eCommerce Boom Drives Demand for Sustainable Supply Chains

WRITTEN BY JAMIE DIXON,

DIRECTOR SUPPLY CHAIN, TMX

Increased growth of deliveries is driving up the use of last-mile delivery vehicles due to inefficiencies, resulting in trucks running empty. The transport and logistics sector needs sustainable supply chains not just for corporate governance and operational savings, but for retaining customers who are becoming more environmentally conscious.

The role of technology in transport and logistics has evolved significantly over the past decades, with GPS systems playing a crucial part in delivering efficiency gains in the delivery process.

GPS-enabled tracking and routing systems that see a delivery truck transmit its location to a central terminal at the dispatcher level, means that vehicles can be dynamically routed to avoid traffic jams. This results in a reduction in time spent on the road, operational and maintenance costs, and carbon emissions.

The less time that a delivery driver is spending in their vehicle, the less time they are producing carbon (and increasing costs to your logistics operation.) Having drivers report traffic issues to dispatch means that updates to the GPS units of other drivers can be processed, and areas of high congestion can be avoided.

The cost of implementing a system of dynamic routing is minimal in terms of both hard and soft costs. Soft costs, in this context, refer to the cost of software and dispatcher training.

While GPS technologies are not new to the industry, never has the move towards technology occurred so quickly or dramatically as in response to COVID-19. Many operators have taken up route optimisation to improve customer experience and reduce carbon footprint. Others have considered the type of fuel they use.

ECommerce has put an immense pressure on last-mile logistics, with customers placed as top priority. But what happens when customers don’t

quite understand the difference between cheap and fast deliveries to sustainable supply chains?

As operators raced to deliver order volumes over the Christmas period, the question remained whether cost to service was being covered. Those who can optimise their costs are more likely to reduce their carbon footprint.

According to Australia Post’s 2020 eCommerce Industry Report, the key concerns for online shoppers are sustainable packaging and delivery, returns policies and processes, and additional costs such as shipping, taxes and duties.

Almost half of the respondents want recyclable packaging, and nearly 30 percent prefer carbonneutral delivery. Some 28 percent are willing to wait longer for delivery to reduce environmental impact.

To help address some of the key concerns that shoppers have today, progressive logistics operators can utilise the process of reverse distribution to build on their bottom line and improve their green credentials. Some logistics operators may be running at a percentage of their full storage capacity. In these instances, using the extra capacity to collect, transport and store goods that can be used again in supply chains can produce real benefits.

Utilising extra storage space in a truck to transport packaging that can be reused multiple times would offer environmental and costs savings to the business. Senior supply chain executives face sustainability issues daily as they look to ensure their organisation’s activities are aligned to the expectation of shareholders, including internal and external stakeholders.

Having the capability and metrics in place to identify and communicate social, environmental and economic achievements is paramount to embedding sustainability thinking within an organisation. Some overseas organisations have the added challenge of complying with legislative requirements. Therefore, setting the right targets is crucial, including making emissions a critical KPI for companies.

Measuring the effectiveness of green supply chain strategies can be highly complex. As a starting point though, most organisations should be able to simply record the amount of kilometres driven as part of their transportation programs, and measure the subsequent reduction of cost and driver time to demonstrate a reduction in carbon emissions.

Supply chain strategies should enable businesses to exceed sustainability ambitions across logistics functions, designing solutions that are practical and adaptable to meet environmental goals and targets in line with customer, shareholder and community values and expectations.

It’s unlikely that the explosion in online shopping and B2C is going away any time soon. Leading companies need to find ways to become more efficient and adapt to the new normal; they need to understand the full cost of servicing orders and consider adapting their logistics profile from a large warehouse to multiple smaller ones in order to deliver goods on time. Global eCommerce giant Amazon in the US has led the way with this.

Industrial parks across Australia have been incorporating sustainable practices in their facilities for a while now, which is driving green initiatives in the industrial property market. Many have been investing in solar panels and water recycling plants among other environmentally-friendly initiatives in industrial property, which is ultimately reducing carbon emissions.

As the pandemic has pushed the industry ahead by around five years, turbocharging the growth of online retail, now’s the time to take charge of sustainable supply chains. ●