Sustainability is a topic that is broached quite often within supply chains, thanks largely to sweeping government regulations on reducing emissions and widespread concern over responsible consumption. Businesses have been looking to cut down on logistics excesses by introducing sustainable practices in sourcing, transport and even packaging.
"This is a trend that crosses all disciplines and industries, with people coming to expect vendors to have a focus on sustainable practices. It is an interesting dynamic, where within companies, the supply chain component is often the largest carbon footprint — which, when addressed, can have a great impact," said Scott Fletcher, the president and CEO of LocatorX, a track-and-trace technology startup.
For instance, take the fashion industry, which is a mainstay of the e-commerce segment. A survey done by consulting firm McKinsey with major stakeholders in the apparel trade revealed alarming results — 80% of all greenhouse gas emissions and 90% of the impact to land, water and biodiversity within the fashion industry was directly related to its supply chain.
Though understanding the supply chain's impact on the environment is one step closer to rectifying the problem, companies do grapple with issues that are sometimes too overwhelming to address within shorter time windows. For a business at the downstream of a supply chain, the immediate challenge would be to vet their sellers to ascertain that they source their goods in a sustainable fashion.
That is easier said than done, as visibility across supply chain nodes is still deficient and in need of concrete structural reforms across the horizon.
"Consumer preferences are also changing, with them expecting not just a great experience of buying a product, but also desiring to have the product show up at their doorstep as soon as possible," said Pat Pickren, CTO at LocatorX. "So there's pressure to deliver quicker, even as businesses look to drive greener supply chains with higher levels of sustainability."
The challenge here is that companies are caught at the cross wire of conflicting consumer expectations — expedited shipping and sustainable logistics. In many cases, expedited shipping forces businesses to send out products for delivery in less-than-truckload (LTL) trucks rather than full truckload (FTL) trucks, as waiting for full truckloads can cost companies valuable time. However, sending out LTL trucks will mean that they are compromising on sustainability as fuel efficiency goes down considerably.
Pickren explained that Internet of Things (IoT) technology could be leveraged to improve sustainability, as smart labels or tagging technology will allow businesses to track their assets accurately. "Nanotechnology and microchips can now be embedded in the packaging itself, giving greater intelligence to companies," he said.
On the supply chain's upstream, companies can reduce carbon footprint by maintaining a smarter data center, where renewable resources can be used to power computers within the facility. Warehouses could be built in a way in which natural ambient light can be drawn during the day and solar panels can be put on the roofs to power operations.
Another vital link to sustainability comes in educating consumers on the importance of sustainability and enabling an ecosystem in which they consciously choose to avail slow shipping on products they have no immediate need on, helping businesses to stack products and improve delivery efficiency.
"When people are informed and aware, it creates a behavioral change. We could also provide a little financial incentive for people who choose slower shipping over expedited delivery," said Fletcher. "On the technology side, creating more visibility over shipment movement will help chip away inefficiencies and create sustainable logistics."