and fleet age.

Climate TRACE, an alliance of climate research groups, is close to launch of an initiative that will track and publish greenhouse gas emissions traceable to individual factories and ships.

“Our work will be extremely granular in focus – down to specific power plants, ships, factories, and more. Our goal is to actively track and verify all significant human-caused GHG emissions worldwide with unprecedented levels of detail and speed,” the alliance founders say.

Climate TRACE will give business leaders, investors, NGOs and climate activists a powerful tool “while ensuring that no one – corporation, country, or otherwise – will ever again have the ability to hide or fake their emissions data.”

As global focus shifts toward addressing and combating the effects of climate change, the retail industry must adapt to meet demand while also adhering to environmentally sustainable practices. A key to reducing emissions and increasing sustainability lies in green supply chain management, or the incorporation of environmental concerns in retail supply chain organization and operation. In the push for improved environmental performance, a pressing question arises: How can retailers green their supply chains?

Although the task of integrating green practices into a traditional retail supply chain can seem daunting, the benefits are far-reaching—and the environment isn’t the only benefactor. Companies that adopt green supply chain solutions can cut costs, bolster brand image, and see an improved access to resources. In 2020, businesses with strong environmental, social, and governance practices had an 11 percent valuation premium over their competitors.

By adopting green supply chain management practices, companies can find success while lowering their carbon footprint. Agility can help businesses capitalize on the benefits of sustainable supply chain solutions.

Introducing the green supply chain

The green supply chain refers to the integration of environmental-minded practices into supply chain management. As resource depletion, pollutants, and the expanding human carbon footprint place stress on ecosystems, companies can address and reduce their impact on the environment with green supply chain management.

Greening the supply chain

A supply chain is the system by which companies develop a raw material into a product or service that they then deliver to consumers. In this system, various people and organizations exchange resources and information to take a material—oftentimes beginning with extracted natural resources—and develop it into a product or service. The size and composition of a supply chain varies from industry to industry and product to product.

No matter the structure, it is essential for a company to understand their own supply chain to ensure that they always have access to the materials they need from suppliers. Supply chain management necessitates the careful consideration of many factors, including procuring materials at a low cost, predicting trends to match supply and demand, optimizing the manufacturing process, and delivering the product to retailers.

At each step of a supply chain there is waste, whether it is time, money, or resources. When these failures and inefficiencies arise, they unnecessarily consume the natural resources used in a supply chain. Although these issues may seem small in isolation, waste at each stage of a supply chain can lead to significant costs. Efforts to minimize waste can not only save a business money but also have environmental benefits that allow for a more sustainable and streamlined supply chain.

Greening a supply chain refers to the incorporation of environmentally beneficial policies and objectives into the supply chain. As growing public and political attention focuses on the threat posed by climate change, the importance of finding green options for retail supply chains has grown. Companies must seek ways to lower carbon emissions, conserve resources, and safely dispose of waste.

Companies can employ the four key strategies of reverse logistics to meet these goals: reducing, reusing, recycling, and remanufacturing. These strategies track the supply chain from resource acquisition to product distribution. They then move the goods from a typical final destination back to a manufacturer in order to repurpose or dispose of them. By implementing these strategies, companies are able to reduce waste, slash emissions, and lower costs, effectively greening their supply chain.

What going green means for small and medium-sized businesses

Many large corporations are seeking to boost their environmental performance, paving the way for small and medium-sized businesses to green their supply chains. Although small and medium-sized businesses have less of an impact on the actions of their suppliers than large corporations do, they have the power to select suppliers with a lower environmental impact. For example, shipping emissions and costs from an overseas supplier far exceed those of a local supplier. This allows a small business to practice sustainability while cutting costs.

Small and medium-sized businesses can also commit to green purchasing, or the procurement of products that have a reduced impact on the environment. Green materials can lower costs associated with disposing of hazardous materials, operations, and employee safety. In addition, environmentally friendly products increasingly attract consumers. As such, small and medium-sized businesses can see an increase in consumer loyalty when they embrace green supply chain management.

Green supply chain versus sustainable supply chain

Although a green supply chain and a sustainable supply chain sound synonymous, there are crucial differences between the two. Green supply chain management focuses on integrating environmentally friendly practices into a supply chain. By contrast, sustainable supply chain management involves integrating socially, economically, and environmentally friendly practices in the supply chain. It is a broader term that encompasses green supply chain management; achieving a sustainable supply chain is impossible without green solutions. Essentially, all economic practices must be both environmentally and socially ethical.

Beyond the environmental practices that make up sustainable supply chain management, companies work to behave more ethically overall. Often, this relates to working conditions. Sustainable practices include eradicating child labor, ensuring safe working conditions, implementing appropriate working hours, and fairly compensating employees.

These practices must be present in the entirety of the supply chain, not just in the consumer company. For a supply chain to be sustainable, manufacturers and suppliers must also practice sustainability; therefore, a key element of sustainability is transparency. A company must be clear about its sustainability targets and work with suppliers to reach them. This helps to ensure that the ethical codes necessary to sustainability are apparent throughout the supply chain as a whole.

Importance of sustainability in a retail supply chain

As the number of consumers worldwide continues to grow—1.8 billion people will join the global consuming class by 2025—it becomes increasingly important for companies to expand their customer base while adhering to sustainable retail solutions. Practices that attract new customers often align with green retail solutions, emphasizing the importance of sustainability in the retail supply chain.

Why retail needs to be sustainable

The environmental benefits of retail supply chain sustainability are clear: companies can adopt practices to lower their carbon footprint by conserving natural resources and cutting emissions. As the destruction of ecosystems and natural resources can damage a supply chain by lowering productivity and raising costs, a greener supply chain is often in a company’s best interests. Due to deforestation, for example, 81 percent of agricultural product companies reported significant changes to operations, revenue, and expenditure.

Sustainable retail supply chains also result in better conditions for workers and less strain on the resources and energy sources in the communities surrounding warehouses and factories. Beyond the clear environmental and social benefits, however, sustainability in the retail supply chain can provide companies with tangible benefits relating to profits and business reputation.

Top impacts of having a sustainable supply chain

To remain competitive, businesses must keep costs low. By greening their supply chain, companies can lower operational costs while attracting consumers, thus boosting their business.

Lowered cost

As sustainable retail solutions evolve and grow more accessible, they allow a company to cut costs found in a traditional supply chain. McKinsey analysis shows that a supply chain produces over 80 percent more carbon emissions and more than 90 percent of the impact on air, land, water, biodiversity, and geological resources than that of the consumer company. An unsustainable supply chain can pose a significant financial risk to a sustainable company.

By focusing on sustainable transportation solutions, companies can reduce the cost of fuel emissions. Localized suppliers and manufacturers can also cut unnecessary trips that result in costly fuel usage. This can streamline the shipment process as more full-load trips help place the right materials in the right place without overflow.

Certain environmentally friendly, renewable materials, such as bamboo, Tencel, linen, and cork, also require less power to harvest or create. As unsustainable product processing can be hazardous on top of requiring a significant amount of power, green materials provide an accessible solution. They help lower acquisition and production costs.

In addition, as the global focus turns toward green solutions, great costs are associated with a lack of adherence to laws and regulations relating to sustainability. Targets outlined in the Paris Agreement, for example, require companies to reduce global greenhouse gas emissions. There are numerous other laws and regulations that enforce sustainable practices. Companies that fail to adhere can see their value chipped away by worker health and safety issues and child labor law violations. All companies can see their profits affected by issues such as deforestation, air pollution, and water shortages.

Increased reputation

In 2018, 81 percent of surveyed consumers expressed a strong belief that companies have an obligation to help improve the environment. This growing belief factors into purchasing decisions. Consumers who value improved environmental and social conditions will seek out companies with sustainable practices.

The growing appeal of sustainable purchasing also impacts first- and second-tier suppliers. Companies can face scandals and damaged reputations for boasting sustainability while relying on suppliers with detrimental environmental and social practices. Suppliers who do not follow sustainable practices could see a loss of business.

