Because it involves the large-scale, long-distance movement of orders between principals and suppliers, the supply chain has a significant impact on the environment. However, solutions for reducing our carbon footprint and limiting our impact on the climate do exist.

It may seem obvious, but the first step towards a green logistics is to make the entire supply chain more eco-friendly. This means mainstreaming environmental issues and climate change awareness at every link in the chain.

Implementing a green supply chain

Implementing this green supply chain requires strong commitment from the whole company. Only a holistic approach will achieve sustainable results. All stages – from packaging to sourcing, from warehouse organisation to transport and distribution optimisation – need to be reconsidered with a single objective in mind: to minimise the environmental footprint of the supply chain. The deployment of a methodology inspired by the principles of Lean Logistics, based on lifelong learning and continuous improvement, is fundamental here. It will enhance the agility of your logistics and the performance of your flows.

In many ways, the quest for performance can actually be good for the planet. Tracking down sources of waste, avoiding picking errors or unnecessary stockpiling will help reduce waste, pollution, energy consumption and CO2 emissions in your supply chain.

Developing a responsible procurement policy

Since it essentially concerns the flow of orders and supplies, the supply chain is, of course, closely linked to the procurement function. Clearly, developing a responsible procurement policy will have a positive effect on the environmental impact of your supply chain.

Not only does sustainable procurement promote the development of the circular economy, based on the eco-design, reuse and recycling of products, but it also encourages buyers to favour short circuits and local suppliers. Indeed, if the distances travelled decrease, so too do the CO2 emissions. Again, this strategy is likely to improve the overall performance of your company. A Swedish study published in October 2020 estimated that the circular economy could generate up to 535 billion in savings at European level by 2030.

Sustainable procurement involves your choice of suppliers as well. Make sure that they themselves implement strict environmental criteria. This applies not only to first-tier suppliers, but also to lower-tier suppliers. A recent article in Harvard Business Review emphasised the need for a holistic approach to all suppliers, regardless of where they are in the supply chain.

Developing new performance indicators for your supply chain

Correctly assessing the environmental performance of your supply chain obviously entails being able to measure it accurately. Alongside MPIs (Management Performance Indicators) and OPIs (Operational Performance Indicators), EPIs (Environmental Performance Indicators) now merit your full attention. Indicators of interest include:

  • Energy consumption of supply, delivery and storage;
  • The rate of alternative transport (cycling, biofuels, hydrogen engines, electric engines) used throughout the green logistics;
  • The number of tonnes transported per kilometre and the number of kilometres travelled;
  • The number of turnarounds made by the delivery vehicles;
  • The tonnage of greenhouse gas emissions.

Promoting the use of AI, data and automation

Because they enhance the reliability of indicators, the collection and processing of data in real time contribute to the environmental performance of companies. In a study conducted by Orange Business Services in the summer of 2020, 85% of the companies questioned considered that it is now possible to combine the reduction of logistics costs with environmental protection.

In 2019, a report by the World Economic Forum, drawn up in collaboration with McKinsey, cited the example of Schneider Electric, which was able to increase the efficiency of its operators by 25%, reduce its maintenance costs by 30% and, above all, cut its energy consumption by 30% thanks to digital technologies. Predictive maintenance, the Internet of Things (IoT) and autonomous vehicles were central to this system. Logistically, the arrival of 5G is accelerating warehouse automation, while artificial intelligence (AI) is improving the predictability of purchases and supplies.

Indeed, for many companies, taking sustainable development and climate change into account acts as a catalyst for innovation. 59% of them are now using digital technologies to monitor environmental indicators such as their energy, fuel, or water consumption1.

How can we build more sustainable supply chains?

Global supply chains are growing and becoming more complex as consumer demand increases. This growing need for products, resources and raw materials translates directly into an increased environmental impact.

As consumers and organisations become aware of the potential damage caused by global trade and logistics, how can we develop more sustainable supply chains?

There are a number of changes that can be made to your supply chain to better protect the environment, reduce damage and ensure that your source, manufacture and distribute products in a sustainable way.

One of the ways in which organisations can help reduce the environmental impact of their activities is through the smart use of technology.

Using technology to build sustainable supply chains

Building more ethical and sustainable supply chains is good practice for any company. This improves regulatory compliance, enhances the company’s brand image and reputation, reduces waste and overheads, and reassures consumers about sourcing.

Here are 6 keyways in which technology can help reduce the environmental impact of supply chains.

1. Planning supply and demand effectively to reduce overproduction

A misalignment between supply and demand leads to excessive or insufficient consumption of raw materials, overproduction or underproduction of goods and ill-considered distribution. This creates returns and waste which all have an impact on the environment.

Artificial intelligence, machine learning and predictive analytics can forecast likely demand and ensure much more efficient procurement and manufacturing processes.

2. Introducing transparency to ensure that suppliers use ethical sourcing

Supply chain managers need visibility on how suppliers extract or produce raw materials to ensure they are meeting sustainability standards.

Blockchain technology is a useful way to capture and verify supplier sourcing practices. IoT devices, meanwhile, monitor and report on working conditions and environmental factors.

3. Using route optimisation to reduce the consumption of fossil fuels.

Until logistics moves to electric vehicles and other sustainable means of transport, route optimisation is one of the best ways to reduce the environmental impact of transport and distribution.

Artificial intelligence can work with GPS devices to optimise international, national, and local delivery routes. Advanced analytics can even update routes in real time to account for traffic jams and other traffic problems.

4. Consolidating shipments to make full use of containers and transport

An empty container is a wasted container. Predictive analytics can predict where and when goods will arrive and consolidate shipments from multiple suppliers to multiple final destinations.

This allows for the most efficient use of assets (i.e. containers, trailers, etc.) and transport, thereby reducing the total amount of greenhouse gases generated per unit of freight.

5. Planning for existing environmental risks and impacts

Many supply chains are already affected by climate change and other environmental factors. Issues such as forest fires (e.g. on the west coast of the US), rising sea levels, shortages of drinking water or declining agricultural yields have a profound impact on the efficiency, quality and speed of the supply chain.

Supply chain technology helps predict these risks and enables supply chain managers to mitigate their impact and put contingency plans in place.

6. Streamlining supply chain processes to reduce waste

Supply chains can be improved by major changes, but results are more commonly achieved by small, incremental improvements. Effective analytics and reporting work hand in hand with machine learning to continuously improve processes throughout the supply chain. Every step taken to slightly reduce waste, speed up delivery or increase product quality contributes to gradual improvements in sustainability.