Capturing The Economic Benefits of Green Logistics Practices

Here's a quick glance at the key takeaways from this post:

5 Major Driver of Logistics Sustainability

>Dynamic Delivery Landscape

>Consumer Demands

>Economic Benefits

>Brand Conscience

>Potential Future Regulations

Distance traveled per package is a north star for ensuring sustainable logistics. Hence businesses must focus two metrics:

1) Reducing miles traveled

2) Making miles traveled greener.

Now, let's delve deeper into each of these.

Sustainability has become more important than ever before. But why should we act on sustainability now? What has changed over the past few years that's making supply chain, and logistics stakeholders go beyond boardroom discussions and take actions on the ground? 

Dynamic delivery landscape, consumer demands, economic benefits, brand conscience, and regulations are the five primary drivers of logistics sustainability. Let's see why.

1. Dynamic Delivery Landscape

Everything is now moving towards home deliveries. Packet sizes are shrinking. There are faster inventory turns, which means that 'lot' sizes are reducing, and goods are traveling more miles before they reach the end customer. This also results in excessive packaging being used. All these factors are coming together right now and will only increase over the next few years, which makes it imperative for supply chain stakeholders around the world to think, plan and act when it comes to sustainability. 

How packet sizes are shrinking:

• In the US, a small box of Kleenex now has 60 tissues; a few months ago, it had 65 
• Chobani Flips yogurts have shrunk from 5.3 ounces to 4.5 ounces
• In the U.K, Nestlé slimmed down its Nescafé Azera Americano coffee tins from 100 grams to 90 grams
• In India, a bar of Vim dish soap has shrunk from 155 grams to 135 grams

2. Consumer Demands

Around the world, consumers are becoming increasingly aware of the impact of growing carbon emissions and expect brands to drive greater focus on sustainability. Hence, expectations around getting shipments in eco-friendly packages and consolidation of orders to reduce packaging and miles traveled are growing. 

Did you know that UCL's new office supply strategy driven by order consolidation led to an 80% reduction in carbon emissions from office deliveries? They eliminated 2928 vehicle miles per year.

3. Economic Benefits

Another major reason driving logistics sustainability is reaping actual economic benefits. Businesses across geographies are seeing significant cost savings by using electric vehicles for longer deliveries and bicycles for shorter ones. 

So, to understand the benefits of eco-friendly vehicles over scooters, Croatia's national postal service provider started using e-bikes for daily rounds. These were the benefits:

• Estimated annual savings per vehicle was around USD 894
• Replacing all 180 motor scooters with e-bikes, it is estimated 85% cost savings, approx
• An estimated 100 tonnes of CO₂ emissions will be reduced annually

4. Brand Conscience 

Many brands today do not just want to be known for selling products. They want to stand for something more and hence are driving a greater focus on building sustainable logistics practices to respond to climate change and global warming.

According to recent research, 87% of companies have committed to integrating sustainability into company strategy

5. Potential Future Regulations

This might not be a major driver now, but as we move forward, strict government regulations and UN policies will drive enterprises to pledge to reduce emissions. For instance, in December 2020, the EU had to update the target of reducing global CO₂ emissions by at least 55% from 40% by 2030. 

Best Practices To Drive Sustainability In Transportation

There is one north star when it comes to ensuring sustainable logistics operations — the distance traveled per package.  Therefore it’s important that businesses focus on reducing the distance traveled and making the miles traveled greener. Let’s see how. 

Four Ways To Reduce Distance Traveled

Territory optimization, efficient route planning, dynamic order batching, and route optimization are four critical ways businesses can significantly reduce the distance traveled.

1) Territory Optimization

Leveraging advanced territory optimization capabilities helps logistics stakeholders plan resource utilization to serve their demand and cover geographies optimally.

Territory Optimization not just reduces emissions but also logistics costs by up to 28% . Here's how.

2) Intelligent Route Planning

Using intelligent route planning, businesses can find the most efficient route based on consignment mapping with the vehicles. Efficient logistics planning and increasing fleet capacity, minimizes the distance traveled, fuel consumption, and delivery time. It also plans daily routes so that vehicle capacity utilization increases and the number of vehicles required to do the same number of deliveries decreases. Logistics stakeholders can increase vehicle capacity by 32% using intelligent route planning.

3) Dynamic Order Batching

When it comes to 30 mins, 20 mins, or 10 mins delivery, it's important that delivery managers push towards a dynamic automated order batching environment. It significantly reduces the distance traveled for order picking with similar pickup locations.

Distance traveled per package is the north star when it comes to ensuring sustainable logistics.

4) Route Optimization

Advanced route optimization empowers delivery managers to allocate orders to specific vehicles/riders based on multiple constraints like delivery type, order volume, weight, costs, rider proximity, traffic considerations, and more. Based on these constraints, the system chalks out the shortest route possible for every vehicle. Thereby reducing the distance traveled and delivery time. Route optimization can help businesses increase deliveries per rider by 14%.

Four Ways To Make Miles Traveled Greener

1) Prioritizing Electric Vehicles (EVs)

All EVs ensure zero tailpipe emissions. A smart logistics management platform helps delivery managers automatically prioritize allocating orders to electric vehicles over conventional means based on predefined distance limits. 

A smart logistics management platform can reduce 'return to origin’ instances by 18% saving critical miles.

2) Partnering with The Right Carrier

We are seeing more customers using automation and analytics to partner with carriers using sustainable fuel usage practices. 

3) Leveraging Bicycles for Short Distances

Using advanced route planning and optimization solutions, logistics stakeholders can seamlessly allocate short-distance orders to riders using bicycles. For instance, any distance that’s less than 5 km can be assigned to a rider using a bicycle.

Logistics stakeholders can increase vehicle capacity by 32% using intelligent route planning.

4) Increasing First-Attempt Delivery Success

Better communication between the drivers and the end customers ensures fewer delivery attempts and boosts first-attempt success rates, thereby reducing the distance traveled. Also, businesses can reduce delivery failures by using advanced geocoding and arresting fake delivery attempts. A smart logistics management platform can reduce 'return to origin’ instances by 18% saving critical miles.

These are some key strategies we see supply chain stakeholders leveraging to build sustainable logistics operations. Let us know in the comments how you are expediting your organization's sustainability goals.