Since the signing of the Paris agreement in 2015 and the enactment of the Energy Transition Act for Green Growth , France, alongside 195 other countries, has committed to reducing its environmental footprint. While certain business sectors, such as construction and transportation (which account for 25% of greenhouse gas emissions in France and 25% of CO2 emissions respectively), get the most attention, no industry can escape these new policies.
Every company must take tackle its environmental profile and try to reduce its impact. Integrating these issues into a supply chain strategy is one of the ways to accomplish it and to differentiate your company by attaining numerous competitive advantages. Why and, especially, how do you implement greener logistics? Read on as we tell you all about it.
Why choose a green Supply Chain for your company?
The pandemic has made citizens and businesses aware of the need to do more when it comes to the environment. It is now a necessity, first of all for the climate, but also in terms of reputation and branding issues ‒ not to mention in order to comply with changes in regulations.
The logistics and transportation sectors account for a significant proportion of greenhouse gas emissions worldwide.
The issue of climate can be included in technical specifications. Your business partners may have already taken this step.
In addition to improving their environmental footprint by adapting their raw materials sourcing, waste management and the energy efficiency of their buildings, more and more companies are looking at the transportation and logistics aspects . Most delegate these tasks to external service providers. Therefore, the logistics provider's commitment to a greener Supply Chain can become a differentiating factor, a major advantage in particularly competitive markets.
While the advantages of this transition are obvious, there are still several major challenges to be addressed. Indeed, logistics and Supply Chain specialists need to deal with climate issues on the one hand, and new expectations from their customers on the other hand ‒ goals that can, unfortunately, seem incompatible. Must we then choose between the two, or are there solutions that bridge the gap?
Logistics players are offering competitive solutions that do not neglect CSR policy concerns
The logistics business is like many sectors subject to competitiveness requirements. Supply Chain managers must deal with this constraint, as well as with increasingly short delivery times despite the lengthening of supply chains which are predominantly sourced in Asia. The "just-in-time" approach, which used to be the standard, morphed into "always faster" to respond in particular to the explosion of e-commerce, which was exacerbated during the pandemic. We favor fast, agile transportation ‒ airplanes and trucks ‒ sometimes with low fill rates.
E-commerce has also introduced its own constraints for supply chain specialists.
Before condemning these practices, we must be wary of overly fast shortcuts. After all, while the boom in e-commerce shipments may seem, at first glance, to be at odds with greener logistics, home delivery by a company that handles huge volumes and uses environmentally compatible practices is preferable to the classic paradigm in which each consumer drives their car to a shopping center in the suburbs to do their shopping.
Reconciling the issues and imperatives of logistics and transportation with CSR needs is, as we have seen, a challenge in its own right. Getting assistance from an industry professional will allow you to find the best compromises.
A four-step plan to support you in reconciling logistics efficiency and CSR
Some logistics providers have the skills to help their customers move towards a more environmentally friendly supply chain. One example is GEODIS, a group that has been working on this subject for years: a gold medal rating in the EcoVadis CSR assessment for more than 10 years, with a score as high as 90/100 for the environment category ‒ more than twice the average of its competitors ‒ and 42% of Geodis sites are certified under ISO 14001, the environmental management standard. Its goal is to offer you solutions that use less and less carbon.
The first step is to accurately measure the emissions generated by transportation and logistics activities. Without this stage, it is difficult to identify possible areas for improvement, and where you should focus your efforts. GEODIS uses the most advanced calculation methods and tools to provide a detailed measurement of the emissions of each shipment.
The second step consists in optimizing all logistics flows. Optimization starts from the design of the network consisting of suppliers, factories, distribution centers and customers, up to the famous "last mile" of a shipment. It continues with the optimization of transportation plans and, in particular, reducing empty miles and increasing fill rates for containers and vehicles. This requires comprehensive synchronization work, which is made possible by the massive collection and processing of data using GEODIS TMS (Transportation Management System) software.
The third step is to act on the means of transportation. Sea or rail transport produces considerably fewer emissions per ton-kilometer driven than the aircraft and road vehicles. In Europe, GEODIS is one of the major players in combined rail-road transportation with nearly 75% fewer GHG emissions! Road vehicles use biofuels, natural biogas or biodiesel (B100 made from French rapeseed without any change in land use or palm oil-HVO). These fuels reduce GHG emissions by 60% to 85%. These biofuels also contribute to reducing emissions from air transportation (SAF) and even maritime transport, a possibility that GEODIS offers its customers. Battery-powered electric vehicles are becoming increasingly competitive.Vehicles that run on hydrogen or hydrogen fuel cells are still in the experimental stages.
The fourth and final step, when everything has been done to reduce, is to work toward carbon neutrality (previously known as "offsetting remaining CO2 emissions") through dedicated programs. This approach involves financing projects outside the company's scope to reduce CO2 emissions (solar or wind farms, for example) or "carbon capture" programs (such as forest ecosystem restoration). A logistics specialist like GEODIS can assist you in choosing trustworthy programs for the long term.
So it is not a mere pipe dream to think that we can do something to reduce our environmental impact while ensuring efficient and competitive logistics. Solutions exist, and others will be developed in the coming years thanks to advances in technology. Logistics will become greener thanks to collaborations between the various stakeholders in the supply chain sector! Are you ready to take the next step and be a part of the fight against climate change?