The transportation industry is notorious for its contribution to global air and water pollution, accounting for around 28% of greenhouse gas emissions globally. Every year, more and more businesses make effort to reduce fuel consumption. They also aim to optimize the usage of resources and prioritize a sustainable supply chain. At this point, it is no longer an option for global companies to be unconcerned with environmental issues.
The role of a sustainable supply chain
It’s hard to find a more hyped supply chain trend than sustainability and green logistics. While green logistics seemed like an unrealistic fever dream just ten years ago, today it is no longer just a buzzword and has taken over as an attainable, essential, and even lucrative business strategy. In fact, sustainability appears to become a priority for many businesses.
Benefits of a Sustainable Supply Chain
As the industry becomes more attuned to customer demands, more shippers and customers choose socially responsible partners. This has put pressure on supply chain executives to update their strategies and shift to a more environmentally friendly approach. In fact, 40% of supply chain organizations say sustainability is “very important” to their company, and almost 30% name it “extremely important”.
Risk mitigation
Sustainability in the supply chain is not just about environmentalism. Although that is an incredibly important factor, there is another emerging contributor – supply chain resilience. Optimizations to attain more environmentally sustainable practices will ensure that your supply chain survives and even thrives through emerging challenges for decades to come.
Visibility into your operations with sustainability in mind can uncover many potential risks that can be eliminated and increase your efficiency. Assess risks across your supply chain to detect any potentially harmful practices to employees, customers, or the environment. This is a crucial first step you can take to prevent those risks from occurring.
Customer retention and industry collaboration
Sustainable supply chains not only attract customers but also expands opportunities for collaboration and partnerships with businesses. Businesses are very strategic about their collaborations, so they will often opt to work with companies that adhere to international sustainability standards like ISO 14001 (the international standard for environmental management systems). For customers, it becomes even more valuable. More than 47% of consumers stated shifting to another product or service provider because of a violation of their values, including environmental responsibility.
Profitability
Companies are often hesitant to adopt sustainability practices as they fear it will happen at the expense of the company’s profits. This is still the most important concern for businesses. Going green is typically associated with increased spending to make the initial changes and risking decreased operational efficiency.
However, there are many low-cost, low-risk ways to make your supply chain more sustainable. Becoming more environmentally responsible doesn’t mean switching to driverless trucks overnight and shutting down operations. These optimizations can be gradually implemented to rein in spending, allow time to monitor and reduce risks, and properly promote these changes to your customers and business partners. Also, recycling waste can be more cost-efficient than paying waste taxes for some companies.
To start, businesses can take small but impactful steps to reduce their carbon footprint. For example, they can participate in environmental initiatives and partnerships. These small improvements will differentiate your brand as a sustainable logistics company for your customers, which will ultimately increase brand loyalty and profits. In fact, the profits of logistics companies with sustainable and social responsibility practices are up to 8% higher than those of companies with low environmental responsibility. This can be connected to the fact that customers are driven toward companies that share their values.