Green solutions for the retail supply chain

Companies seeking to green their retail supply chains have a number of solutions available to them. Due to the flexibility of these solutions, companies are able to select the green solutions that best fit their supply chains. Correctly implementing these solutions can allow companies to reap the benefits yielded by a more sustainable supply chain.

Implementing green solutions

There is a wide array of green solutions, with some suiting certain companies better than others—due to size or financial constraints, for example, it may be impossible for some businesses to ship using biofuel. Regardless of the specific action that a company takes to green its supply chain, one of the most important tools in the implementation of green logistics is accountability.

Companies rely on a number of suppliers to produce goods. To increase supply chain sustainability, a company must identify environmental and social challenges among its suppliers. From there, the company can require suppliers to set their own goals that align with the company’s expectations.

To truly spark change, companies must also extend resources, such as training modules and conferences. This provides suppliers with the tools necessary to implement sustainable practices. Periodically, companies can also perform assessments to ensure that their suppliers are adhering to these practices.

To aid in these checks, Agility created a Carbon Trust–validated methodology to provide logistics customers with carbon footprint reports. These free reports allow companies to track carbon emissions throughout their supply chain, providing them with the information necessary to reduce emissions. With the availability of this information, consumer companies can also be sure they are partnering with the right suppliers.

Retailers leading by example in green solutions for supply chain logistics

By integrating sustainable practices in their supply chains, several major corporations established themselves as leaders in green logistics. They made significant steps toward green corporate offices, and they recognize their supply chains as a necessary part of achieving sustainability. Their advancements can serve as a model for other companies looking to green their retail supply chain.

Benefits of green solutions

The green supply chain logistics these three companies adopted led to impressive financial gains. This, coupled with the positive environmental impact of their initiatives, demonstrates the benefits of green supply chain management.

Climate change has a growing impact on the cost of materials necessary for business operations. Coca-Cola noted an uptick in the price of water, energy, and raw materials. This is due to water stress, carbon taxation, and resource disruption caused by severe weather conditions. As such, the company plans to cut costs by reducing the water per liter by 20 percent in 2025.

Apple found comparable benefits in shifting to environmentally friendly initiatives. In 2019, for example, Apple’s investments in energy-efficient technology in new and existing buildings allowed the company to cut $27 million in electricity costs.

Similarly, Volkswagen’s commitment to reverse supply chain logistics by remanufacturing products such as turbochargers, differentials, coolant pumps, and alternators allowed the company to cut costs by 30 percent per part.

The final benefit these three companies attain by greening their supply chain is a boost to their reputation. By demonstrating their commitment to more sustainable practices, these brands earn the trust of consumers. Additionally, they pave the way for and encourage other businesses to adopt green supply chains.

How you can implement similar methods in your supply chain

The green supply chain methods developed by Apple, Coca-Cola, and Volkswagen provide a model for other businesses. Although these are major retailers, their sustainability initiatives are a valuable framework for small and medium-sized businesses.

Apple, Coca-Cola, and Volkswagen dedicated time and resources to sustainable supply chain management. Although not every company can make significant investments into greening their suppliers or appointing a chief sustainability officer, it is important to set goals relating to green supply chain management. These demonstrate a company’s commitment to an improved environmental performance and streamline the path ahead.

By tracking a supply chain and identifying areas of waste, a company can construct its idea of success as it relates to green supply chain management. From there, a company can lay out the steps necessary to reaching these goals. As Apple, Coca-Cola, and Volkswagen did, companies can turn to solutions such as sustainably sourcing raw materials, remanufacturing material, expanding recycling programs, and relying on green energy sources.

Another key to Apple’s, Coca-Cola’s, and Volkswagen’s success in supply chain management comes from their commitment to improving sustainability among their suppliers. Companies can also share their set goals with suppliers in order to ensure their whole supply chain is working toward a lessened environmental impact.

How Agility can help

As green solutions become a more pressing necessity, retailers must seek out methods that allow them to optimize their supply chain while practicing green supply chain management. The green supply chain integrates practices that lower carbon emissions, conserve resources, and safely dispose of waste. These practices can also enable companies to streamline their supply chain. While the environmental benefits of green supply chains are numerous, companies can also reap the rewards of lowered costs and a bolstered reputation when they shift to green supply chain management.

Agility has solutions to help companies set and achieve their sustainability goals. We work with shippers, carriers, and other partners in the supply chain to lower carbon emissions, allowing companies to capitalize on the benefits of a green supply chain. Contact Agility to boost sustainability and optimize your supply chain.

Businesses that regularly transport goods often ask an important question: What is green distribution, and is it a feasible way to reduce the impact on our planet? Green distribution refers to logistics practices that minimize environmental harm. It is possible to make greener choices across the supply chain, including storage, order processing, packaging, and final-mile delivery. Green logistics reduce waste and emissions—ideal for businesses that hope to shrink their carbon footprint.

Green distribution is just one solution for a growing problem, but it stands to make a big difference. The European Commission reports that maritime transport alone is responsible for about 2.5 percent of global greenhouse gas emissions. The Environmental and Energy Study Institute found that commercial aviation is responsible for about 5 percent of global warming. And the US Environmental Protection Agency reports that containers and packaging comprised 82.2 million tons of municipal solid waste—28.1 percent of all municipal waste produced in the U.S. in 2018. In short, the impact of logistics activities can add up. At Agility, we believe it’s in our collective best interest to do our part for a greener world. That’s why we’re committed to building greener supply chains and educating our clients about how they can ship goods both sustainably and efficiently.

Importance of sustainable distribution methods

Sustainable distribution methods reduce carbon dioxide (CO₂), a greenhouse gas causing global warming. These practices also reduce waste and optimize resources to improve the health of our planet and build a better future. And they help businesses take action to make changes that matter to them and their customers.

How does distribution impact your ecological footprint?

Distribution consists of many activities, from packaging to transportation, that have a substantial impact on the earth. One way to think of this is in terms of your organization’s ecological footprint. This term refers to how much of the biological capacity of the planet your business needs in order to operate. Calculating this accurately is far from simple since you must take into consideration everything from the urban infrastructure and roads you rely on for distribution to the waste products and CO₂ emissions you produce.

Virtually all businesses contribute to what’s known as ecological overshoot. This is when our collective demand on the Earth’s ecosystem exceeds its ability to absorb our carbon dioxide emissions and regenerate the resources we have used at a rate that keeps pace with our consumption. That’s disheartening, but there’s a lot we can do to reduce overshoot. Even actions as simple as recycling can shrink a company’s ecological footprint. And adopting green distribution methods can make a big difference, especially over a long period.

5 benefits of sustainable distribution methods

Hands down, supply chain sustainability is better for the planet. But businesses can achieve many other benefits from striving for sustainability:

