Ecological Sustainability

Owing to climate change, increasing environmental destruction and the depletion of natural resources, an enhanced public awareness of protecting the environment and natural resources is noticeable. Thus, the ecological pressure on companies is growing. Companies are exposed to meeting the demand of internal and external stakeholders to operate economically and ecologically. Companies are asked to create and offer sustainable products and services, with this demand getting more and more important owing to different stakeholders. Therefore, the challenging objective is to analyse the life cycle of products and their entire value chain from an environmentally sustainable point of view and to meet customer requirements at the same time.

Rising customer demands for ecological products and services, increasing global regulations (eg CO 2 trade), rising resource prices (eg oil) and the demand for more corporate social responsibility are the four main drivers for environmental and resource protection within companies. The implementation of ecological sustainability affects almost every unit of a company, especially logistics and supply chain management. An essential requirement for logistics, for example, is the reduction of greenhouse gases. It is estimated that today, up to 75 per cent of a company’s carbon footprint, ie CO2 emissions, results from transportation and logistics.

Hence, logistics needs to highlight the current need for ‘green’ solutions.

Global Logistics 2015+ reveals that environmentally compatible logistics is a relevant issue but has not yet reached the status of a top priority for many companies.

The first steps in a green logistics direction were taken (eg reduction in / avoidance of transport and energy) – however, these are rather generic objectives applying only to a particular ‘environmental issue’. The majority of the companies have no concrete goals, measures or holistic approaches in order to achieve ecologically sustainable solutions for logistics processes. This is often caused by a shortage of standards, tools and methods, leaving respondents to wait for concrete legal requirements and guidance (for, say, CO 2 emissions). The exact impact of logistics systems on the environment is largely unknown. Existing tools and methods are sometimes not known or not fully deployable in practice.

Regarding the financing of such projects or green logistics in general. Passing on additional costs to the end customers is not considered a viable option. Some approaches to implementing environmental compatible logistics systems display remarkable growth in the future and are listed below.

Transportation and packaging

An environmentally friendly design for transportation and packaging has been regarded as the highest priority for companies in order to achieve green logistics. Considering transportation, an increase of efficiency can be generated in the short term, for example by improving capacity utilization and avoiding empty runs (eg through bundling and route planning wherever possible).

Companies want to utilize intermodal transportation and plan to increase the use of renewable energy sources in their vehicle fleets. The majority of companies aim to realize a twofold benefit, since both higher capacity utilization and a reduction in the level of transport activity lead to a reduction in environmental pollution and also a reduction in costs.

Companies take various steps towards designing less environmentally harmful packaging. Some companies are specifically applying reusable boxes and containers. However, interviewees did point out that for long-distance transport they need to evaluate whether the ecological and economic effects actually necessitate or even legitimate their use of reusable boxes and containers.

Furthermore, the recycling of packaging materials (eg biodegradable materials) was frequently mentioned as a means to increase environmental compatibility.

Environmentally friendly sourcing

Achieving ‘greener’ business in many cases also includes the involvement of partners. One trend is environmental sourcing, where companies seek to audit their suppliers’ greenness or preferably purchase goods certified for their environmental compatibility.

Companies would consider terminating business relationships as a result of inferior environmental

compatibility of their suppliers or their products. However, many would generally be willing to support their suppliers in the search for solutions in the case of poor results in environmental audits. Ultimately, this reveals another important driver for companies’ (and suppliers’) environmentally friendly behaviour.

Involvement and cooperation with logistics service providers (LSPs)

LSPs will also play an important role in achieving environmentally compatible logistics. Since companies have almost fully outsourced transportation and major portions of warehousing in many cases, these companies particularly demand LSPs’ involvement in their green efforts and require LSPs to ecologically improve their existing logistics services.

Companies already take LSPs’ greenness into consideration upon selection during tenders. This is achieved by demanding certifications and standards (eg ISO, EU emission standards). However, some are able or willing to spend extra money to employ greener transport. Environmentally friendly transport cannot be established at the expense of lower service levels (eg longer lead times or less frequent deliveries) acceptable in exchange for more environmentally friendly operations.

Thus, LSPs are asked to improve the environmental compatibility of their services while leaving service and cost levels unchanged. Many companies will contract third parties to manage environmental issues. It is still not clearly predictable to what extent LSPs will take over this task, although it is clear that LSPs will consult their customers when designing environmentally compatible logistics on the operational, tactical and strategic level.

Measurement and evaluation

As mentioned earlier, many companies have not yet determined the level of environmental compatibility of their logistics. Thus, identification of drivers, measurement of greenness and evaluation of environmental impact are important steps towards the development of sustainable logistics. By taking into account all activities for achieving environmentally compatible logistics, the

measurement and evaluation of environmental impact (eg damage caused to health, damage caused to the environment, CO2 emissions and monetary costs) will increase most.

Future Trends

Get industry recognized certification – Contact us