Tuesday, February 11, 2014
Green Logistics in Supply Chain Networks
In a marketing and consumption-driven world, where being green often costs more, the Bentonville, Ark.-based big box retailer broke the mold by rolling back prices and preconceptions in the interest of both the environment and economy. It created a business case for sustainability that permeates all facets of its organization and extends to suppliers and customers, as well.
Green logistics describes all attempts to measure and minimize the ecological impact of logistics activities. This includes all activities of the forward and reverse flows of products, information and services between the point of origin and the point of consumption. It is the aim to create a sustainable company value using a balance of economic and environmental efficiency.
The main objective of Green logistics is to coordinate the activities within a supply chain in such a way that needs are met at the least cost to the environment considering factors like climate change, air pollution, dumping waste (including packaging waste), soil degradation, noise, vibration and accidents, as illustrated below:
Green or sustainable logistics is concerned with reducing environmental and other negative impacts associated with the movement of supplies. Sustainability seeks to ensure that decisions made today do not have an adverse impact on future generations
Is it really worth it??
Upon contemplating the various pros and cons of Green Logistics, I stumbled upon some interesting benefits that would greatly impact the environment, while at the same time have also posed some big challenges to companies:
Costs associated with Packaging
Packaging represents one of the greatest challenges to environmental friendly logistics while at the same time being vital in shipping and storage. Correct or incorrect packaging has consequences for how much of a product can be stored, how it is stored and or transported in a given space. This can increase the unit cost if the packaging hinders optimization of storage space. Many industries have developed forms of packaging that is used only once and discarded, especially when it relates individual tins or cartons of food. It is this type of packaging that presents the greatest challenge to logisticians as, increasingly, there is a responsibility for the supplier and the buyer to recover and recycle or effectively dispose of packaging.
Attempts to reduce carbon footprints
The ships, trucks, trains, airplanes, shipping containers, and warehouses that the logistics function uses to deliver products and services both locally and globally account for almost 6% of the GHG emissions generated by human activity. Though there are known logistics strategies that can significantly reduce CO2 emissions, a key obstacle to implementing these strategies is that they require significant internal and external collaboration. The logistics function supports multiple business activities and related decisions. It’s driven by client-supplier relationships, outsourcing arrangements, cost-sharing, and coordination between trading partners. Constantly shifting standards, relatively complex GHG computations, and differences between the strategic and tactical objectives of the participants make it easy to appreciate why logistics is often regarded as a tough environmental nut to crack!
Despite the various challenges, big companies like Walmart have gone out of their way to adopt Green Logistics and have significantly incorporated this process. It is without a doubt that this is a boon to the environment. But the main thing to ponder about here is – Given the significant costs and collaboration that will be incurred, to what extent are more companies willing to embrace this process in their supply chain network?