Increased efficiency
Green distribution practices prioritize efficiency to prevent wasted energy. That could mean anything from packing trucks or shipping containers more efficiently to achieving optimal fuel efficiency during ground transportation. Sometimes, it even comes down to how seamlessly your team works together to get the job done, which could mean less idling equipment. All of that adds up to significant energy savings and reduced carbon emissions. But what’s more, a business that runs smoothly tends to have a happier team, better customer outcomes, and less wasted resources. Since improving operational efficiency tends to be a goal for most businesses, think of this as a win-win for you and the environment.
Reduced costs
Needless to say, reducing energy use is better for your bottom line. Even relatively small changes, like remembering to turn off outdoor floodlights during the day, could lead to big savings for your operation. For instance, a 2018 energy audit conducted by researchers found that a Zimbabwean industrial site could achieve annual electricity cost savings of over $50,000 per year simply by improving its lighting technologies. And when one of our customers wanted to decrease supply chain waste by reusing cartons, Agility collaborated with them to double carton reuse and save $128,000 over a period of five years. When you consider that sustainable distribution streamlines many functions across your supply chain, it’s easy to imagine how fast the savings can add up.
Improved risk management
Sustainable distribution methods can reduce several kinds of risk for your organization. For one, greener practices are better for the overall health of your employees and the environment surrounding your distribution centers. After all, your business can be liable for issues resulting from harmful practices—like not adhering to regulations for greenhouse gas emissions from commercial trucks. In addition, organizations face risk to their reputations. Customers value environmentally responsible businesses. Irresponsible behavior such as excessive waste generation or failure to take environmentally beneficial actions can ultimately harm your brand.
Improved service
Increasing your organization’s efficiency doesn’t just achieve green gains. It leads to satisfied customers. For instance, by streamlining your operations to reduce energy use, you could achieve cost savings and pass them on to consumers. Perhaps more importantly, today’s customers care about making sustainable choices. According to a recent study by Barron’s, two-thirds of North American consumers say they prefer eco-friendly brands. Changes such as switching to recyclable, biodegradable packaging material can help your customers feel better about their purchasing decisions, making them more likely to shop with you again.
A competitive edge
Making the effort to go green can lead to a competitive advantage across many areas of your organization—from employee recruitment and retention to positive online reviews. Why? Because green business practices are better for workers, communities, and the planet. Doing your part to protect the environment, such as saving water, switching to renewable energy, and using recycled materials ensures your organization can continue operating sustainably and profitably in the future. If your competitors aren’t doing the same, they’ll struggle to adapt to the values and regulations of the changing business landscape. Finally, committing to sustainable distribution practices is key to keeping your organization top of mind for environmentally conscious consumers. When it comes to communicating your values to your customers, a choice as simple as compostable packing materials speaks volumes.

Getting started with green distribution

Turning a traditional supply chain green doesn’t need to happen overnight. It all starts with breaking down your processes to see how you could make more environmentally friendly choices at every step.

Components of green distribution

Every component in the distribution process has room for improvement. Achieving truly sustainable operations means taking a close look at every leg of your customer’s and product’s journey:

Warehousing
Could your warehouses be greener? Most likely, yes. These buildings tend to be drafty and, in some cases, larger than they need to be. This makes them costly to heat and cool. And of course, heating and cooling processes—along with lighting and warehouse equipment—cause significant CO₂ emissions. In addition, warehouse location matters. Distribution centers located few and far between means more miles of ground transportation, leading to more emissions.

Overhauling your own warehouses or rebuilding from the ground up can be prohibitive, though when constructing new distribution centers, green options abound. For instance, warehouse architecture could minimize wasted space and even maximize natural light to reduce the need for electric lights. That said, there are many ways to improve the warehouses you already have—starting by changing the way you power them. For instance, installing solar photovoltaic roof panels lets you make use of a plentiful resource in shade-free warehouse complexes: the sun. Painting your roof a reflective color can help keep your warehouse cooler and reduce the cost of air conditioning. And hydro and wind power offer alternative energy sources that can replace or minimize your reliance on fossil fuels. These changes can make a big difference in your carbon footprint, not to mention your operational expenses.

Do you rely on a third party for warehousing? In this case, location is everything. Ideally, choose a warehousing partner with many locations around the country. Having distribution centers convenient to major shipping ports, airports, and urban centers with a high concentration of your customers can help you maximize ground transportation efficiency.
Packaging
Unsustainable packaging doesn’t just lead to more waste in landfills. It causes environmental impact at every phase of its life cycle, from material sourcing to transportation to disposal. Packing peanuts made of Polystyrene foam are especially notorious. They aren’t biodegradable and cause harm to fish and wildlife who eat them. In addition, producing packing materials often uses nonrenewable resources, like plastic. NPR reports that emissions from producing and incinerating plastics could amount to fifty-six gigatons of carbon between 2019 and 2050.Fortunately, there are many alternatives on the market. For starters, shippers can choose from packaging materials made from recycled materials, including corrugated cardboard “bubble wrap.” Air pillows are another sustainable packaging idea. Since they’re mostly air, they minimize the material needed to make them but keep products safe during shipping. And lately, many biodegradable packaging materials have entered the market. For instance, cornstarch packaging has plastic-like properties but consists of organic materials. And mushroom packaging uses agricultural waste, so your customers can compost it in their backyards.When evaluating green packaging, consider a few factors. For one, packaging should ideally make use of renewable energy at every stage of its life cycle. That includes materials sourcing, manufacturing, transport, and disposal. In addition, optimized packaging should use renewable and recyclable materials. And finally, it should have a design that is as efficient as possible to minimize waste at every step—and optimize loads for transport too. Even a change as simple as switching from rigid to flexible packaging can increase the volume of goods that fit into a truck, reducing loads and overall emissions.
Transportation
In most cases, transportation will be the area of your distribution operations that has the most environmental impact. Vehicles that run on gasoline and diesel emit CO₂, the major culprit in environmental issues such as global warming and acid rain. Add to that the fact that fossil fuels are nonrenewable resources, and sourcing them presents an ongoing environmental threat. And ground transportation is not the only source of harmful emissions. Shipping by air and sea—a critical part of the journey for importers and exporters—causes environmental hazards too. Beyond air pollution, ships can release oil and chemicals into the sea, harming water quality and marine life. The same goes for planes, since jet fuel and other chemicals can enter waterways in the form of runoff.So what can you do? For ground transportation, you can use fleets that run on alternative fuels or even invest in electric trucks, which have improved to the point where they’re suitable for long hauls. Other green transportation methods, such as rail, offer another possibility. When shipping by air or sea, consider consolidating goods as much as possible to minimize the number of shipments you make in a given time frame. By packing more efficiently, you could ultimately reduce your carbon footprint. Finally, partner with a freight forwarder that’s committed to sustainability—like Agility. We’ll help you make the necessary changes to your supply chain to ensure a greener journey at every step.

How can existing practices become economically and sustainably refurbished?

Wondering how to develop a green distribution strategy without overhauling every aspect of your operations all at once? In many cases, some adjustments to your existing practices can make a big difference. Here are some tips to help you start transforming your distribution processes—even if it’s just a little at a time:

Audit your HVAC system.
Heating, ventilation, and air conditioning (HVAC) systems use a lot of energy, and they aren’t always as efficient as they could be. An HVAC technician can spot inefficiencies and fine-tune your system to save you energy. That’s good for the environment and your bottom line.
Invest in insulation.
You’ll recoup the costs in no time. Drafty warehouses require much more energy and expense to achieve temperature control. By installing installation, you can heat or cool your warehouse more efficiently and even save wear and tear on your HVAC system.
Keep equipment maintained.
When equipment isn’t in optimal shape, it may not perform as efficiently. Maintenance also extends the life of the product. Remember, replacing equipment before the end of its life span has an environmental impact too. But when the time is right, look for energy-efficient replacements.
Switch to energy-efficient lighting.
Today, there are many great options on the market, like light-emitting diodes. Making the upgrade is greener and will reduce your electricity bill.
Research new packaging options.
It can take some time to find the right packaging solution for your products, so get started now. Biodegradable materials are more eco-friendly and can even make a good impression on your customers. In addition, much of the packaging on the market today is lighter in weight, making it more efficient to ship. That can lead to reduced emissions during transport.
Consolidate your shipments.
Do you frequently send out less-than-truckload shipments? Consider sending full truckloads, since it’s easier to efficiently pack a full truck with no wasted space. Optimal packing means fewer trucks on the road and less emissions.
Change trucking policies.
Having clear engine shutdown policies help drivers know how long is too long when it comes to idling. It’s also important to evaluate trucker speed and provide clear guidelines for how fast they can go. That means knowing your vehicles’ optimal range and figuring out the right balance of fuel efficiency and acceptable delivery speed. These kinds of changes can make a big difference when it comes to reducing carbon emissions.
Offset your carbon footprint.
A good start to going green is to make a donation that offsets your organization’s carbon use. Many organizations offer this service, giving you a way to make contributions to vital projects such as planting trees and restoring the rainforest. Just as importantly, it’s a way to start calculating and becoming conscious of your carbon emissions. After all, awareness is the first step to change.

