Supply chain systems and sustainability tools can not only peacefully coexist, but work in complementary fashion to hit benchmarks in both transportation SLAs and carbon reduction.
Sustainability is no new term for manufacturers, shippers, retailers, and logistics professionals. Almost neglected during COVID-19 when the world faced global lockdown, recent disruptions, including port congestion and an increase in ecommerce orders globally, have sparked renewed interest in sustainable operations.
Several regulations and intense global warming have made sustainability of global importance across organizations. That’s especially the case among global food distributors, who are under increasing pressure to disclose the source of their products back to the farm.
According to Convoy’s State of Sustainability in Transportation report, more than 67% of transportation professionals say sustainability is essential to the running of their business, and, transportation alone is responsible for a minimum of 28% of the emissions of in the United States. Any reduction in the per-mile carbon emissions from trucking will have a drastic impact on the country’s ability to reduce emissions to more sustainable levels.
Reaching the Values-Driven Consumer
Consumers are becoming increasingly educated on the need for sustainability across manufacturing and the supply chain. Nearly 75% of consumers are willing to pay a premium or wait extra time for climate-friendly products or transportation options.
Today’s consumers use their wallets more than ever to align themselves with companies that share their values of sustainability and social responsibility. Not only that, but investors, shareholders, and supply chain partners are all considering environmental, social and governance (ESG) as critical factors when dealing with organizations.
Because supply chains generate 60% of global emissions, companies that make net-zero commitments must adopt carbon-neutral products, production, and supply chain practices. They must also embrace technology as a critical and viable tool to operate more sustainably.
Organizations can leverage digital tools to reduce empty miles by carriers and make the supply chain greener. Supply chain analytics can also help to measure trust with stakeholders and achieve greater transparency.
However, for many shippers, knowing what the right first step or next step is can be a challenge. According to a survey conducted by Redwood Logistics in the fall of 2021, shippers encounter several challenges when implementing carbon reduction strategies, the most common being remaining competitive and changing company culture.
Shippers know they must prioritize sustainability to remain competitive long-term and stay aligned with customer demands. They also know that they must leverage technology to measure the company’s supply chain carbon impacts accurately and set attainable sustainability goals. But they’re often stuck in their traditional ways of doing things and finding the right solutions that support their values.
A Top-Down Approach
Shifting to a more environmentally focused mindset requires a change in all areas of a business, starting with the top. Creating and scaling widespread sustainability initiatives can be costly and labor-intensive and require partners to agree to abide by new guidelines.
The same can be said for employees. If sustainability is not already complementary to a company’s established culture, implementation among team members can often be overcome through transparent leadership, open communication, and training sessions.
Early adopters will have a leg up over their peers as demands continue to grow from end consumers. They will also be more prepared to adapt to any new government regulations.
But while doing this is a great step toward a sustainable future, shippers also need to seamlessly integrate sustainable tools with the rest of their tech stack to remain ahead in today’s fast-paced world. The supply chain is increasingly complex and it’s hard to meet growing customer demands when your systems—sustainability tools, inventory management tools, order management tools, etc.—are operating separately.
Customers demand faster shipping, but they also want to make a more environmentally-friendly purchase. Most new technologies can assist the trucking industry directly with reducing carbon emissions, but they are often separated from the organization’s current stack. An independent or disconnected network of systems, shipping partners, applications, and processes can affect productivity and cost you a lot with little to no ROI.
The Connected Supply Chain
The solution is obvious: embrace a connected supply chain. A connected supply chain ensures that all disparate systems, logistics technologies, and partners involved are linked. It ensures proper communication, promotes end-to-end visibility across the supply chain, and allows for more streamlined, efficient workflows that share data and promote unique business goals.
With the right partners, however, companies can achieve visibility into their emissions — including Scope 3 emissions — while integrating with the rest of their systems. Partnering with companies that prioritize eco-friendly practices while still offering an open platform that allows you to connect everything is an ideal solution.
For an open platform to truly be effective in achieving sustainable outcomes, it needs to be able to connect shipment data at a load level with emissions calculations based on trusted standards. Those metrics need to be able to be presented in reliable reporting that shippers and carriers alike can use to understand the current state of their emissions, which can then be validated and shared through carbon assessment platforms like EcoVadis.
Lastly, a true solution should be able to provide carbon reduction or at least offsetting opportunities. While operating in a truly carbon-neutral manner is the goal of the future, companies may need to rely on carbon offsets to balance out their emissions today. Gaining access to a verified carbon credit marketplace is a great way to quickly offset current emissions.
The future of the supply chain requires a more resilient approach. Companies must quickly adjust to disruption to win more business and scale faster while making their supply chain lean and green. Hence, it’s important to choose partners that bring together the power of logistics, technology, and sustainability to boost the bottom line and adjust quickly to respond to changing demands.
John Rattay is Chief Commercial Officer at Redwood Logistics