Best products for green distribution

Today, businesses are fortunate to have many options for achieving green distribution. In particular, the marketplace offers a wealth of better products and packaging to replace unsustainable kinds. When looking for the best products for green distribution, consider the following criteria:

Low emissions. Emissions don’t just apply to manufacturing and transport. Products themselves can emit volatile organic compounds and formaldehyde. Always opt for goods that promote good air quality—indoors and out.
Choosing products and equipment built to last ultimately leads to less waste. However, when choosing material like packaging, too much unnecessary durability could actually lead to more waste. After all, your customer is only going to recycle or dispose of the materials. So invest in durability when it makes sense.
Recycled content. Products that use postconsumer or postindustrial recycled content tend to be the greener choice.
Reused content. In some cases, it’s possible to find salvaged or upcycled products. For example, if you’re constructing a warehouse from the ground up, consider incorporating reclaimed materials.
Manufacturing process. How was the product made? Items made via natural or renewable resources—such as wood or corn—are more sustainable than those made from nonrenewable resources, such as petroleum. Also, make sure the manufacturing process doesn’t result in toxic by-products that could damage the environment.
Supplier location. Products that need to be shipped long distances, or that use imported materials, require more energy throughout the supply chain. If at all possible, choose local, sustainable suppliers.
Ozone friendliness. Look for products that don’t contain ozone-depleting substances. For example, aerosol sprays, blowing agents for foams and packing materials, refrigerants, and other substances contain chlorofluorocarbons, which can damage the ozone layer.
Sustainable harvesting. This applies to wood or other natural products. Sustainable harvesting or sustainable agriculture uses a set of practices and principles to ensure careful resource management. For instance, instead of clear-cutting woodlands, foresters harvest trees selectively and make sure to leave plenty for the future.
To minimize waste, choose products that are recyclable. In particular, look for materials that are suitable for a closed-loop recycling system. Closed-loop recycling is when manufacturers can turn recycled materials into the same products many times over without much loss of quality. For example, it’s possible to recycle glass and metals such as steel again and again. And to minimize waste, avoid single-use products whenever possible.
Distributors can’t control whether customers recycle packing material. But with biodegradable materials, at least they know packaging will break down easily in a landfill. Consider that paper products can biodegrade in as little as a few months, whereas plastic bags take five hundred years or longer.

When evaluating the types of packaging most sustainable for green distribution, you need to factor in not just the above criteria but also your performance goals. After all, having your products break during transit isn’t sustainable. Fortunately, there are plenty of great options out there—from corrugated cardboard packing materials to reusable plastic shipping cartons. Your choice comes down to whether a given product’s costs, performance, and sustainability meet your organization’s objectives.

How to achieve green logistics in the transport stage

A key principle of green logistics is minimizing wasted energy and its resulting emissions. You can do that by optimizing cargo space, which helps reduce the number of trips you need to make. In addition, load-planning software takes the guesswork out of logistics planning. Since load optimization involves many factors—from vehicle capacity to load requirements and how far your goods need to travel—logistics companies such as Agility rely on this sophisticated software to plan optimal routes. Rely on us to ensure your shipment gets from point A to point B as efficiently as possible.

Latest green practices in supply chain management

Supply chain management is a constantly evolving field, with new and greener solutions arriving by the day. In part, that’s because green supply chains lead to competitiveness and economic performance. Since sustainability measures increase energy efficiency and rely on cost-efficient recycled products, they’re good for a business’s bottom line.

In fact, Boston Consulting Group found that businesses leading in environmental, social, and governance practices have an 11 percent valuation premium, compared to their competitors. What’s more, the majority of consumers say they are willing to pay a price premium for sustainable goods. As consumers clamor for greener brands, companies must compete to incorporate sustainable practices throughout the value chain. This drives green innovation in pretty much every field—including supply chain management.

How can supply chain leaders incorporate green practices while maintaining profit margins?

Today, supply chain leaders use the following methods to go green while maintaining—or growing—their profits:

The green service model.
These days, supply chain leaders don’t have to invest in all-new green equipment or the technology that enables logistics efficiency. They can rely on the service model instead. You can find everything from eco-friendly warehouse lighting to alternative energy sources as a service. That means you don’t have to assume the upfront expense, risk, and ongoing maintenance of green solutions. An expert service provider handles everything for a monthly fee.
Thinking outside the box.
It’s fully possible to combine green distribution practices with the goal of increasing cost efficiency and profits. Supply chain leaders do this every day. For instance, they may discover that new, lighter packaging reduces cargo weight and volume—thereby trimming costs and energy use. Or they may determine that shipping large volumes of goods by ocean freight instead of transporting smaller quantities via air freight is both a cost saver and a more sustainable choice. Don’t be afraid to dive in with both sustainability and profitability in mind and see what creative solutions you come up with.
The circular economy.
Traditionally, many business processes—including the supply chain—produced a lot of waste that ended up in landfills. Today, supply chain leaders are changing that by giving waste materials a new life. This method is known as the circular economy model, and its possibilities are endless. For instance, businesses could turn recycled content into green products or packaging or sell by-products instead of discarding them.

The challenges of implementing green practices in supply chain management

When trying to improve sustainability performance in the supply chain, businesses tend to struggle with the following areas:

Since the field of sustainable supply chain management is still evolving, supply chain leaders may not know the latest facts and best practices.
Operational changes. Yes, change can be disruptive. Implementing green initiatives may require you to reimagine ingrained practices or enforce new protocols. In time, these will become your team’s new normal.
Finding cost-effective and sustainable materials and equipment—and establishing new supplier relationships—may require time, planning, and upfront costs.
When implementing new measures, expect some initial resistance. Communicating the importance and efficacy of sustainable practices—and listening to your team to address snags along the way—is key to going green.

Partner with a green logistics provider

As a leader in green supply chain management, Agility is here to help you develop a more sustainable logistics strategy. Want to explore our services, get a quote, or learn more about our approach to sustainability?

Environmentally conscious businesses often ask a critical question: What are green supply chain practices, and what’s the first step to developing a more sustainable strategy? Green supply chain practices incorporate sustainability concepts into traditional supply chain management. The goal is to help industries reduce their carbon emissions and minimize waste while maximizing profit. Every area of the supply chain has room for green improvements—from manufacturing and purchasing to distribution, warehousing, and transportation.

Wondering how to get started? Agility can help. We’re a leader in building green supply chains, with a commitment to helping our customers achieve their sustainability goals. In this article, we’ll cover the fundamentals of achieving a greener supply chain, why it matters, and how you can do your part to drive change.

Importance of implementing green supply chain practices today

Green supply chain management (GSCM) practices offer substantial benefits for the environment. For one, striving for supply chain sustainability by using less energy reduces carbon dioxide (CO₂) emissions and other air pollutants. Produced by activities ranging from industrial work to operating vehicles, CO₂ is one of the main greenhouse gasses responsible for global warming. According to the US Environmental Protection Agency (EPA), CO₂ emissions have increased by nearly 90 percent since 1970. And already, climate change has impacted diverse industries that rely on natural resources—from commercial fishing to forestry. By making the switch to more sustainable practices, businesses can do a lot to slow or stop global warming and ensure a bright future for our planet.

In addition, green supply chain practices reduce waste and conserve nonrenewable resources. For instance, when businesses choose recycled paper products instead of plastic, they keep trash out of landfills and fragile ecosystems while also reducing their reliance on petroleum-based products. When they load trucks more efficiently and institute stricter policies for driving speed and idling, they use less fuel. And when they abide by the principles of sustainable agriculture and sustainable forestry, they conserve resources for future generations. In short, implementing GSCM practices is not just important for the health of our environment. It’s critical for sustaining industries and communities into the future.

How implementing a green supply chain can save you money

A fundamental principle of green supply chains is reducing waste and overall energy use. Needless to say, this can lead to big cost savings. According to Inbound Logistics, the office supply retailer Staples saved $3 million in fuel annually, simply by asking its delivery drivers to slow down. By limiting top speed to sixty miles per hour, Staples reduced its fleet’s fuel efficiency from 8.5 miles per gallon (mpg) to 10.4 mpg, equating to 20 percent less fuel. Other ways of using GSCM practices to improve environmental performance and reduce costs include:

Rethinking your materials:
Using recycled materials during the manufacturing process can save money. For instance, it’s now possible to convert waste plastic into 3D printing filament, which manufacturers can use to create new products at lower costs than new plastic. While testing new materials to ensure they meet safety and performance standards takes time, the payoff could be worthwhile.
Reusing waste or by products:
Think creatively about what your company is throwing away—whether that’s at the manufacturing stage or during distribution. It’s possible to reuse waste you’d otherwise discard or even unlock new revenue streams from recyclable materials. For instance, some food manufacturers supply local farmers with organic waste to use as fertilizer. And with closed-loop recycling, manufacturers can turn recycled products made of materials like glass or metal into the same products without sacrificing quality. So it may be possible to salvage excess materials or broken products from the manufacturing process and use them to make new goods.
Cutting back on packaging:
Switching to streamlined packaging uses less materials and can lead to lower costs. In addition, a more efficient package design could make it possible to ship more units in the same cargo space, lowering transport costs and reducing greenhouse gas emissions.
Reducing risk to your business:
Unsustainable practices inevitably have an end date. When businesses don’t plan for the future, they can find themselves without a cost-effective supplier if environmental or socioeconomic issues cause disruptions to the supply chain. Proactively planning to adopt supply chain practices that are both smarter and greener can help you prepare for a future in which your former practices are no longer feasible. A great example of this is how sustainable forestry helps preserve woodlands for ongoing use, as opposed to clear-cutting trees.
Redesigning your processes:
Have you considered ways that technology could streamline your manufacturing processes or other areas of your operations? Small changes that boost efficiency can lead to big energy and cost savings down the line. For instance, Nike famously used a new kind of knitting technology to reduce labor and materials for a greener, more cost-effective sneaker. Even boosting your team’s productivity by a marginal amount could reduce equipment operation time and lead to less energy use.
Optimizing transport:
Streamlining your transportation logistics offers many ways to save money and shrink your carbon footprint. For instance, you could use load-planning software to not only make logistics planning easier but utilize cargo space more efficiently and reduce the number of trips you must make to transport your products. In addition, making the change from primarily using air freight to shipping goods via another method, such as ocean freight, is better for the environment and easier on your bottom line.

How implementing a green supply chain can improve your public image and marketing

Today’s consumers value companies that make the effort to go green. In fact, Boston Consulting Group found that 70 percent of consumers are willing to pay a 5 percent price premium for sustainable goods. After all, green supply chain practices don’t just help to preserve the planet for future generations. They make communities better now, in part by reducing emissions that impact air quality and worker health. And as consumer values shift, demand for green products will keep growing. According to the US Small Business Association, four out of five consumers buy environmentally friendly products and services.

What does that mean for you? For one, communicating your green values could boost your public image and marketing efforts, helping you win over customers who are looking for sustainable solutions. For two, opting not to get on board with the demand for green supply chain practices could ultimately harm your brand. As we collectively seek solutions for pressing climate issues, environmental consciousness is growing. Overhauling your supply chain practices now will help ensure your company stays at the forefront of positive change.

Types of green supply chain practices

6 practices for a more sustainable supply chain

Green supply chains use ethical and environmentally sound practices at every stage, with the goal of reducing air, water, and waste pollution. Needless to say, designing a sustainable supply chain requires different practices at each leg of your product’s journey from initial concept to your customer’s home:

Green purchasing:
Green purchasing, which means finding suppliers with environmentally sustainable products and services, is just as important as greening your own operations. After all, sourcing your materials sustainably is the foundation on which the rest of your supply chain rests. For some brands, seeking recycled or remanufactured materials is the way to go. Others will need to find sustainably harvested raw materials, such as lumber from suppliers that take steps to conserve wildlife habitat.
Green manufacturing:
Green manufacturing focuses on using fewer nonrenewable natural resources, reducing pollution and waste, and keeping emissions to a minimum, among other green practices. The most critical component of going green at this stage is reducing energy use. Everything from powering equipment and lighting to keeping your factory warm or cool requires significant energy output. Fortunately, alternative energy sources like hydropower, wind energy, solar energy, and biofuels can help reduce your reliance on fossil fuels. Newer manufacturing technologies and even changes as simple as installing light-emitting diode lights can also make a big difference in your energy usage.
Green packaging:
Green packaging considers every phase of a package’s life cycle. That includes everything from how your supplier sources materials to how consumers dispose of the packaging. Using boxes and packing materials made of postconsumer recycled materials is a good start. You’ll find many varieties of recycled paper and corrugated cardboard filler on the market. Another option is biodegradable packing material. Made of everything from corn to mushrooms, this material will easily decompose in consumers’ gardens—or in a landfill, if it comes to that. Which leads to another point: it’s important to instruct consumers on how they can recycle packaging. Don’t expect your customer to know that those cornstarch packing peanuts are dissolvable in water and compostable in the backyard.
Green warehousing:
Green warehousing focuses on ensuring warehouses run more efficiently, reducing waste and energy use. One big challenge is that warehouses grow obsolete quickly. Logistics Management reports that about 11 percent of US warehouses are over fifty years old, and just 4 percent have construction dates more recent than 2008. Older warehouses tend to be less energy efficient, leading to more CO₂ emissions. Fortunately, renovations can help make warehouses greener. Installing installation, using alternative energy sources like hydro and wind power, and adding windows to maximize natural light are just a few ways to improve your facility. And today, many organizations work with a third party to take advantage of managed warehouses in strategic locations. The closer your warehouse is to key distribution hubs, the less energy you’ll need to expend when transporting goods.
Green transportation:
According to the EPA, transportation caused 28.2 percent of 2018 greenhouse gas emissions—more than any other source. Fortunately, there are ways to make transportation greener, such as consolidating goods to minimize your total number of air freight shipments or truck trips. You can also invest in electric trucks or those that run on alternative fuels. These options have improved significantly in recent years, becoming a viable option even for longer hauls. And don’t overlook rail transportation, which offers an efficient and eco-friendly solution. Trains carry far more cargo than trucks, use less fuel per ton-mile, and tend to cost less. And finally, choose a freight forwarder that prioritizes green transportation. At Agility, we’re committed to working with our partners to make transportation greener, and we invest in solutions such as electric and double-trailer trucks that reduce overall emissions.
Life-cycle management:
Green product design always considers the complete life cycle of the item. For example, say you design backyard playground equipment for children. If the material is sturdy enough, your customer can pass on the playground equipment to another child after the first child outgrows it. And if the playground consists of recyclable materials, such as wood, those materials can have a second (and third, and fourth) life as outdoor furniture, paper, or mulch after the original product is no longer in use.

What is the difference between green and sustainable supply chain practices?

Green supply chain management and sustainable supply chain management share many features in common, but the two fields are not interchangeable. Whereas green supply chain practices have the goal of improving environmental health, sustainable supply chains focus on reducing their impact across many areas of life to ensure industry can continue to operate into the future. Naturally, environmental concerns factor into sustainability. But organizations also have to consider areas of social responsibility that include fair trade, ethical labor practices, and the effects of industry on surrounding communities. They also need to consider economic issues, like managing sustainable growth.

Leading examples of green supply chain practices, such as actively working to switch to biofuels, incorporate recycled materials into the manufacturing process, and reduce energy use, are also sustainable. But not all sustainable supply chain practices are explicitly green. For example, instituting better labor practices and fair pay for workers helps promote a higher quality of life, overall. But these practices don’t have a direct impact on the environment.

Factors affecting green supply chain practices

Green supply chain practices are critical to the health of our planet and the continued sustainability of industry. In addition, they lead to competitiveness and economic performance in several ways: by increasing cost efficiency, reducing waste, and meeting consumer demand for green products. That said, the leading factors advancing adoption of green supply chain practices can also hinder the process of going green, if not managed properly. Let’s take a look at some of these factors and what businesses can do to develop and promote GSCM practices:

Leadership commitment:
When managers and executives are all fully on board, it’s much easier to develop a unified approach to creating a green supply chain strategy. On the other hand, when decision makers disagree about what practices to adopt, contradictions can arise throughout the supply chain. Potential challenges include issues with supply chain performance, quality control, and overall effectiveness of green initiatives.
Technology:
A variety of software applications and advanced technology support green supply chain management at various steps of the process. These could range from warehouse management systems (WMS) that boost warehouse efficiency to new manufacturing technologies that use less energy to make products or reduce the quantities of hazardous materials involved in the manufacturing process. When employees learn and readily adopt technology that enables green supply chains, organizations tend to see good results. When there’s employee pushback or poor adoption, it can be harder to implement lasting changes.
Brand image and company culture:
When going green has positive implications for your brand and your culture supports these changes, introducing new green practices throughout your supply chain tends to go smoothly. In addition, involving your human resources team in recruiting green supply chain experts drives positive results. If corporate culture is less supportive of green initiatives, and if consumer demand isn’t strong enough to drive change in your industry, that can negatively impact your success.
Cost:
Depending on your business and industry, developing a green supply chain may initially seem cost prohibitive. The expense of investing in overhauling your infrastructure and equipment may be daunting. That said, these investments can lead to long-term savings. For example, the addition of photovoltaic solar panels to your green warehouse roof can help you generate alternative energy that reduces your reliance on fossil fuels and lowers the overall costs of powering your facility. Though the initial investment is steep, you’ll recoup your outlay and then some.
Knowledge:
Participants’ expertise stands to have a big impact on supply chain performance at every stage. Involving green architects, consultants, and other green supply chain experts can help companies make the best use of green resources, implement sustainable solutions, and optimize results. For instance, involving Agility in planning a green logistics solution can take the guesswork out of sustainable distribution. Conversely, not involving the experts can reduce the overall effectiveness of your strategy.

Trends in green supply chain practices

Green supply chain practices are working themselves into the greater consciousness because they’ve arisen in response to pressing need. Each year, measurable human demand and activity exceed the regenerative capacity of the planet’s natural ecosystem. It’s a phenomenon known as “ecological overshoot.” In 2020, for example, overshoot occurred on August 22. For the rest of the year, human activities operated in ecological deficit, drawing on resources needed for the future. Now that most individuals and organizations recognize the detriment of overshooting nature’s capacity to support its occupants, finding sustainable solutions has gained momentum. This drive has led to a variety of green innovations in recent years, particularly when it comes to supply chains.

The latest green supply chain practices

The following supply chain trends and practices are helping organizations achieve greener operations and promote a more sustainable future for our planet:

Minimizing air freight:
Shipping by air is extraordinarily efficient in terms of transporting goods quickly. Unfortunately, it’s far from energy efficient. More organizations are seeing the value of using air freight to meet only immediate demand, while relying on ocean freight and rail transport to meet planned ongoing needs. Developing the right freight and transportation mix helps ensure you’re equipped to meet customer demand while minimizing your environmental impact.
Investing in transportation infrastructure:
Improvements to ports, railways, and roads, especially in emerging markets like Southeast Asia, are enabling more efficient transportation. That, in turn, has led to fewer carbon emissions. The next step? Building more charging stations for heavy electric trucks. The West Coast Electric Highway, a network of electric vehicle fast-charging stations that crosses California, Oregon, and Washington, is a good start in North America. But experts say that this infrastructure needs to develop at a faster pace throughout the world to keep up with demand for green trucks.
3D printing:
Every day, 3D printing gains new applications across a range of industries—from aerospace to medical device manufacturing. What’s more, 3D printing is more energy efficient and cost efficient than other equipment and processes used in the manufacturing industry. Why? For one, 3D printers are precise and lead to almost no material waste. For two, they enable manufacturers to create products on demand, reducing the chance of overproduction. By minimizing energy use and waste, 3D printers help lower carbon emissions. It’s even possible to turn recycled materials into new products using a 3D printer.
Circular supply chains:
Circular supply chains focus on recovering and recycling waste materials to turn them into saleable products. This approach can take many forms—from refurbishing old products for resale, as Apple does with its iPhones, to reprocessing old components to make brand-new products. Needless to say, adopting the circular economy model reduces waste and helps keep valuable materials out of landfills. And it can also be quite profitable for companies.
Carbon emissions trading:
Carbon trading is the process of exchanging carbon credits among nations to minimize CO₂ emissions. Each country has a cap on the amount of CO₂ it can release. Nations with higher carbon emissions can then buy carbon credits from countries with lower carbon emissions, gaining the right to release more CO₂ into the atmosphere. Individual companies can also engage in trading. The idea behind this system is that using fossil fuels comes with many hidden costs—from environmental degradation to health care needs resulting from poor air quality. Putting a price tag on the right to emit carbon gives nations and corporations a financial incentive to reduce their emissions. In fact, emissions trading systems around the world are growing in number.

Technology developments that are impacting green supply chain practices

The advent of supply chain technology innovations makes it easier to achieve green results by optimizing efficiency at every leg of a product’s journey:

The Internet of Things (IoT):
IoT enables organizations to monitor equipment, inventory, and energy use in real time. For example, sensors can track the temperature and lighting inside a warehouse, making it possible to control these aspects from afar. Organizations gain greater awareness of energy waste, overstocking, and other missteps. That leads to a clearer picture of what needs to change throughout the supply chain.
Digitization of the supply chain:
Improved digital tools, such as smarter WMS, make it possible to increase supply chain efficiency and automate processes—from stock reordering to optimizing warehouse picking paths. This helps supply chain leaders increase accuracy, avoid rush orders that require expedited shipping solutions like air freight, and prevent overordering. In turn, these improvements help reduce waste and energy use.
Artificial intelligence (AI):
AI helps automate processes, boost efficiency, and prevent human error. These capabilities are useful throughout the supply chain—from streamlining manufacturing processes to using data to forecast product demand to analyzing delivery routes and planning the quickest journey. By helping people work faster and more accurately, AI leads to less wasted effort and resources. For example, say route optimization tools enabled by AI help shave an average of a few minutes off each truck haul. Over the course of a year, that could add up to a significant reduction in fuel expenditure and CO₂ emissions.
Robotics:
Robots hold great potential for streamlining operations throughout the supply chain—particularly when it comes to logistics. For example, drones could one day make small deliveries much more efficient than large vehicles. In addition, self-driving trucks could automate traffic decisions, optimizing everything from delivery route to fuel efficiency.
Materials engineering:
In recent years, advances in materials engineering have led to greener and more efficient manufacturing and product packaging. For example, new processes make it easier to turn recycled materials into durable products or develop new materials that are lightweight but strong. In addition, life cycle planning tools help organizations optimize products for a future beyond their initial use.

Meet your green supply chain partner

At Agility, we believe good logistics means green logistics. As a proven leader in green supply chain management, we’re committed to reducing our carbon footprint and helping our customers do the same. To learn more about our approach to green supply chain solutions and how we can help you achieve sustainable growth.

In a global economy that demands efficient product delivery to satisfy customer demand, companies must find ways to optimize their production and delivery processes. For some this is an easy task, while larger companies need to adapt to meet customer demand. To assist in this process, companies can turn to logistics management services.

Logistics management services differ in their features and offerings. Companies can relinquish control of some or all of their supply chain to logistics management services, depending on their specific needs. At the most basic is first-party logistics (1PL), and services progress in involvement up to fifth-party logistics (5PL).

To capitalize on logistics management systems, companies must understand the difference between 1PL, 2PL, 3PL, 4PL, and 5PL.

PL in the supply chain

A company’s supply chain defines the ways in which a product moves through various phases to end up in the customer’s hands. Supply chains vary in complexity, and proper management of the process plays a crucial role in a business’s success. In managing a supply chain, businesses can decide how much of the process to outsource, if any. The party logistics system outlines the way companies use each level of outside logistics management.

How PL works

To ship products across the world, companies rely on logistics management to organize and implement their supply chains. Various kinds of party logistics enable companies to manage their complex supply chains. As each level of party logistics serves different purposes, it is important for companies to understand the difference between 1PL, 2PL, 3PL, 4PL, and 5PL.

First-party logistics (1PL)

First-party logistics is a simple method of transportation in which a company or manufacturer produces and ships a product from one point to another. They do not outsource any of the supply chain. Instead they handle all elements of logistics management internally, including production, transport, and retrieval.

Second-party logistics (2PL)

A second-party logistics provider assists businesses by providing transportation solutions. By employing trucks, ships, and airlines, 2PL providers move and deliver inventory for different companies. 2PL providers do not produce goods; they only ship them.

Third-party logistics (3PL)

For more complex logistical needs, a company may turn to a third-party logistics provider. This provider helps a company organize its supply chain while the company retains overall control of its supply chain. By handling shipment, warehousing, reverse logistics, and more, a 3PL service provider helps companies optimize their supply chains.

Fourth-party logistics (4PL)

A fourth-party logistics provider is further involved in logistics management. These providers manage the supply chain in its entirety by designing and implementing supply chain solutions. 4PL providers apply strategies to meet customer demand and help a business grow.

Fifth-party logistics (5PL)

Fifth-party logistics is the most in-depth and costly form of supply chain management. Like a 4PL, a 5PL provider controls every step of the supply chain, starting with production. Its services include ordering, warehousing, and transportation management systems, all of which optimize the supply chain. The difference, however, is that a 5PL provider manages several supply chain networks, implementing its solutions for a variety of different clients.

Why companies need supply chain PL

By outsourcing some or all of the supply chain, companies will save money and streamline their logistics. By 2017, 90% of Fortune 500 companies had shifted to 3PL management to improve logistics efficiency. This is because the success of a supply chain and the success of a business are linked.

By hiring experts in supply chain operations, companies feel safe with the knowledge that their product will reach the consumer. With a comprehensive supply chain solution, a business will strengthen its logistics chain. In a highly competitive market, companies can use supply chain PLs to strengthen their global supply chain and connect with more customers.

Benefits of 1PL, 2PL, 3PL, 4PL, and 5PL

Optimizing the supply chain can yield several benefits for any business. Eliminating errors in the supply chain can save time and money while improving customer satisfaction, thus boosting a business’s reputation with its consumers. Implementing the correct level of party logistics will help companies maximize the benefits of an efficient supply chain.

Cost and efficiency benefits

A notable draw of logistics management systems is related to efficiency. Logistics management systems at all party levels offer solutions to optimize a company’s supply chain.

First-party logistics

Because the entirety of 1PL management is performed internally, it offers companies a heightened level of control over their supply chain. The company manages the fulfillment process, which allows it to tailor its packaging, transportation, and delivery to best suit its customers. If implemented correctly, the company’s control over the supply chain can boost its own efficiency.

Second-party logistics

2PLs provide companies with increased flexibility, as they outsource transportation services. 2PLs oversee the transportation for a company’s goods, which often means access to various transportation methods such as air or sea freight. Using a 2PL provider can open new avenues for transport that were previously unavailable to companies.

The infrastructure associated with transportation, such as staff and equipment, can be extremely costly. 2PLs provide access to these resources at a lesser cost than it would be if companies were to establish the infrastructure themselves.

Third-party logistics

3PLs allow a company to retain overall control of the supply chain but provide efficiency solutions. With services such as supply chain management, warehousing, and product tracking software, a 3PL provider allows companies to bypass obstacles such as delays.

Outsourcing to a 3PL provider saves companies money on logistics costs. Additionally, 3PL providers increase supply chain efficiency by protecting against lost or damaged goods and boosting delivery speeds.

Fourth-party logistics

With 4PLs, a company outsources logistics and its execution. 4PLs fully oversee the supply chain to ensure needs are fulfilled so companies can work without any logistics-related interruptions. This allows companies more time to focus on general business management and expansion.

Similar to 3PLs, 4PLs increase efficiency and reduce the costs associated with disruptions to the supply chain. Inefficiencies in supply chain logistics can result in lost time, damaged or lost products, and other issues. 4PL providers coordinate with external 3PLs to achieve a smooth supply chain and save time and money.

Fifth-party logistics

5PLs relieve all logistic responsibilities from a company. These providers work as strategic partners, managing each aspect of the supply chain. By relying on these specialists, companies can increase their efficiency while 5PL providers develop new strategies to help a company succeed.

Going one step beyond 4PLs, 5PLs offer further efficiency by serving as full strategic partners and finding the best logistic solutions for a company. Leveraging their established infrastructure, 5PLs help reduce costs for the companies with which they partner. By capitalizing on the benefits of 3PLs and 4PLs in their network, a 5PL provider can find the best prices available.

Challenges of 1PL, 2PL, 3PL, 4PL, and 5PL

Each level of party logistics offers unique benefits and is effective when integrated into the supply chain in an optimal way. Challenges arise, however, when party logistics are incorrectly implemented. Businesses must make certain considerations about their supply chain to identify the best solution for them.

What to consider when implementing supply chain PL

When seeking supply chain solutions, it is important for a company to assess which party level is most appropriate for its needs.

Cost is often one of the most important factors for determining the best solution. At lower levels, payments to providers are less expensive. At 1PL, there is no external provider to pay; at 2PL, the payment is just for transportation costs. This cost continues to increase with the level, 5PL being the most expensive. However, by outsourcing less of the logistics process, companies must coordinate their own supply chain and acquire the expensive infrastructure associated with logistics. In 1PL, these costs can be high.

It is also necessary to determine the needs of the company. Is the company small or large? Are there international shipping requirements? How complex is the supply chain? In situations where a company needs to coordinate transit across a complicated supply chain, it may be useful to consider higher-level PLs to benefit from the efficiency solutions they offer. This is particularly true for international shipping needs.

What to avoid when implementing supply chain PL

Each level of supply chain solutions offers different costs and benefits to suit companies based on their needs and budget. For example, for companies with a small, simplistic supply chain, a 4PL or 5PL provider may be too advanced a solution.

The necessity of choosing realistic logistics management solutions is especially relevant for small businesses. The in-depth logistics management 4PL, 5PL, or even 3PL providers offer may seem to be the strongest option, but 1PL or 2PL may be the best fit. If a company is shipping locally and has the capacity to store products in-house, it can often handle logistics autonomously.

Finding the right PL solution for your company

Once a company considers the benefits and challenges of various party logistics, it must decide which level works best for its needs. Since every supply chain is different, companies must take several elements into consideration, such as the size of their business and their primary focus.

Supply chain PL for small and medium-sized businesses

Small and medium-sized businesses looking to save time and money on logistics have a strong option in 3PL providers. While 2PL providers help a business save time and effort on shipment fulfillment, with 3PL solutions, companies can open up space for growth.

As 3PLs help a company with sending and receiving products, warehousing goods, and organizing logistics, small and medium-sized businesses can focus their attention on growing their business. Because small and medium-sized businesses often have simpler supply chains, party levels higher than 3PL are typically unnecessary.

Supply chain PL for large businesses

Large businesses can benefit from both ends of the PL spectrum. 1PLs mean companies have full control over their supply chain, which is difficult to attain without infrastructure in place. Large businesses often will have the infrastructure and the high-volume needs that make 1PL solutions ideal. They can reap the rewards of 1PLs without it being cost prohibitive.

Alternatively, 4PLs or 5PLs are also fitting solutions for large businesses. They offer strategic insights and enable large companies to focus their efforts elsewhere: on improving their products or customer service, for example. Large companies often have more complicated supply chains, which makes 4PL or 5PL providers helpful partners in increasing supply chain efficiency.

Supply chain PL for e-commerce businesses

While 5PL is the newest form of logistics management, it can offer companies advanced logistics management solutions. 5PL providers focus heavily on technology and the ways in which they can use it to optimize the supply chain. They can, for example, use new technologies to perform sales analysis, inventory management, and product tracking.

This focus on technological solutions makes 5PL a strong option for an e-commerce business. These companies rely on internet transactions to meet high customer demand. As such, e-commerce businesses require advanced technological solutions to keep items in stock, the ability to manage returns with reverse logistics, and innovative online payment systems.

A 5PL’s focus on technology allows businesses to quickly adapt to the expanding e-commerce market.

Use the strength of 2PL and 3PL with Agility

All companies, from small to large to e-commerce based, can benefit from the strengths of logistics management services. To do so, they must understand the difference between 1PL, 2PL, 3PL, 4PL,and 5PL. For companies looking to retain control of their supply chain while reaping many logistical benefits, 2PL and 3PL are strong solutions. Agility offers 2PL and 3PL solutions for companies looking to optimize their supply chain. It offers beneficial services from logistics and freight forwarding to warehousing. Boost supply chain operations with solutions provided by Agility.

Agility’s Tarek Sultan joined the London Business School’s Middle East Club for a fireside chat on the rise of successful startups.

Nearly 90% expect export growth by using tech to overcome shipping, regulatory obstacles

DUBAI – May 10, 2018 – Small and medium-size businesses that have struggled for equal footing in the global economy are increasingly looking to cross-border trade for growth, seeing technology as a way past obstacles in shipping and compliance, according to new research from Shipa Freight.

Shipa Freight’s global study of 800 SMEs from developed and emerging markets shows that smaller companies are remarkably upbeat about their ability to expand through trade.

Eighty-nine percent of exporting SMEs surveyed say their export revenue will grow over the next three years. Seventy-one percent say they are concentrating more on international markets than on their home markets. The Shipa Freight survey included exporters and importers from the UK, USA, Germany, Italy, China, India, Indonesia and UAE.

Smaller companies account for an estimated 95% of all businesses and employ two-thirds of the world’s workers. Critics of globalization have argued that decades of efforts aimed at easing the flow of goods, capital and jobs across borders has come at the expense of SMEs and disproportionately benefitted multi-nationals and other large businesses.

“Smaller businesses used to think they couldn’t compete in trade. Now many see it as their best path for growth,” says Toby Edwards, CEO of Shipa Freight, the online freight service. “SMEs are not naïve about the obstacles to unlocking new markets. They see online tools and other technology as a way to conduct transactions, get financing and gather market intelligence.”

Three-quarters of SME executives surveyed by Shipa Freight believe businesses that operate internationally are more resilient. Nearly 80% say they are already using online platforms for freight quotes and bookings.

Roadblocks

SMEs identified numerous obstacles they face in international trade. Forty-two percent say the costs of shipping abroad are too high, or that they don’t have an accurate picture of their costs. Forty percent say they find it difficult to understand documentation requirements.

A significant minority say their cargo has been held up in customs (39%) or lost in transit (27%).

Small and medium-sized businesses based in emerging markets are finding export regulations particularly challenging: 67% identify export regulations as a difficult issue, compared with just 44% of SMEs based in mature European markets. Seventy-nine percent of exporters from India, China and Indonesia say they find it challenging to penetrate markets in Europe.

SMEs that view the UK as one of their top export markets are looking elsewhere because of Brexit. Seventy-three percent say Britain’s vote to leave the European Union has prompted them to prioritize trade with other European countries. Sixty percent of UK SMEs that export and 52% of UK SMEs that import say that leaving the EU Single Market would be “disastrous” for them.

New tech boosts export prospects

Smaller companies clearly see technology as a way to close the gap with bigger competitors, cope with documentation requirements and get quick access to competitive shipping options. Eighty-six percent say that tech is “leveling the playing field” for SMEs to operate globally; 89% believe technology is transforming the logistics industry.

“The logistics industry has traditionally ignored SMEs and done far too little to help them find new markets and grow,” Edwards says. “Technology is giving them the ‘virtual’ scale that they’ve needed to lower their costs, get real-time information and compete.”

About the study

Shipa Freight’s Ship for Success research examines the trade patterns and barriers of SMEs, defined here as organizations with 10-250 employees. The opinion research was conducted in winter 2017 amongst 800 companies (400 exporters and 400 importers). There were 100 respondents from each of the following markets: UK, USA, Germany, Italy, India, Indonesia, China and UAE. Study participants included SME leaders, such as managing directors and operations directors. Participating companies were drawn from the following sectors: retail and fashion, fast-moving consumer goods (FMCG), automotive (including supply chain), industrial and manufacturing, and technology. You can explore the findings and download the full report below. Download full report

About Shipa Freight

Shipa Freight is the new online service powered by Agility that makes it easy to get air and ocean freight quotes, book, pay and track your shipments online. With our global network of logistics experts and industry-leading technology, we ensure that your goods arrive safely and reliably every time.

For more information about Shipa Freight, visit www.shipafreight.com/
Twitter: twitter.com/ShipaFreight
LinkedIn: linkedin.com/company/shipafreight/
YouTube: youtube.com/ShipaFreight

About Agility

Agility is one of the world’s leading providers of integrated logistics. It is a publicly traded company with more than $4.6 billion in revenue and more than 22,000 employees in over 500 offices across 100 countries. Agility Global Integrated Logistics (GIL) provides supply chain solutions to meet traditional and complex customer needs. GIL offers air, ocean and road freight forwarding, warehousing, distribution, and specialized services in project logistics, fairs and events, and chemicals. Agility’s Infrastructure group of companies manages industrial real estate and offers logistics-related services, including customs digitization, waste management and recycling, aviation and ground-handling services, support to governments and ministries of defense, remote infrastructure and life support

For more information:

Sabrina Mundy
Man Bites Dog
+44 1273 716 826
[email protected]

‘Emerging markets’ refers to the combined results of India, China and Indonesia. It does not include UAE figures. ‘Mature European markets’ refers to the combined results of the UK, Germany and Italy.

1. A green recovery could be a stronger one

2. Investors want more

3. It’s a culture thing now

4. Businesses can’t afford to be out of step with consumers

5. There is competition … and cooperation

6. Technology is making it easier

7. The ocean industry is racing to catch up

8. There are carrots to go with sticks

9. The sticks are real

10. There’s nowhere to hide

Introducing the green supply chain

Greening the supply chain

What going green means for small and medium-sized businesses

Green supply chain versus sustainable supply chain

Importance of sustainability in a retail supply chain

Why retail needs to be sustainable

Top impacts of having a sustainable supply chain

Lowered cost

Increased reputation

Green solutions for the retail supply chain

Top green solutions

Improve packaging options

Use efficient warehouses

Focus on renewable energy

Implementing green solutions

Retailers leading by example in green solutions for supply chain logistics

Top retailers implementing green solutions

Apple

Coca-Cola

Volkswagen

Benefits of green solutions

How you can implement similar methods in your supply chain

How Agility can help

Importance of sustainable distribution methods

How does distribution impact your ecological footprint?

5 benefits of sustainable distribution methods

Increased efficiency

Reduced costs

Improved risk management

Improved service

A competitive edge

Getting started with green distribution

Components of green distribution

Warehousing

Packaging

Transportation

How can existing practices become economically and sustainably refurbished?

Audit your HVAC system.

Invest in insulation.

Keep equipment maintained.

Switch to energy-efficient lighting.

Research new packaging options.

Consolidate your shipments.

Change trucking policies.

Offset your carbon footprint.

Best products for green distribution

Latest green practices in supply chain management

How can supply chain leaders incorporate green practices while maintaining profit margins?

The green service model.

Thinking outside the box.

The circular economy.

The challenges of implementing green practices in supply chain management

Partner with a green logistics provider

Importance of implementing green supply chain practices today

How implementing a green supply chain can save you money

Rethinking your materials:

Reusing waste or by products:

Cutting back on packaging:

Reducing risk to your business:

Redesigning your processes:

Optimizing transport:

How implementing a green supply chain can improve your public image and marketing

Types of green supply chain practices

6 practices for a more sustainable supply chain

Green purchasing:

Green manufacturing:

Green packaging:

Green warehousing:

Green transportation:

Life-cycle management: