One consideration that is sometimes forgotten is supply chain sustainability. Sustainability is a hot topic in all industries, logistics included. While consumers demand faster access to online goods, they’re also looking for companies that use sustainable measures.

Reducing a company’s carbon footprint is a popular topic, especially since consumers are becoming more environmentally aware. A green logistics park can help you reduce your carbon footprint in a variety of ways. For example, the supply chain solutions team at Agility helped customers reduce emissions by an average of 8 percent per year.

In modern business, sustainable options are more important than ever. When you have a suitable logistics space, such as the affordable options Agility offers, sustainable practices will help you meet your goals of lowering your costs, increasing your productivity, and reducing your carbon footprint.

Evaluation index of green logistics parks

Supply chain sustainability is one way to reduce the larger problem of our impact on the environment. The carbon footprint of individual aspects of supply chains might seem negligible, but they add up to a significant impact.

For example,  the European Commission asserts that 2.5 percent of all greenhouse gas emissions come from maritime transport. Additionally, the Environmental and Energy Study Institute reports that transport by plane drives about 5 percent of global warming.

Green logistics parks differ from their unsustainable counterparts in three ways. First, they reduce energy costs. Secondly, they reduce the environmental impact of the building, and finally, they increase productivity. With the right logistics enterprise, your business can enjoy all three benefits.

What are the elements of a green logistics park?

When it comes to a green logistics park, the main features you look for should serve multiple purposes. These elements are those that reduce carbon emission, energy consumption, and the environmental impact of the building. Ideally, logistics providers will also have a green building certification.

A common sustainable goal for logistics parks is to reduce energy consumption. Features such as LED lighting, solar panels, and skylights accomplish this at low cost. Another is to use construction techniques that make the buildings themselves greener. Green logistics parks should also strive to reduce waste and increase recycling.

As technology develops and businesses continue to understand the importance of reducing their environmental impact, new solutions will arise. Therefore, an essential consideration for a logistics park should be that it can evolve with new techniques.

What qualifies as a green logistics park?

Simply put, a green logistics park is any park that meets standards to reduce its impact on the environment. This usually includes measuring and lowering carbon emissions, reducing waste, and lowering resource consumption.

There are other efforts a logistics park can take to reduce its footprint, such as increasing natural spaces. Agility warehousing spaces use drought-resistant plants to create natural spaces that do not require lots of maintenance.

One of the most significant factors regarding what a park can offer is its location. For example, Agility’s parks are near major roads and national population hubs, meaning the distance your trucks must drive is significantly reduced. Agility’s prime locations maximize your distribution efficiency, saving you money and lowering your environmental impact.

Additionally, logistics parks qualify as green when they are EDGE certified. EDGE certification means that Agility’s buildings have reduced water and energy consumption by at least 20 percent compared to traditional buildings.

Key performance indicators in green logistics parks

When it comes to the key performance indicators (KPIs) of a green logistics park, there are two main elements to look for.

The first KPI is the financial aspect of sustainable development. While decreasing your carbon footprint is important, it’s crucial that you use a financially sound strategy to incorporate green technologies. Additionally, green solutions should be able to scale with your business.

Second, sustainable methods should increase the productivity of your entire supply chain. With the right training, you can create a team of personnel who can implement your sustainable practices in every part of your supply chain. From your warehouse floor to transport vehicles, the most successful sustainable practices will make everything run better.

How do sustainable practices reduce costs?

When the term “cut costs” comes up in conversations, people tend to think of immediate actions that result in a temporary reduction of money going out. This can involve anything from letting go of personnel, enforcing a no-idling rule for truck drivers to reduce fuel costs, or selling under-used equipment.

However, cost reductions like that often have a negative impact and are usually only temporary fixes. When a company is serious about reducing its costs, implementing green practices is a long-term option. There is a direct correlation between reducing costs and reducing your resource consumption.

For example, Agility constructs logistic spaces with the local environment in mind. Roofs and walls are built with locally sourced materials and designed to meet regional conditions. This construction method reduces your heating and cooling costs by using local knowledge of the environment. It also lowers the impact of the building by reducing the amount of shipping involved in the procurement of the construction materials.

LED lighting is another feature of Agility facilities, with both indoor and outdoor lighting using cost-effective and environmentally friendly bulbs. According to the US energy department, LEDs can reduce the amount of energy you use to light your building by up to 90 percent.

How do sustainable practices increase productivity?

New ways to increase productivity are usually towards the top of every business owner’s wish list. Increasing productivity is a great way to reduce costs and increase your selling power.

When you streamline your supply chain, you’re likely to cut methods and techniques that are wasteful. The very process of streamlining will increase your productivity. Agility parks offer optimized storage space for your needs—you can rent exactly the amount of space you need. Your warehousing space easily scales with you, with more space available whenever you need it.

Transportation is an area where many businesses see a dip in productivity, but a logistics park near national hubs means faster shipping, quicker receiving, and a smaller impact on the environment. With Agility, you gain access to the most productive means of transportation: freeways, seaports, airports, and railways.

Determining the success of sustainable practices in logistics parks

One of the most effective methods of determining the success of a logistics warehouse is to look at energy consumption. According to the US Environmental Protection Agency, 25 percent of all greenhouse gas emissions come from electricity production, 23 percent from industrial production, and 13 percent from commercial business needs for heating and waste removal.

Energy management not only reduces your overall costs, but it also lowers your carbon footprint. The easiest way to determine the efficacy of your efforts to go green can be measured in the amount of energy you consume and the money you save. While there are many ways to increase your energy efficiency, Agility logistics parks offers distribution center spaces with everything set up for you.

Agility makes use of the ample roofs on its buildings by setting up solar panels. You’ll also find skylights, which not only reduce your need for lighting (thus reducing your power bill), but it makes the warehouse space more enjoyable for your employees.

The critical difference between traditional methods of cutting costs and sustainable practices is your return on investment (ROI). With conventional methods, you usually don’t see a high ROI. With sustainable practices, however, you not only get a return on your capital investment, but you also get all the other benefits that come with sustainability.

Importance of sustainable practices for logistics parks

Environmental sustainability will continue to rise in importance for all industries, and companies that want to keep their competitive edge need to embrace the movement.

However, creating a green supply chain is important beyond its appeal to customers. A green logistics park optimizes your available resources, reduces costs, and reduces your overall environmental impact.

What are the tax benefits of sustainability practices at a logistics park?

It used to be that taking sustainable measures was something a company did to improve its image. Today, sustainability is helpful for much more than your reputation. Aside from the obvious benefit of helping the environment, there are numerous economic incentives to going green. One of the incentives is tax benefits.

While tax benefits vary based on the country your business is located in, efforts in sustainability usually come with valuable tax cuts and credits.

For example, the Green Business Bureau reports that the US government offers tax credits, rebates, and breaks for companies that invest in sustainability practices. These benefits include:

• Deductions for green installations that reduce power use, such as LED lighting
• Grants and credits for properties that use alternative energy, such as solar panels
• Bonuses for recycling of waste and equipment
• Credits for using fuel-efficient vehicles

Some countries have better tax breaks than others, but you can expect to see some sort of tax benefits when you use sustainable practices.

Green warehousing technologies and products available for logistics parks

Just as logistics parks have different business features, the same is true for sustainability. Ideally, a logistics park will offer the green practices you want as well as features you can grow into.

For example, Agility logistics parks offer a long list of sustainability practices that you can make use of with little to no effort:

• Recycling
• Solar panels
• Xeriscaping
• Skylights
• Construction techniques
• Low-emitting paint
• LED lighting
• Regionally-sourced construction materials

The benefit an Agility warehouse is that you don’t have to choose which green warehousing technologies you want to use—you get them all.

What are the most recent developments in green warehousing technology?

Today, the biggest developments in warehousing technology aim to reduce energy consumption and environmental impact. Current warehousing trends include a move towards automation, optimizing facilities, increasing recycling, and increasing the use of renewable energies. Optimizing facilities includes lowering resource consumption

An example of reducing resource consumption while promoting green building techniques is Agility’s use of xeriscaping. Agility uses drought-resistant plants to minimize water consumption while ensuring workers have access to natural spaces.

Recycling is of particular interest in warehousing because there is a lot of waste created in the supply chain. Agility has recycling zones set up in every logistics park. An essential part of recycling is reusing materials. Reusing materials not only saves you money, but it also lowers your carbon emission.

For example, Agility was able to help one client increase its reuse rate from 47 percent to 72 percent, which saved them over $78,000.

What factors are driving trends in green warehousing technologies?

COVID-19 has significantly impacted the way people shop, and warehousing technology has become an increasingly popular topic of conversation. According to the World Green Building Council, facilities like logistics parks have huge potential to make a massive impact on efforts to reduce global warming.

However, industrial buildings are giant consumers of energy, water, and other resources. This fact has driven the development of sustainable practices in warehouses and logistic parks.

Explore your sustainability options with Agility

Agility recognizes that sustainability practices are more than your reputation. Today’s businesses need sustainable options to meet their goals of reducing their carbon footprint, increasing productivity, and reducing costs.

If you’re ready to see how a sustainable Agility logistics park can help your business, contact us today to get started.

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The economic damage and costly business disruption brought on by the global spread of the COVID-19 virus have failed to slow the gathering momentum behind environmental sustainability and the array of efforts to battle climate change.

After decades of doubt on the part of business leaders, sustainability is delivering ROI. Businesses, investors, consumers, governments and others see it as a source of post-pandemic resiliency, efficiency and competitive advantage. Why is it proving durable now? 

1. A green recovery could be a stronger one

“A low-carbon recovery could not only significantly reduce emissions, but also create more jobs and economic growth than a high-carbon recovery would,” McKinsey says.

Many industries are doubling down on sustainability investments. Few are backing off. In an Agility survey of 1,200 global supply chain executives, 72% of respondents said their companies will maintain or increase their environmental sustainability commitments coming out of the pandemic.

Want more proof? In May, the International Energy Agency slashed its forecast for the amount of renewable energy capacity to be added worldwide in 2020. But by year’s end, the IEA was forced to backtrack.

“The renewables industry has adapted quickly to the challenges of the COVID crisis. We have revised the IEA forecast for global renewable capacity additions in 2020 upwards by 18% from our previous update in May. Supply chain disruptions and construction delays slowed the progress of renewable energy projects in the first six months of 2020. However, construction of plants and manufacturing activity ramped up again quickly, and logistical challenges have been mostly resolved with the easing of cross-border restrictions since mid-May,” the IEA says.

2. Investors want more

Global asset managers want in on sustainability. In 2020, they poured more than $5 billion into so-called blank-check companies created to invest in businesses that are driven by environmental, social or governance (ESG) principles or formed to bring ESG ideas to market.

“Capital markets are wide open for investment in green businesses in a way that they’ve never been before: Interest rates are at historical lows, technology costs have fallen, and financial regulators are beginning to nudge investors, so the risk-reward equation is beginning to shift,” says Dickon Pinner, who leads McKinsey’s global Sustainability practice.

There were 20 ESG-focused blank-check companies — also known as Special Purpose Acquisition Companies (SPACs) – launched last year, according to Pitchbook.  (Agility said in January that it invested $35 million in Queen’s Gambit Growth Capital, a blank-check company that will target businesses offering sustainable solutions in clean energy, healthcare, financial technology, industrials, mobility and emerging technology.)

3. It’s a culture thing now

A report by SAP and media firm Which-50 indicated a “strong shift to sustainability” among the corporations tracked by consultants and research firms such as BCG, Gartner, Juniper and Forrester.

“Sustainability has shifted from a discussion largely driven by compliance to one at the centre of business strategy,” says Which-50.

Companies are taking aggressive steps to stay ahead of the pack. VF Corp., parent of Timberland, North Face and Vans brands, is one of many companies drilling deeper into their own supply chains. VF’s traceability mapping gives the company a view of its tier 1 through tier 4 suppliers. In a show of transparency, VF has posted 46 of 100 anticipated product maps online.

4. Businesses can’t afford to be out of step with consumers

In a recent survey of European consumers, 57% of respondents said they had made significant changes to their lifestyles to ease the environmental impact. More than 60% said they were taking steps to recycle and buy products in environmentally friendly packaging.

“Consumer behavior and changing tastes are all moving in the direction of sustainability and adding pressure on companies and brands to do the same,” says Mohammed Esa, Agility GIL’s Senior Vice President of Global Business Development. “Social media plays a big role because it gives consumers a much bigger voice than they ever had.”

5. There is competition … and cooperation

Thousands of companies have announced ambitious goals. Apple, for instance, vows to be carbon-neutral by 2030.

Fifty-three companies signed the Climate Pledge, co-founded by Amazon, committing to getting themselves to net-zero carbon emissions by 2050 – 10 years ahead of the Paris Agreement. The pledge requires them to adopt rigorous reporting, cut emissions and neutralize remaining emissions with credible offsets. Climate Pledge signatories include Microsoft, IBM, Johnson Controls, Unilever, Canary Wharf Group, Uber, Henkel, Siemens, Mercedes-Benz, Infosys, Real Betis, Daabon Group,

Another group has promised to share best practices for achieving net-zero emissions. The Transform to Net Zero initiative includes Maersk, Danone, Mercedes-Benz, Microsoft, Natura & Co., Nike, Starbucks, Unilever, and Wipro. The initiative makes business plans and other resources available online.

6. Technology is making it easier

TextileGenesis, based in Hong Kong and India, is one of many apparel companies adopting blockchain so it can track the sourcing of raw materials through to production and shipment of finished garments.

The fashion and apparel industry is moving to introduce sustainable materials such as recycled cotton, lyocell (made from wood pulp) and viscose (made from wood) in place of less environmentally friendly fibers like polyester and nylon, which contain petroleum, coal and chemicals. Blockchain would help apparel manufacturers source, track and certify their use of the new materials.

Piramal Glass, an Indian company that makes bottles and glass packaging for the pharma, cosmetics and perfume industries, is using blockchain to get supply chain transparency and auditability.    

Another important advance is the use of digital or virtual twinning.

The flood of data available from the Internet of Things (IoT) and cloud computing makes it possible and cost effective to create digital “twins” that model and simulate processes with potential to deliver environmental benefits.

“This pairing of the virtual and physical worlds allows analysis of data and monitoring of systems to head off problems before they even occur, prevent downtime, develop new opportunities and even plan for the future by using simulations,” says Forbes.

The Port of Rotterdam is using digital twinning to model automation, design and sustainability features that are part of its push to become “the world’s smartest port.” Twinning gives port planners the ability to virtually test use of autonomous ships, “digital handshakes” for documentation exchanged between vessels and the port, and emissions-lowering port call practices. 

Without digital twinning, port officials would have no way to test the transformational processes  without disrupting operations at a sprawling port that handles 8.8 million containers and 15 million twenty-foot equivalent units a year.

“In a virtual environment, we can verify and validate solutions before the real tests begin, maturing solutions much faster. We also don’t have the safety risks or hazards we would in real-life tests and that’s why this digital environment is better and faster for development and validation work,” says Karno Tenovuo, CEO of Awake.AI, the Finnish company that is Rotterdam’s smart-port development partner.

Tenovuo says ports will able to lower CO2 emissions 10% by adopting the features and optimization methods that will be harnessed in Rotterdam.

7. The ocean industry is racing to catch up

Slow to embrace sustainability, the maritime logistics industry is now an area to watch.

Leading container lines and ports are working on standards for a just-in-time port call process that would eliminate wasteful delays and dwell times. JIT port calls would allow ships to optimize steaming speed, lower fuel use, cut CO2 emissions, and avoid getting stranded outside ports waiting for berthing slots.

Singapore’s futuristic Tuas port is being built to handle 65 million TEUs a year. By consolidating existing container-handling facilities at a single location, Singapore will cut inter-terminal trucking hauls and emissions. Reused and recycled materials make up half of the land reclamation work, and the port is moving sensitive coral colonies that would have been damaged by the construction.

Maersk, the world’s largest container line, is accelerating development and deployment of the world’s first carbon-neutral container ship. Maersk says the vessel, a smaller ship known as a feeder, will run on biomethanol, made from paper-mill waste and other byproducts. It will join the Maersk fleet in 2023.

RightShip, a maritime risk-management company, created a ratings system to compare the efficiency of different cargo ships, along with operational performance used to score ships on safety. RightShip ratings allow shippers to choose vessels with lower CO2 footprints, better fuel efficiency, and higher safety ratings.

8. There are carrots to go with sticks

European Union companies that rely on imports from South Asia are promising broader market access, training and gap assessments for Sri Lankan exporters whose products can meet international sustainability standards.

The initial group of Sri Lankan companies are providers of rubber, apparel and food products, but a German and EU business delegation has agreed to help Sri Lanka extend the project to its critical tourism sector.

Banks and venture capital firms are offering preferential terms to companies that agree to meet environmental criteria, such as reporting CO2 emissions and implementing emissions-reduction strategies.

9. The sticks are real

In early 2020, BlackRock, the world’s largest asset manager, notified hundreds of listed companies in its portfolio that it had started to factor environmental issues and performance into its investment decisions.

A year later, BlackRock told its own investors that it had voted against the management of 53 companies – including some of the biggest global names in manufacturing and industrial supply – because those companies failed to “make sufficient progress regarding climate risk disclosure or management.”

Too many companies still rely strictly on internal data to get a picture of their supply chains. To strengthen their post-pandemic supply chains and drive sustainability, many realize they need to exchange data with suppliers and customers.

10. There’s nowhere to hide

Seventy-percent of shippers look at sustainability as part of RFPs, and more are requiring their vendors to report on sustainability metrics on a regular basis. They want to know about fuel efficiency; CO2 emissions; alternative fuel use; personnel & staffing devoted to sustainability; and fleet age.

Climate TRACE, an alliance of climate research groups, is close to launch of an initiative that will track and publish greenhouse gas emissions traceable to individual factories and ships.

“Our work will be extremely granular in focus – down to specific power plants, ships, factories, and more. Our goal is to actively track and verify all significant human-caused GHG emissions worldwide with unprecedented levels of detail and speed,” the alliance founders say.

Climate TRACE will give business leaders, investors, NGOs and climate activists a powerful tool “while ensuring that no one – corporation, country, or otherwise – will ever again have the ability to hide or fake their emissions data.”

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Although the task of integrating green practices into a traditional retail supply chain can seem daunting, the benefits are far-reaching—and the environment isn’t the only benefactor. Companies that adopt green supply chain solutions can cut costs, bolster brand image, and see an improved access to resources. In 2020, businesses with strong environmental, social, and governance practices had an 11 percent valuation premium over their competitors. 

By adopting green supply chain management practices, companies can find success while lowering their carbon footprint. Agility can help businesses capitalize on the benefits of sustainable supply chain solutions.

Introducing the green supply chain

The green supply chain refers to the integration of environmental-minded practices into supply chain management. As resource depletion, pollutants, and the expanding human carbon footprint place stress on ecosystems, companies can address and reduce their impact on the environment with green supply chain management.

Greening the supply chain

A supply chain is the system by which companies develop a raw material into a product or service that they then deliver to consumers. In this system, various people and organizations exchange resources and information to take a material—oftentimes beginning with extracted natural resources—and develop it into a product or service. The size and composition of a supply chain varies from industry to industry and product to product. 

No matter the structure, it is essential for a company to understand their own supply chain to ensure that they always have access to the materials they need from suppliers. Supply chain management necessitates the careful consideration of many factors, including procuring materials at a low cost, predicting trends to match supply and demand, optimizing the manufacturing process, and delivering the product to retailers. 

At each step of a supply chain there is waste, whether it is time, money, or resources. When these failures and inefficiencies arise, they unnecessarily consume the natural resources used in a supply chain. Although these issues may seem small in isolation, waste at each stage of a supply chain can lead to significant costs. Efforts to minimize waste can not only save a business money but also have environmental benefits that allow for a more sustainable and streamlined supply chain. 

Greening a supply chain refers to the incorporation of environmentally beneficial policies and objectives into the supply chain. As growing public and political attention focuses on the threat posed by climate change, the importance of finding green options for retail supply chains has grown. Companies must seek ways to lower carbon emissions, conserve resources, and safely dispose of waste.

Companies can employ the four key strategies of reverse logistics to meet these goals: reducing, reusing, recycling, and remanufacturing. These strategies track the supply chain from resource acquisition to product distribution. They then move the goods from a typical final destination back to a manufacturer in order to repurpose or dispose of them. By implementing these strategies, companies are able to reduce waste, slash emissions, and lower costs, effectively greening their supply chain.

What going green means for small and medium-sized businesses

Many large corporations are seeking to boost their environmental performance, paving the way for small and medium-sized businesses to green their supply chains. Although small and medium-sized businesses have less of an impact on the actions of their suppliers than large corporations do, they have the power to select suppliers with a lower environmental impact. For example, shipping emissions and costs from an overseas supplier far exceed those of a local supplier. This allows a small business to practice sustainability while cutting costs.

Small and medium-sized businesses can also commit to green purchasing, or the procurement of products that have a reduced impact on the environment. Green materials can lower costs associated with disposing of hazardous materials, operations, and employee safety. In addition, environmentally friendly products increasingly attract consumers. As such, small and medium-sized businesses can see an increase in consumer loyalty when they embrace green supply chain management.

Green supply chain versus sustainable supply chain

Although a green supply chain and a sustainable supply chain sound synonymous, there are crucial differences between the two. Green supply chain management focuses on integrating environmentally friendly practices into a supply chain. By contrast, sustainable supply chain management involves integrating socially, economically, and environmentally friendly practices in the supply chain. It is a broader term that encompasses green supply chain management; achieving a sustainable supply chain is impossible without green solutions. Essentially, all economic practices must be both environmentally and socially ethical.

Beyond the environmental practices that make up sustainable supply chain management, companies work to behave more ethically overall. Often, this relates to working conditions. Sustainable practices include eradicating child labor, ensuring safe working conditions, implementing appropriate working hours, and fairly compensating employees. 

These practices must be present in the entirety of the supply chain, not just in the consumer company. For a supply chain to be sustainable, manufacturers and suppliers must also practice sustainability; therefore, a key element of sustainability is transparency. A company must be clear about its sustainability targets and work with suppliers to reach them. This helps to ensure that the ethical codes necessary to sustainability are apparent throughout the supply chain as a whole.

Importance of sustainability in a retail supply chain

As the number of consumers worldwide continues to grow—1.8 billion people will join the global consuming class by 2025—it becomes increasingly important for companies to expand their customer base while adhering to sustainable retail solutions. Practices that attract new customers often align with green retail solutions, emphasizing the importance of sustainability in the retail supply chain.

Why retail needs to be sustainable

The environmental benefits of retail supply chain sustainability are clear: companies can adopt practices to lower their carbon footprint by conserving natural resources and cutting emissions. As the destruction of ecosystems and natural resources can damage a supply chain by lowering productivity and raising costs, a greener supply chain is often in a company’s best interests. Due to deforestation, for example, 81 percent of agricultural product companies reported significant changes to operations, revenue, and expenditure. 

Sustainable retail supply chains also result in better conditions for workers and less strain on the resources and energy sources in the communities surrounding warehouses and factories. Beyond the clear environmental and social benefits, however, sustainability in the retail supply chain can provide companies with tangible benefits relating to profits and business reputation. 

Top impacts of having a sustainable supply chain

To remain competitive, businesses must keep costs low. By greening their supply chain, companies can lower operational costs while attracting consumers, thus boosting their business. 

Lowered cost

As sustainable retail solutions evolve and grow more accessible, they allow a company to cut costs found in a traditional supply chain. McKinsey analysis shows that a supply chain produces over 80 percent more carbon emissions and more than 90 percent of the impact on air, land, water, biodiversity, and geological resources than that of the consumer company. An unsustainable supply chain can pose a significant financial risk to a sustainable company.

By focusing on sustainable transportation solutions, companies can reduce the cost of fuel emissions. Localized suppliers and manufacturers can also cut unnecessary trips that result in costly fuel usage. This can streamline the shipment process as more full-load trips help place the right materials in the right place without overflow.

Certain environmentally friendly, renewable materials, such as bamboo, Tencel, linen, and cork, also require less power to harvest or create. As unsustainable product processing can be hazardous on top of requiring a significant amount of power, green materials provide an accessible solution. They help lower acquisition and production costs.

In addition, as the global focus turns toward green solutions, great costs are associated with a lack of adherence to laws and regulations relating to sustainability. Targets outlined in the Paris Agreement, for example, require companies to reduce global greenhouse gas emissions. There are numerous other laws and regulations that enforce sustainable practices. Companies that fail to adhere can see their value chipped away by worker health and safety issues and child labor law violations. All companies can see their profits affected by issues such as deforestation, air pollution, and water shortages.

Increased reputation

In 2018, 81 percent of surveyed consumers expressed a strong belief that companies have an obligation to help improve the environment. This growing belief factors into purchasing decisions. Consumers who value improved environmental and social conditions will seek out companies with sustainable practices. 

The growing appeal of sustainable purchasing also impacts first- and second-tier suppliers. Companies can face scandals and damaged reputations for boasting sustainability while relying on suppliers with detrimental environmental and social practices. Suppliers who do not follow sustainable practices could see a loss of business. 

Green solutions for the retail supply chain

Companies seeking to green their retail supply chains have a number of solutions available to them. Due to the flexibility of these solutions, companies are able to select the green solutions that best fit their supply chains. Correctly implementing these solutions can allow companies to reap the benefits yielded by a more sustainable supply chain.

Top green solutions

There are a number of retail supply chain solutions that can enable companies to adopt green logistics. Although not every option is viable for every company, these solutions represent important first steps in greening a supply chain.

Measure the transportation’s carbon footprint

Companies can use ocean, truck, air, or rail transport as methods of transporting goods. For companies looking to reduce their negative environmental impact, ocean shipping is the most effective way to transport goods. Air freight produces the most carbon emissions at nearly forty to fifty times higher than ocean transport. In addition, ships built since 2013 have designs that make them 30 to 40 percent more carbon efficient than their predecessors. 

Regardless of the transport method, it’s more environmentally efficient to ship full container loads as opposed to less-than-full container loads. Reducing shipment frequency by increasing shipment size also helps companies lower emissions.

Improve packaging options

By reexamining packaging options, companies can cut both costs and carbon emissions. Packaging solutions made from recyclable or biodegradable material, such as fabric packaging and recycled plastics, can reduce waste and a company’s carbon footprint.

Additionally, companies can cut down on packaging size, limiting bulk and waste. They can also help cut down on shipment size, enabling full container load shipments to carry more products.

Use efficient warehouses

Green warehouse solutions play a vital role in lowering costs and reducing resource consumption. LED lights, for example, are 90 percent more energy efficient than incandescent lights.

Companies such as Agility turn to green solutions—photovoltaic panels to generate electricity and updated air-conditioning solutions, for example—to limit the resource drain in surrounding communities. Warehouses can increase their overall sustainability by creating jobs without pulling energy from the local power grid and generating pollution.

Focus on renewable energy 

Renewable energy sources, such as solar power, wind power, or hydropower, allow companies to reduce the waste and emissions associated with fossil fuel usage. These are naturally replenishing power sources that provide clean, reliable energy. A study by Bloomberg New Energy Finance projects that renewable, zero-emission energy sources will make up 60 percent of electricity generation by 2040.

Renewable resources are more accessible and affordable. Their usage allows companies to avoid the price fluctuations and regulatory changes associated with fossil fuels, resulting in lower costs.

Implementing green solutions

There is a wide array of green solutions, with some suiting certain companies better than others—due to size or financial constraints, for example, it may be impossible for some businesses to ship using biofuel. Regardless of the specific action that a company takes to green its supply chain, one of the most important tools in the implementation of green logistics is accountability.

Companies rely on a number of suppliers to produce goods. To increase supply chain sustainability, a company must identify environmental and social challenges among its suppliers. From there, the company can require suppliers to set their own goals that align with the company’s expectations.

To truly spark change, companies must also extend resources, such as training modules and conferences. This provides suppliers with the tools necessary to implement sustainable practices. Periodically, companies can also perform assessments to ensure that their suppliers are adhering to these practices.

To aid in these checks, Agility created a Carbon Trust–validated methodology to provide logistics customers with carbon footprint reports. These free reports allow companies to track carbon emissions throughout their supply chain, providing them with the information necessary to reduce emissions. With the availability of this information, consumer companies can also be sure they are partnering with the right suppliers. 

Retailers leading by example in green solutions for supply chain logistics

By integrating sustainable practices in their supply chains, several major corporations established themselves as leaders in green logistics. They made significant steps toward green corporate offices, and they recognize their supply chains as a necessary part of achieving sustainability. Their advancements can serve as a model for other companies looking to green their retail supply chain.

Top retailers implementing green solutions

Many major retailers look to improve their environmental impact by shifting to renewable energy, cutting carbon emissions, and adopting sustainable practices. In recent years, Apple, Coca-Cola, and Volkswagen established themselves as leaders in this area through their green supply chain initiatives.

Apple

As one of the world’s leading tech companies, Apple has an extensive supply chain, with manufacturers worldwide. As the company expanded globally, it continuously sought ways to boost its supply chain sustainability.

The company’s sustainability drive focuses on climate change, resources, and smarter chemistry. Apple uses recycled materials to make products such as the MacBook and iPhone, with the MacBook Air and Mac made from 100 percent recycled aluminum. The innovative design enabled Apple to reduce its carbon footprint by 4.3 million metric tons in 2019.

Apple is also establishing methods for increasing energy efficiency throughout its supply chain. This is made possible through close partnerships with suppliers and by investing money in the sustainability of their suppliers. These partnerships educate suppliers on sustainability, enabling them to limit waste while manufacturing Apple products. In addition, by upgrading their buildings, Apple lowered their operational energy by nearly one-fifth.

The company also invests in renewable energy. At this time, renewable energy powers 100 percent of Apple’s facilities. With innovation, Apple hopes to shift more of its supply chain to rely on clean energy. In 2020, Apple forged agreements with seventy suppliers to use 100 percent renewable energy for Apple production. This will cut approximately 14.3 million metric tons of carbon emissions each year. 

Although Apple’s corporate operations are already carbon-neutral, the company plans to be entirely carbon-neutral across its supply chain and product life cycle by 2030.

Coca-Cola

Coca-Cola is the world’s largest beverage manufacturer and boasts one of the globe’s largest supply chains. The supply chain is responsible for the company’s procurement, planning, manufacturing, and engineering. Coca-Cola focuses on the need for sustainability at all points of the supply chain, from sourcing the raw materials to distributing a finished product to customers. In 2017, the company appointed Beatriz Perez as its first-ever chief sustainability officer, demonstrating its commitment to green supply chain management.

Coca-Cola invests in advanced technologies to help digitalize its supply chain operations. This will help optimize its existing infrastructure while also saving energy and water. In 2019, these technologies helped the company cut its water usage by 22 percent and total energy consumption by 31 percent.

The company also places a great deal of focus on the sustainable sourcing of raw materials. It developed an approach to sustainable agriculture, which it shares with its suppliers, providing guidance on protecting the environment, enforcing workplace rights, and building sustainable communities. This approach ensures that the company sustainably sources the key ingredients in its beverages. To further enforce this, Coca-Cola developed supplier guiding principles, which its suppliers must adhere to.

The close relationship that the company fosters with its suppliers helps Coca-Cola work toward its 2025 goal of cutting its 2017 emissions level by 30 percent.

Volkswagen

Volkswagen is one of the world’s foremost automobile and commercial vehicle manufacturers. The company has built close relationships with its suppliers so that it can carry out its three-pronged approach to creating sustainable supply chains: prevention, detection, and reaction. 

Inspiration for Volkswagen’s sustainability initiative comes from the goals set in the Paris Agreement. To reach these goals, Volkswagen focuses on its suppliers, with sustainability requirements written into their contracts. Based on its vehicles’ life cycle assessment data, the company is able to identify the most significant sources of emissions across the supply chain. The company then collaborates with suppliers to reduce these emissions.

Volkswagen also promotes resource cycle management, a process that reuses raw materials from old vehicles. This can cut energy consumption by 80 percent. Volkswagen also has a closed-loop cycle for aluminum in which press shops return scraps of aluminum to the distributor, who then recycles them.

To further its commitment to sustainability, Volkswagen has a strong human rights initiative. The close focus on human rights means that the company’s initiatives are not only green but also sustainable.

Benefits of green solutions

The green supply chain logistics these three companies adopted led to impressive financial gains. This, coupled with the positive environmental impact of their initiatives, demonstrates the benefits of green supply chain management. 

Climate change has a growing impact on the cost of materials necessary for business operations. Coca-Cola noted an uptick in the price of water, energy, and raw materials. This is due to water stress, carbon taxation, and resource disruption caused by severe weather conditions. As such, the company plans to cut costs by reducing the water per liter by 20 percent in 2025. 

Apple found comparable benefits in shifting to environmentally friendly initiatives. In 2019, for example, Apple’s investments in energy-efficient technology in new and existing buildings allowed the company to cut $27 million in electricity costs. 

Similarly, Volkswagen’s commitment to reverse supply chain logistics by remanufacturing products such as turbochargers, differentials, coolant pumps, and alternators allowed the company to cut costs by 30 percent per part.

The final benefit these three companies attain by greening their supply chain is a boost to their reputation. By demonstrating their commitment to more sustainable practices, these brands earn the trust of consumers. Additionally, they pave the way for and encourage other businesses to adopt green supply chains.

How you can implement similar methods in your supply chain

The green supply chain methods developed by Apple, Coca-Cola, and Volkswagen provide a model for other businesses. Although these are major retailers, their sustainability initiatives are a valuable framework for small and medium-sized businesses.

Apple, Coca-Cola, and Volkswagen dedicated time and resources to sustainable supply chain management. Although not every company can make significant investments into greening their suppliers or appointing a chief sustainability officer, it is important to set goals relating to green supply chain management. These demonstrate a company’s commitment to an improved environmental performance and streamline the path ahead.

By tracking a supply chain and identifying areas of waste, a company can construct its idea of success as it relates to green supply chain management. From there, a company can lay out the steps necessary to reaching these goals. As Apple, Coca-Cola, and Volkswagen did, companies can turn to solutions such as sustainably sourcing raw materials, remanufacturing material, expanding recycling programs, and relying on green energy sources.

Another key to Apple’s, Coca-Cola’s, and Volkswagen’s success in supply chain management comes from their commitment to improving sustainability among their suppliers. Companies can also share their set goals with suppliers in order to ensure their whole supply chain is working toward a lessened environmental impact.

How Agility can help

As green solutions become a more pressing necessity, retailers must seek out methods that allow them to optimize their supply chain while practicing green supply chain management. The green supply chain integrates practices that lower carbon emissions, conserve resources, and safely dispose of waste. These practices can also enable companies to streamline their supply chain. While the environmental benefits of green supply chains are numerous, companies can also reap the rewards of lowered costs and a bolstered reputation when they shift to green supply chain management.

Agility has solutions to help companies set and achieve their sustainability goals. We work with shippers, carriers, and other partners in the supply chain to lower carbon emissions, allowing companies to capitalize on the benefits of a green supply chain. Contact Agility to boost sustainability and optimize your supply chain.

The post A “green retailing” how-to: Optimizing the supply chain for environmental sustainability appeared first on Agility Logistics.

Green distribution is just one solution for a growing problem, but it stands to make a big difference. The European Commission reports that maritime transport alone is responsible for about 2.5 percent of global greenhouse gas emissions. The Environmental and Energy Study Institute found that commercial aviation is responsible for about 5 percent of global warming. And the US Environmental Protection Agency reports that containers and packaging comprised 82.2 million tons of municipal solid waste—28.1 percent of all municipal waste produced in the U.S. in 2018. In short, the impact of logistics activities can add up. At Agility, we believe it’s in our collective best interest to do our part for a greener world. That’s why we’re committed to building greener supply chains and educating our clients about how they can ship goods both sustainably and efficiently.

Importance of sustainable distribution methods

Sustainable distribution methods reduce carbon dioxide (CO₂), a greenhouse gas causing global warming. These practices also reduce waste and optimize resources to improve the health of our planet and build a better future. And they help businesses take action to make changes that matter to them and their customers.

How does distribution impact your ecological footprint?

Distribution consists of many activities, from packaging to transportation, that have a substantial impact on the earth. One way to think of this is in terms of your organization’s ecological footprint. This term refers to how much of the biological capacity of the planet your business needs in order to operate. Calculating this accurately is far from simple since you must take into consideration everything from the urban infrastructure and roads you rely on for distribution to the waste products and CO₂ emissions you produce.

Virtually all businesses contribute to what’s known as ecological overshoot. This is when our collective demand on the Earth’s ecosystem exceeds its ability to absorb our carbon dioxide emissions and regenerate the resources we have used at a rate that keeps pace with our consumption. That’s disheartening, but there’s a lot we can do to reduce overshoot. Even actions as simple as recycling can shrink a company’s ecological footprint. And adopting green distribution methods can make a big difference, especially over a long period.

What are the benefits of sustainable distribution methods?

Hands down, supply chain sustainability is better for the planet. But businesses can achieve many other benefits from striving for sustainability:

• Increased efficiency: Green distribution practices prioritize efficiency to prevent wasted energy. That could mean anything from packing trucks or shipping containers more efficiently to achieving optimal fuel efficiency during ground transportation. Sometimes, it even comes down to how seamlessly your team works together to get the job done, which could mean less idling equipment. All of that adds up to significant energy savings and reduced carbon emissions. But what’s more, a business that runs smoothly tends to have a happier team, better customer outcomes, and less wasted resources. Since improving operational efficiency tends to be a goal for most businesses, think of this as a win-win for you and the environment.
• Reduced costs: Needless to say, reducing energy use is better for your bottom line. Even relatively small changes, like remembering to turn off outdoor floodlights during the day, could lead to big savings for your operation. For instance, a 2018 energy audit conducted by researchers found that a Zimbabwean industrial site could achieve annual electricity cost savings of over $50,000 per year simply by improving its lighting technologies. And when one of our customers wanted to decrease supply chain waste by reusing cartons, Agility collaborated with them to double carton reuse and save $128,000 over a period of five years. When you consider that sustainable distribution streamlines many functions across your supply chain, it’s easy to imagine how fast the savings can add up.
• Improved risk management: Sustainable distribution methods can reduce several kinds of risk for your organization. For one, greener practices are better for the overall health of your employees and the environment surrounding your distribution centers. After all, your business can be liable for issues resulting from harmful practices—like not adhering to regulations for greenhouse gas emissions from commercial trucks. In addition, organizations face risk to their reputations. Customers value environmentally responsible businesses. Irresponsible behavior such as excessive waste generation or failure to take environmentally beneficial actions can ultimately harm your brand.
• Improved service: Increasing your organization’s efficiency doesn’t just achieve green gains. It leads to satisfied customers. For instance, by streamlining your operations to reduce energy use, you could achieve cost savings and pass them on to consumers. Perhaps more importantly, today’s customers care about making sustainable choices. According to a recent study by Barron’s, two-thirds of North American consumers say they prefer eco-friendly brands. Changes such as switching to recyclable, biodegradable packaging material can help your customers feel better about their purchasing decisions, making them more likely to shop with you again.
• A competitive edge: Making the effort to go green can lead to a competitive advantage across many areas of your organization—from employee recruitment and retention to positive online reviews. Why? Because green business practices are better for workers, communities, and the planet. Doing your part to protect the environment, such as saving water, switching to renewable energy, and using recycled materials ensures your organization can continue operating sustainably and profitably in the future. If your competitors aren’t doing the same, they’ll struggle to adapt to the values and regulations of the changing business landscape. Finally, committing to sustainable distribution practices is key to keeping your organization top of mind for environmentally conscious consumers. When it comes to communicating your values to your customers, a choice as simple as compostable packing materials speaks volumes.

Getting started with green distribution

Turning a traditional supply chain green doesn’t need to happen overnight. It all starts with breaking down your processes to see how you could make more environmentally friendly choices at every step.

Components of green distribution

Every component in the distribution process has room for improvement. Achieving truly sustainable operations means taking a close look at every leg of your customer’s and product’s journey: 

• Warehousing: Could your warehouses be greener? Most likely, yes. These buildings tend to be drafty and, in some cases, larger than they need to be. This makes them costly to heat and cool. And of course, heating and cooling processes—along with lighting and warehouse equipment—cause significant CO₂ emissions. In addition, warehouse location matters. Distribution centers located few and far between means more miles of ground transportation, leading to more emissions.
  
  Overhauling your own warehouses or rebuilding from the ground up can be prohibitive, though when constructing new distribution centers, green options abound. For instance, warehouse architecture could minimize wasted space and even maximize natural light to reduce the need for electric lights. That said, there are many ways to improve the warehouses you already have—starting by changing the way you power them. For instance, installing solar photovoltaic roof panels lets you make use of a plentiful resource in shade-free warehouse complexes: the sun. Painting your roof a reflective color can help keep your warehouse cooler and reduce the cost of air conditioning. And hydro and wind power offer alternative energy sources that can replace or minimize your reliance on fossil fuels. These changes can make a big difference in your carbon footprint, not to mention your operational expenses.
  
  Do you rely on a third party for warehousing? In this case, location is everything. Ideally, choose a warehousing partner with many locations around the country. Having distribution centers convenient to major shipping ports, airports, and urban centers with a high concentration of your customers can help you maximize ground transportation efficiency.
  
• Packaging: Unsustainable packaging doesn’t just lead to more waste in landfills. It causes environmental impact at every phase of its life cycle, from material sourcing to transportation to disposal. Packing peanuts made of Polystyrene foam are especially notorious. They aren’t biodegradable and cause harm to fish and wildlife who eat them. In addition, producing packing materials often uses nonrenewable resources, like plastic. NPR reports that emissions from producing and incinerating plastics could amount to fifty-six gigatons of carbon between 2019 and 2050.Fortunately, there are many alternatives on the market. For starters, shippers can choose from packaging materials made from recycled materials, including corrugated cardboard “bubble wrap.” Air pillows are another sustainable packaging idea. Since they’re mostly air, they minimize the material needed to make them but keep products safe during shipping. And lately, many biodegradable packaging materials have entered the market. For instance, cornstarch packaging has plastic-like properties but consists of organic materials. And mushroom packaging uses agricultural waste, so your customers can compost it in their backyards.When evaluating green packaging, consider a few factors. For one, packaging should ideally make use of renewable energy at every stage of its life cycle. That includes materials sourcing, manufacturing, transport, and disposal. In addition, optimized packaging should use renewable and recyclable materials. And finally, it should have a design that is as efficient as possible to minimize waste at every step—and optimize loads for transport too. Even a change as simple as switching from rigid to flexible packaging can increase the volume of goods that fit into a truck, reducing loads and overall emissions.
• Transportation: In most cases, transportation will be the area of your distribution operations that has the most environmental impact. Vehicles that run on gasoline and diesel emit CO₂, the major culprit in environmental issues such as global warming and acid rain. Add to that the fact that fossil fuels are nonrenewable resources, and sourcing them presents an ongoing environmental threat. And ground transportation is not the only source of harmful emissions. Shipping by air and sea—a critical part of the journey for importers and exporters—causes environmental hazards too. Beyond air pollution, ships can release oil and chemicals into the sea, harming water quality and marine life. The same goes for planes, since jet fuel and other chemicals can enter waterways in the form of runoff.So what can you do? For ground transportation, you can use fleets that run on alternative fuels or even invest in electric trucks, which have improved to the point where they’re suitable for long hauls. Other green transportation methods, such as rail, offer another possibility. When shipping by air or sea, consider consolidating goods as much as possible to minimize the number of shipments you make in a given time frame. By packing more efficiently, you could ultimately reduce your carbon footprint. Finally, partner with a freight forwarder that’s committed to sustainability—like Agility. We’ll help you make the necessary changes to your supply chain to ensure a greener journey at every step.

How can existing practices become economically and sustainably refurbished?

Wondering how to develop a green distribution strategy without overhauling every aspect of your operations all at once? In many cases, some adjustments to your existing practices can make a big difference. Here are some tips to help you start transforming your distribution processes—even if it’s just a little at a time:

• Audit your HVAC system. Heating, ventilation, and air conditioning (HVAC) systems use a lot of energy, and they aren’t always as efficient as they could be. An HVAC technician can spot inefficiencies and fine-tune your system to save you energy. That’s good for the environment and your bottom line.
• Invest in insulation. You’ll recoup the costs in no time. Drafty warehouses require much more energy and expense to achieve temperature control. By installing installation, you can heat or cool your warehouse more efficiently and even save wear and tear on your HVAC system.
• Keep equipment maintained. When equipment isn’t in optimal shape, it may not perform as efficiently. Maintenance also extends the life of the product. Remember, replacing equipment before the end of its life span has an environmental impact too. But when the time is right, look for energy-efficient replacements.
• Switch to energy-efficient lighting. Today, there are many great options on the market, like light-emitting diodes. Making the upgrade is greener and will reduce your electricity bill.
• Research new packaging options. It can take some time to find the right packaging solution for your products, so get started now. Biodegradable materials are more eco-friendly and can even make a good impression on your customers. In addition, much of the packaging on the market today is lighter in weight, making it more efficient to ship. That can lead to reduced emissions during transport.
• Consolidate your shipments. Do you frequently send out less-than-truckload shipments? Consider sending full truckloads, since it’s easier to efficiently pack a full truck with no wasted space. Optimal packing means fewer trucks on the road and less emissions.
• Change trucking policies. Having clear engine shutdown policies help drivers know how long is too long when it comes to idling. It’s also important to evaluate trucker speed and provide clear guidelines for how fast they can go. That means knowing your vehicles’ optimal range and figuring out the right balance of fuel efficiency and acceptable delivery speed. These kinds of changes can make a big difference when it comes to reducing carbon emissions.
• Offset your carbon footprint. A good start to going green is to make a donation that offsets your organization’s carbon use. Many organizations offer this service, giving you a way to make contributions to vital projects such as planting trees and restoring the rainforest. Just as importantly, it’s a way to start calculating and becoming conscious of your carbon emissions. After all, awareness is the first step to change.

Best products for green distribution

Today, businesses are fortunate to have many options for achieving green distribution. In particular, the marketplace offers a wealth of better products and packaging to replace unsustainable kinds. When looking for the best products for green distribution, consider the following criteria:

• Low emissions. Emissions don’t just apply to manufacturing and transport. Products themselves can emit volatile organic compounds and formaldehyde. Always opt for goods that promote good air quality—indoors and out.
• Choosing products and equipment built to last ultimately leads to less waste. However, when choosing material like packaging, too much unnecessary durability could actually lead to more waste. After all, your customer is only going to recycle or dispose of the materials. So invest in durability when it makes sense.
• Recycled content. Products that use postconsumer or postindustrial recycled content tend to be the greener choice.
• Reused content. In some cases, it’s possible to find salvaged or upcycled products. For example, if you’re constructing a warehouse from the ground up, consider incorporating reclaimed materials.
• Manufacturing process. How was the product made? Items made via natural or renewable resources—such as wood or corn—are more sustainable than those made from nonrenewable resources, such as petroleum. Also, make sure the manufacturing process doesn’t result in toxic by-products that could damage the environment.
• Supplier location. Products that need to be shipped long distances, or that use imported materials, require more energy throughout the supply chain. If at all possible, choose local, sustainable suppliers.
• Ozone friendliness. Look for products that don’t contain ozone-depleting substances. For example, aerosol sprays, blowing agents for foams and packing materials, refrigerants, and other substances contain chlorofluorocarbons, which can damage the ozone layer.
• Sustainable harvesting. This applies to wood or other natural products. Sustainable harvesting or sustainable agriculture uses a set of practices and principles to ensure careful resource management. For instance, instead of clear-cutting woodlands, foresters harvest trees selectively and make sure to leave plenty for the future.
• To minimize waste, choose products that are recyclable. In particular, look for materials that are suitable for a closed-loop recycling system. Closed-loop recycling is when manufacturers can turn recycled materials into the same products many times over without much loss of quality. For example, it’s possible to recycle glass and metals such as steel again and again. And to minimize waste, avoid single-use products whenever possible.
• Distributors can’t control whether customers recycle packing material. But with biodegradable materials, at least they know packaging will break down easily in a landfill. Consider that paper products can biodegrade in as little as a few months, whereas plastic bags take five hundred years or longer.

When evaluating the types of packaging most sustainable for green distribution, you need to factor in not just the above criteria but also your performance goals. After all, having your products break during transit isn’t sustainable. Fortunately, there are plenty of great options out there—from corrugated cardboard packing materials to reusable plastic shipping cartons. Your choice comes down to whether a given product’s costs, performance, and sustainability meet your organization’s objectives.

How to achieve green logistics in the transport stage

A key principle of green logistics is minimizing wasted energy and its resulting emissions. You can do that by optimizing cargo space, which helps reduce the number of trips you need to make. In addition, load-planning software takes the guesswork out of logistics planning. Since load optimization involves many factors—from vehicle capacity to load requirements and how far your goods need to travel—logistics companies such as Agility rely on this sophisticated software to plan optimal routes. Rely on us to ensure your shipment gets from point A to point B as efficiently as possible.

Latest green practices in supply chain management

Supply chain management is a constantly evolving field, with new and greener solutions arriving by the day. In part, that’s because green supply chains lead to competitiveness and economic performance. Since sustainability measures increase energy efficiency and rely on cost-efficient recycled products, they’re good for a business’s bottom line.

In fact, Boston Consulting Group found that businesses leading in environmental, social, and governance practices have an 11 percent valuation premium, compared to their competitors. What’s more, the majority of consumers say they are willing to pay a price premium for sustainable goods. As consumers clamor for greener brands, companies must compete to incorporate sustainable practices throughout the value chain. This drives green innovation in pretty much every field—including supply chain management.

How can supply chain leaders incorporate green practices while maintaining profit margins?

Today, supply chain leaders use the following methods to go green while maintaining—or growing—their profits:

• The green service model. These days, supply chain leaders don’t have to invest in all-new green equipment or the technology that enables logistics efficiency. They can rely on the service model instead. You can find everything from eco-friendly warehouse lighting to alternative energy sources as a service. That means you don’t have to assume the upfront expense, risk, and ongoing maintenance of green solutions. An expert service provider handles everything for a monthly fee.
• Thinking outside the box. It’s fully possible to combine green distribution practices with the goal of increasing cost efficiency and profits. Supply chain leaders do this every day. For instance, they may discover that new, lighter packaging reduces cargo weight and volume—thereby trimming costs and energy use. Or they may determine that shipping large volumes of goods by ocean freight instead of transporting smaller quantities via air freight is both a cost saver and a more sustainable choice. Don’t be afraid to dive in with both sustainability and profitability in mind and see what creative solutions you come up with.
• The circular economy. Traditionally, many business processes—including the supply chain—produced a lot of waste that ended up in landfills. Today, supply chain leaders are changing that by giving waste materials a new life. This method is known as the circular economy model, and its possibilities are endless. For instance, businesses could turn recycled content into green products or packaging or sell by-products instead of discarding them.

The challenges of implementing green practices in supply chain management

When trying to improve sustainability performance in the supply chain, businesses tend to struggle with the following areas:

• Since the field of sustainable supply chain management is still evolving, supply chain leaders may not know the latest facts and best practices.
• Operational changes. Yes, change can be disruptive. Implementing green initiatives may require you to reimagine ingrained practices or enforce new protocols. In time, these will become your team’s new normal.
• Finding cost-effective and sustainable materials and equipment—and establishing new supplier relationships—may require time, planning, and upfront costs.
• When implementing new measures, expect some initial resistance. Communicating the importance and efficacy of sustainable practices—and listening to your team to address snags along the way—is key to going green.

The post What is green distribution? A guide to sustainable logistics appeared first on Agility Logistics.

Wondering how to get started? Agility can help. We’re a leader in building green supply chains, with a commitment to helping our customers achieve their sustainability goals. In this article, we’ll cover the fundamentals of achieving a greener supply chain, why it matters, and how you can do your part to drive change.

Importance of implementing green supply chain practices today

Green supply chain management (GSCM) practices offer substantial benefits for the environment. For one, striving for supply chain sustainability by using less energy reduces carbon dioxide (CO₂) emissions and other air pollutants. Produced by activities ranging from industrial work to operating vehicles, CO₂ is one of the main greenhouse gases responsible for global warming. According to the US Environmental Protection Agency (EPA), CO₂ emissions have increased by nearly 90 percent since 1970. And already, climate change has impacted diverse industries that rely on natural resources—from commercial fishing to forestry. By making the switch to more sustainable practices, businesses can do a lot to slow or stop global warming and ensure a bright future for our planet.

In addition, green supply chain practices reduce waste and conserve nonrenewable resources. For instance, when businesses choose recycled paper products instead of plastic, they keep trash out of landfills and fragile ecosystems while also reducing their reliance on petroleum-based products. When they load trucks more efficiently and institute stricter policies for driving speed and idling, they use less fuel. And when they abide by the principles of sustainable agriculture and sustainable forestry, they conserve resources for future generations. In short, implementing GSCM practices is not just important for the health of our environment. It’s critical for sustaining industries and communities into the future.

How implementing a green supply chain can save you money

A fundamental principle of green supply chains is reducing waste and overall energy use. Needless to say, this can lead to big cost savings. According to Inbound Logistics, the office supply retailer Staples saved $3 million in fuel annually, simply by asking its delivery drivers to slow down. By limiting top speed to sixty miles per hour, Staples reduced its fleet’s fuel efficiency from 8.5 miles per gallon (mpg) to 10.4 mpg, equating to 20 percent less fuel. Other ways of using GSCM practices to improve environmental performance and reduce costs include:

• Rethinking your materials: Using recycled materials during the manufacturing process can save money. For instance, it’s now possible to convert waste plastic into 3D printing filament, which manufacturers can use to create new products at lower costs than new plastic. While testing new materials to ensure they meet safety and performance standards takes time, the payoff could be worthwhile.
• Reusing waste or by-products: Think creatively about what your company is throwing away—whether that’s at the manufacturing stage or during distribution. It’s possible to reuse waste you’d otherwise discard or even unlock new revenue streams from recyclable materials. For instance, some food manufacturers supply local farmers with organic waste to use as fertilizer. And with closed-loop recycling, manufacturers can turn recycled products made of materials like glass or metal into the same products without sacrificing quality. So it may be possible to salvage excess materials or broken products from the manufacturing process and use them to make new goods.
• Cutting back on packaging: Switching to streamlined packaging uses less materials and can lead to lower costs. In addition, a more efficient package design could make it possible to ship more units in the same cargo space, lowering transport costs and reducing greenhouse gas emissions.
• Reducing risk to your business. Unsustainable practices inevitably have an end date. When businesses don’t plan for the future, they can find themselves without a cost-effective supplier if environmental or socioeconomic issues cause disruptions to the supply chain. Proactively planning to adopt supply chain practices that are both smarter and greener can help you prepare for a future in which your former practices are no longer feasible. A great example of this is how sustainable forestry helps preserve woodlands for ongoing use, as opposed to clear-cutting trees.
• Redesigning your processes: Have you considered ways that technology could streamline your manufacturing processes or other areas of your operations? Small changes that boost efficiency can lead to big energy and cost savings down the line. For instance, Nike famously used a new kind of knitting technology to reduce labor and materials for a greener, more cost-effective sneaker. Even boosting your team’s productivity by a marginal amount could reduce equipment operation time and lead to less energy use.
• Optimizing transport: Streamlining your transportation logistics offers many ways to save money and shrink your carbon footprint. For instance, you could use load-planning software to not only make logistics planning easier but utilize cargo space more efficiently and reduce the number of trips you must make to transport your products. In addition, making the change from primarily using air freight to shipping goods via another method, such as ocean freight, is better for the environment and easier on your bottom line.

How implementing a green supply chain can impact your public image and marketing

Today’s consumers value companies that make the effort to go green. In fact, Boston Consulting Group found that 70 percent of consumers are willing to pay a 5 percent price premium for sustainable goods. After all, green supply chain practices don’t just help to preserve the planet for future generations. They make communities better now, in part by reducing emissions that impact air quality and worker health. And as consumer values shift, demand for green products will keep growing. According to the US Small Business Association, four out of five consumers buy environmentally friendly products and services.

What does that mean for you? For one, communicating your green values could boost your public image and marketing efforts, helping you win over customers who are looking for sustainable solutions. For two, opting not to get on board with the demand for green supply chain practices could ultimately harm your brand. As we collectively seek solutions for pressing climate issues, environmental consciousness is growing. Overhauling your supply chain practices now will help ensure your company stays at the forefront of positive change.

Types of green supply chain practices

Green supply chains use ethical and environmentally sound practices at every stage, with the goal of reducing air, water, and waste pollution. Needless to say, designing a sustainable supply chain requires different practices at each leg of your product’s journey from initial concept to your customer’s home:

• Green purchasing: Green purchasing, which means finding suppliers with environmentally sustainable products and services, is just as important as greening your own operations. After all, sourcing your materials sustainably is the foundation on which the rest of your supply chain rests. For some brands, seeking recycled or remanufactured materials is the way to go. Others will need to find sustainably harvested raw materials, such as lumber from suppliers that take steps to conserve wildlife habitat.
• Green manufacturing: Green manufacturing focuses on using fewer nonrenewable natural resources, reducing pollution and waste, and keeping emissions to a minimum, among other green practices. The most critical component of going green at this stage is reducing energy use. Everything from powering equipment and lighting to keeping your factory warm or cool requires significant energy output. Fortunately, alternative energy sources like hydropower, wind energy, solar energy, and biofuels can help reduce your reliance on fossil fuels. Newer manufacturing technologies and even changes as simple as installing light-emitting diode lights can also make a big difference in your energy usage.
• Green packaging: Green packaging considers every phase of a package’s life cycle. That includes everything from how your supplier sources materials to how consumers dispose of the packaging. Using boxes and packing materials made of postconsumer recycled materials is a good start. You’ll find many varieties of recycled paper and corrugated cardboard filler on the market. Another option is biodegradable packing material. Made of everything from corn to mushrooms, this material will easily decompose in consumers’ gardens—or in a landfill, if it comes to that. Which leads to another point: it’s important to instruct consumers on how they can recycle packaging. Don’t expect your customer to know that those cornstarch packing peanuts are dissolvable in water and compostable in the backyard.
• Green warehousing: Green warehousing focuses on ensuring warehouses run more efficiently, reducing waste and energy use. One big challenge is that warehouses grow obsolete quickly. Logistics Management reports that about 11 percent of US warehouses are over fifty years old, and just 4 percent have construction dates more recent than 2008. Older warehouses tend to be less energy efficient, leading to more CO₂ emissions. Fortunately, renovations can help make warehouses greener. Installing installation, using alternative energy sources like hydro and wind power, and adding windows to maximize natural light are just a few ways to improve your facility. And today, many organizations work with a third party to take advantage of managed warehouses in strategic locations. The closer your warehouse is to key distribution hubs, the less energy you’ll need to expend when transporting goods.
• Green transportation: According to the EPA, transportation caused 28.2 percent of 2018 greenhouse gas emissions—more than any other source. Fortunately, there are ways to make transportation greener, such as consolidating goods to minimize your total number of air freight shipments or truck trips. You can also invest in electric trucks or those that run on alternative fuels. These options have improved significantly in recent years, becoming a viable option even for longer hauls. And don’t overlook rail transportation, which offers an efficient and eco-friendly solution. Trains carry far more cargo than trucks, use less fuel per ton-mile, and tend to cost less. And finally, choose a freight forwarder that prioritizes green transportation. At Agility, we’re committed to working with our partners to make transportation greener, and we invest in solutions such as electric and double-trailer trucks that reduce overall emissions.
• Life cycle management: Green product design always considers the complete life cycle of the item. For example, say you design backyard playground equipment for children. If the material is sturdy enough, your customer can pass on the playground equipment to another child after the first child outgrows it. And if the playground consists of recyclable materials, such as wood, those materials can have a second (and third, and fourth) life as outdoor furniture, paper, or mulch after the original product is no longer in use.

What is the difference between green and sustainable supply chain practices?

Green supply chain management and sustainable supply chain management share many features in common, but the two fields are not interchangeable. Whereas green supply chain practices have the goal of improving environmental health, sustainable supply chains focus on reducing their impact across many areas of life to ensure industry can continue to operate into the future. Naturally, environmental concerns factor into sustainability. But organizations also have to consider areas of social responsibility that include fair trade, ethical labor practices, and the effects of industry on surrounding communities. They also need to consider economic issues, like managing sustainable growth.

Leading examples of green supply chain practices, such as actively working to switch to biofuels, incorporate recycled materials into the manufacturing process, and reduce energy use, are also sustainable. But not all sustainable supply chain practices are explicitly green. For example, instituting better labor practices and fair pay for workers helps promote a higher quality of life, overall. But these practices don’t have a direct impact on the environment.

Factors affecting green supply chain practices

Green supply chain practices are critical to the health of our planet and the continued sustainability of industry. In addition, they lead to competitiveness and economic performance in several ways: by increasing cost efficiency, reducing waste, and meeting consumer demand for green products. That said, the leading factors advancing adoption of green supply chain practices can also hinder the process of going green, if not managed properly. Let’s take a look at some of these factors and what businesses can do to develop and promote GSCM practices:

• Leadership commitment: When managers and executives are all fully on board, it’s much easier to develop a unified approach to creating a green supply chain strategy. On the other hand, when decision makers disagree about what practices to adopt, contradictions can arise throughout the supply chain. Potential challenges include issues with supply chain performance, quality control, and overall effectiveness of green initiatives.
• Technology: A variety of software applications and advanced technology support green supply chain management at various steps of the process. These could range from warehouse management systems (WMS) that boost warehouse efficiency to new manufacturing technologies that use less energy to make products or reduce the quantities of hazardous materials involved in the manufacturing process. When employees learn and readily adopt technology that enables green supply chains, organizations tend to see good results. When there’s employee pushback or poor adoption, it can be harder to implement lasting changes.
• Brand image and company culture: When going green has positive implications for your brand and your culture supports these changes, introducing new green practices throughout your supply chain tends to go smoothly. In addition, involving your human resources team in recruiting green supply chain experts drives positive results. If corporate culture is less supportive of green initiatives, and if consumer demand isn’t strong enough to drive change in your industry, that can negatively impact your success.
• Cost: Depending on your business and industry, developing a green supply chain may initially seem cost prohibitive. The expense of investing in overhauling your infrastructure and equipment may be daunting. That said, these investments can lead to long-term savings. For example, the addition of photovoltaic solar panels to your green warehouse roof can help you generate alternative energy that reduces your reliance on fossil fuels and lowers the overall costs of powering your facility. Though the initial investment is steep, you’ll recoup your outlay and then some.
• Knowledge: Participants’ expertise stands to have a big impact on supply chain performance at every stage. Involving green architects, consultants, and other green supply chain experts can help companies make the best use of green resources, implement sustainable solutions, and optimize results. For instance, involving Agility in planning a green logistics solution can take the guesswork out of sustainable distribution. Conversely, not involving the experts can reduce the overall effectiveness of your strategy.

Trends in green supply chain practices

Green supply chain practices are working themselves into the greater consciousness because they’ve arisen in response to pressing need. Each year, measurable human demand and activity exceed the regenerative capacity of the planet’s natural ecosystem. It’s a phenomenon known as “ecological overshoot.” In 2020, for example, overshoot occurred on August 22. For the rest of the year, human activities operated in ecological deficit, drawing on resources needed for the future. Now that most individuals and organizations recognize the detriment of overshooting nature’s capacity to support its occupants, finding sustainable solutions has gained momentum. This drive has led to a variety of green innovations in recent years, particularly when it comes to supply chains.

The latest green supply chain practices

The following supply chain trends and practices are helping organizations achieve greener operations and promote a more sustainable future for our planet:

• Minimizing air freight: Shipping by air is extraordinarily efficient in terms of transporting goods quickly. Unfortunately, it’s far from energy efficient. More organizations are seeing the value of using air freight to meet only immediate demand, while relying on ocean freight and rail transport to meet planned ongoing needs. Developing the right freight and transportation mix helps ensure you’re equipped to meet customer demand while minimizing your environmental impact.
• Investing in transportation infrastructure: Improvements to ports, railways, and roads, especially in emerging markets like Southeast Asia, are enabling more efficient transportation. That, in turn, has led to fewer carbon emissions. The next step? Building more charging stations for heavy electric trucks. The West Coast Electric Highway, a network of electric vehicle fast-charging stations that crosses California, Oregon, and Washington, is a good start in North America. But experts say that this infrastructure needs to develop at a faster pace throughout the world to keep up with demand for green trucks.
• 3D printing: Every day, 3D printing gains new applications across a range of industries—from aerospace to medical device manufacturing. What’s more, 3D printing is more energy efficient and cost efficient than other equipment and processes used in the manufacturing industry. Why? For one, 3D printers are precise and lead to almost no material waste. For two, they enable manufacturers to create products on demand, reducing the chance of overproduction. By minimizing energy use and waste, 3D printers help lower carbon emissions. It’s even possible to turn recycled materials into new products using a 3D printer.
• Circular supply chains: Circular supply chains focus on recovering and recycling waste materials to turn them into saleable products. This approach can take many forms—from refurbishing old products for resale, as Apple does with its iPhones, to reprocessing old components to make brand-new products. Needless to say, adopting the circular economy model reduces waste and helps keep valuable materials out of landfills. And it can also be quite profitable for companies.
• Carbon emissions trading: Carbon trading is the process of exchanging carbon credits among nations to minimize CO₂ emissions. Each country has a cap on the amount of CO₂ it can release. Nations with higher carbon emissions can then buy carbon credits from countries with lower carbon emissions, gaining the right to release more CO₂ into the atmosphere. Individual companies can also engage in trading. The idea behind this system is that using fossil fuels comes with many hidden costs—from environmental degradation to health care needs resulting from poor air quality. Putting a price tag on the right to emit carbon gives nations and corporations a financial incentive to reduce their emissions. In fact, emissions trading systems around the world are growing in number.

Technology developments that are impacting green supply chain practices

The advent of supply chain technology innovations makes it easier to achieve green results by optimizing efficiency at every leg of a product’s journey:

• The Internet of Things (IoT): IoT enables organizations to monitor equipment, inventory, and energy use in real time. For example, sensors can track the temperature and lighting inside a warehouse, making it possible to control these aspects from afar. Organizations gain greater awareness of energy waste, overstocking, and other missteps. That leads to a clearer picture of what needs to change throughout the supply chain.
• Digitization of the supply chain: Improved digital tools, such as smarter WMS, make it possible to increase supply chain efficiency and automate processes—from stock reordering to optimizing warehouse picking paths. This helps supply chain leaders increase accuracy, avoid rush orders that require expedited shipping solutions like air freight, and prevent overordering. In turn, these improvements help reduce waste and energy use.
• Artificial intelligence (AI): AI helps automate processes, boost efficiency, and prevent human error. These capabilities are useful throughout the supply chain—from streamlining manufacturing processes to using data to forecast product demand to analyzing delivery routes and planning the quickest journey. By helping people work faster and more accurately, AI leads to less wasted effort and resources. For example, say route optimization tools enabled by AI help shave an average of a few minutes off each truck haul. Over the course of a year, that could add up to a significant reduction in fuel expenditure and CO₂ emissions.
• Robotics: Robots hold great potential for streamlining operations throughout the supply chain—particularly when it comes to logistics. For example, drones could one day make small deliveries much more efficient than large vehicles. In addition, self-driving trucks could automate traffic decisions, optimizing everything from delivery route to fuel efficiency.
• Materials engineering: In recent years, advances in materials engineering have led to greener and more efficient manufacturing and product packaging. For example, new processes make it easier to turn recycled materials into durable products or develop new materials that are lightweight but strong. In addition, life cycle planning tools help organizations optimize products for a future beyond their initial use.

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Going green proves to stakeholders that a company values sustainability and cares about the larger world outside the corporate conference room. Indeed, research shows that such initiatives are vital to global health now and in the future. And with the right green warehouse practices, the benefit becomes twofold by leading to cost savings as well.

This article covers the cost-effective, competitive advantages of a green warehouse. Discover which green warehouse practices will save you the most money and how to implement them.

Gaining a cost-effective competitive advantage through a green warehouse

Going green provides a competitive advantage, especially considering public interest in green initiatives. Suppose a prospective customer is choosing whether to buy from a company that implements sustainable practices or one that does not. A majority of studies show that all other factors being equal, consumers are more likely to choose the greener option.

Implementing green practices can also lead to cost savings because many green practices center on improving efficiency and reducing waste. Multiple supply chain leaders have achieved significant savings by adopting green practices. For example, Amazon’s data centers run entirely on renewable energy, which costs the company an estimated 10 percent less than using fossil fuel energy.

How supply chain leaders can incorporate green practices while maintaining profit margins

Now more than ever, supply chain leaders consider sustainability efforts to be critically important. In a 2017 survey by EcoVadis and the HEC Paris business school, 97 percent of procurement officers named sustainability as one of their top five priorities. In addition, 75 percent of companies in the survey reported that they took environmental sustainability and social responsibility into account when selecting new suppliers.

Agility has invested in Hyliion, which is developing an electrified powertrain system for Class 8 commercial trucks. The Hypertruck Electric Range Extender (ERX) is a long-haul, fully electric powertrain that will improve vehicle performance, reduce emissions and save on operational costs.

Supply chain leaders also implement supply chain assessments to identify inefficiencies and ways to reduce waste and expense. This leads to cost savings by improving visibility into the supply chain and identifying opportunities for more efficient logistics solutions. Assessments can also pinpoint opportunities for improving environmental impact, such as implementing green procurement systems.

The right technologies and modeling tools also enable higher efficiency and allow companies to optimize their warehouse practices to improve their profit margin. For example, Agility has a modeling tool that enables specialists to work with a nearly infinite number of variables and combinations. These include routes, schedules, inventory requirements, shipping modes, packing density, load configuration, and more. From this data, specialists can model various supply chain strategies and identify ways to optimize their shipping practices, as well as other steps in their supply chains.

How a green warehouse saves you money

Green practices often involve finding ways to improve efficiency through an optimized supply chain, which often benefits not only the environment but also a company’s bottom line. For example, when General Motors established a reusable container program with its suppliers, it reduced disposal costs by $12 million.

The following are some simple examples of how cost savings come about from green practices:

• Decrease fossil fuel use: Using less fossil fuel leads to cost savings, as long as you don’t accomplish this reduction by spending more on electric transportation or other methods. Practices such as consolidating orders into fewer shipments or optimizing shipping routes, for example, save fuel and fuel costs without requiring you to spend the savings elsewhere.
• Reduce hazardous materials use: Many chemicals and other materials may be hazardous to humans or the environment. By minimizing reliance on these materials, such as solvents and paint, you save on costs associated with their handling and disposal.
• Use recyclable or reusable packing materials: Although reusable packing materials may have a higher up-front cost, the ability to reuse them leads to savings in the long run. Recyclable packing materials or materials made from recycled products may be less expensive.
• Use technology to reduce waste: Technologies such as robotic process automation or warehouse management tools lead to fewer mistakes, conserve time and energy, increase process efficiency, and reduce waste overall.

Saving money on operations through green warehouse practices

Warehouse storage can be expensive. Many of the reasons for high costs have their origins in practices that aren’t green. High energy usage, inefficient storage practices, and warehouse processes that result in waste cost money and impact the environment.

Reducing these inefficiencies and sources of waste can make your warehouse practices greener and more cost effective.

Green warehouse practices

Companies can implement many practices within the warehouse environment that increase efficiency, save money, and promote sustainability. The following are some of the more common green warehouse practices:

• Storage optimization: Store products in a way that minimizes the total floor space you need for them. Also, consider stacking products on pallets that forklifts can easily handle and move to minimize any expenditures associated with moving these items.
• Inventory control: Make sure to properly package, label, and store inventory. This minimizes damage, which saves you money while decreasing how much you send to the landfill.
• Cross-docking: By transferring products directly from the supplier truck to the delivery vehicle bound for the customer, you use fewer resources in the warehouse.
• Recycling and reusing: Reusing pallets and storage materials when possible saves money and helps the environment. Recycling old materials keeps them out of the landfill and saves on disposal fees.
• Energy-saving practices: Increasing warehouse insulation, using energy-efficient or natural lighting, and automating lighting can reduce energy costs.
• Warehouse management: Warehouse management systems (WMS) automate and streamline many processe within the warehouse, reducing expense and waste. For example, it can record inventory locations, direct employees where to store items, and calculate the most efficient sequence for picking items. Warehouse management software also facilitates shipping to customers from the closest warehouse, minimizing transportation use.

Benefits of improved resource efficiency

Practices that take place in the warehouse often impact and reflect practices throughout the larger supply chain. Therefore, improvements in warehouse operation often lead to improvements in shipping, handling, order management, and more.

Many of these green warehouse practices fall under the category of improving resource efficiency. In other words, the goal is to obtain the maximum useful work with the minimum amount of resources. Those resources may be human workers, energy usage, storage space, time, transportation, packaging, and so on.

For example, suppose a company plans to warehouse one hundred cubic feet of product. The warehouse needs to receive the product from the manufacturer, store the product, and then ship it to customers when they place an order.

However, this total volume is slightly over the maximum for a single forty-eight-inch by forty-inch pallet. If the company decides instead to ship ninety cubic feet at once, it can stack the product on a single pallet and improve resource efficiency. The company can then wait until demand calls for another ninety cubic feet of the product before it ships more to the warehouse. This minimizes storage space, as well as shipping and handling resources.

Cost efficiency of flexible warehousing

With the fast pace of today’s economy, many companies find that flexible warehousing solutions better meet their needs. Flexible warehousing is a warehousing strategy that enables companies to scale their warehouse space up and down by storing inventory in shared warehouse spaces on an as-needed basis. This also includes changing warehousing locations to meet customer demand.

What makes flexible warehousing green is that it only uses the necessary resources rather than securing space that goes unused. It’s also extremely cost effective because companies only pay for the space they’re using instead of reserving the maximum space they may need at all times.

Some warehousing providers specialize in providing flexible warehousing space, not by owning any actual real estate themselves, but by providing companies with open space in warehouses. Third-party logistics (3PL) providers, like Agility, own multiple warehouse sites. These companies also provide a dedicated workforce capable of handling and managing products of all types in a flexible manner.

Often, 3PL providers bring the most efficient, cost-effective, and green solutions because they come with industry expertise, as well as optimal infrastructure. By handling the warehousing needs of multiple companies at once, they can strategically manage storage of all types, often with the help of industry-leading warehouse management software.

Determining the most cost-effective green warehouse practices

With so many different green techniques on the rise, how can companies determine the most cost-effective green warehouse practices? Fortunately, emerging technologies can provide data and models to predict the financial impact of adopting green practices. In addition, there are a wide variety of case studies that can help companies see what has worked well in similar industries.

Best practices for green warehousing

The first step in determining which practices will prove most cost effective requires using data technology. The right technology and tools allow companies to estimate the environmental impacts of new practices, as well as the associated increase or decrease to overall costs.

For example, Agility has a carbon measurement tool, which allows its customers to accurately offset estimated CO₂ emissions. Since 2009, Agility has been providing customers with free carbon footprint reports that enable them to track and reduce the amount of emissions created in their supply chains.

Reducing carbon emissions often goes hand in hand with decreasing costs. Green practices typically involve cost-efficient measures such as using renewable energy, reusing resources, and cutting down on packaging materials.

Tools like warehouse management software make it easier for companies to manage and optimize their warehouse processes. Companies can also take advantage of other technology tools that automate packaging, handle procedures that reduce waste, and increase efficiency in a host of other ways.

Best green ways to reduce warehouse costs

Cost-effective green warehouse techniques aren’t one-size-fits-all; the best methods can vary based on factors like a company’s product and the target market. To decide on the best green methods for reducing your warehouse costs, it can be helpful to study how similar companies have found success in implementing green practices.

The following are some examples of practices that have helped companies realize significant cost savings:A sports apparel brand in Indonesia and the Philippines realized $2.2 million in savings by collapsing and stacking unused boxes for future use.

A Chilean retail company saw cost savings by using tracking technology. Purchase order visibility and real-time reports enabled proactive vendor contact and tracking, as well as improvements to processing efficiency.

Working with Agility helped a major electronics company meet a tight timeline by selecting a strategically located 14,500-square-meter facility in Algeria. By working with industry experts, the company procured all the necessary equipment, tools, and systems efficiently, minimizing waste and sales losses.

A global telecommunications provider created a goods-in-transit center that reduces air cargo weight, transport costs, and carbon emissions on shipments from mainland China and Hong Kong to India.

In general, following green packaging practices and using green packaging materials can help companies reduce costs while remaining environmentally friendly and reducing waste.

Inexpensively implementing green warehouse practices

Some companies avoid implementing green warehouse practices because they fear the cost of doing so. Even though companies may realize cost savings once those practices are in place, the problem lies in the up-front expenses companies must pay to change current practices.

For example, if a company decides to use reusable shipping containers, the new containers’ up-front cost might far exceed the cost of disposable ones. Even though it saves money in the long term, the opportunity cost may dissuade some supply chain managers.

However, by starting with simple steps that reduce waste and increase efficiency, it’s possible to realize long-term cost savings even with a small initial investment. Afterward, you can apply those saved funds toward other green measures with higher opportunity costs.

Tips for transitioning to green warehouse practices

Adopting green warehouse practices doesn’t have to happen all at once and doesn’t need to be an overwhelming proposition. Below are some simple tips that you can implement over time to transition to more sustainable practices:

• Start small with recycling: Make it a practice to send used packaging materials to a recycling center instead of the landfill. Work with a battery recycler to safely dispose of worn forklift batteries or other similar materials.
• Upgrade warehouse equipment with sustainable alternatives: As older equipment wears out, replace it with new products that have lower energy requirements and maintenance needs. For example, choose electronic forklifts and pallet jacks, as well as eco-friendly conveyor systems.
• Make lighting modifications: Installing an energy management system for warehouse lighting allows you to only use lighting when needed. Replacing older bulbs and fixtures with newer energy-efficient LED fixtures can significantly reduce energy use and save money.
• Consider warehouse layout: A poorly laid out warehouse can reduce efficiency. Look at the process for unloading, storing, and processing products. Identify ways to make the transitions as smooth as possible, without the need for continually rearranging pallets or moving materials across the warehouse floor.
• Consider warehouse locations: A green warehouse is part of a larger green supply chain. Most of the total supply chain carbon footprint comes from moving items to and from warehouse locations and consumers. Strategically optimizing warehouse locations, storing products as close as possible to large customer centers, and optimizing shipping routes will cut emissions and costs.
• Consider other warehouse systems: This includes everything from your heating, ventilation, and air-conditioning (HVAC) system to your choices for insulation and roofing. Improving insulation reduces heat transfer and saves on expenses related to heating and air-conditioning. A more energy-efficient HVAC system reduces usage and costs. And when it’s time to replace the roof, choose one that is bright and reflective.
• Transition to eco-friendly packaging: Many options are available on the market, allowing companies to implement green packaging practices that meet their needs. This includes packaging made from recycled paper, mushrooms, cornstarch, organic fabric, and bamboo. These packaging materials are often inexpensive to produce and lightweight, which can reduce shipping emissions and expenses.

Inefficiencies to eliminate to make your warehouse green while on a budget

Making your warehouse green while on a budget requires careful planning. To begin, look over your entire supply chain management process to identify inefficiencies you can easily eliminate to the benefit of the environment, as well as your bottom line.

These inefficiencies may include things like the following:

• Workflow disorganization: Follow the path a product takes from manufacturer to warehouse/distribution center to consumer. Identify any hiccups along the way, such as delays in transfer, storage times that are longer than needed, or problems with order processing. Remedying the situation may only require simple process changes at no additional cost to you.
• Lack of carrier mode diversification: Seek to continually build relationships with different carriers, and get quotes for other carrier mode options. By sticking with what you’ve always used before, you might be missing out on less expensive (and more environmentally friendly) options.
• Lack of proper demand forecasting: By not having accurate estimates of consumer demands, it’s difficult to strategically and efficiently stock products in the right warehouse locations. This leads to using more space than needed, as well as extra transportation expenses. A small investment in quality forecasting software can lead to a significant payoff in the end.
• Excess packaging usage: Examine your packaging usage and practices. You need to use enough packing materials to keep products safe during storage and transport, but overuse is simply waste. Identify ways to refine and optimize the use of packaging materials.

Eliminating inefficiencies often costs little except the time it takes to identify them and implement new practices. As a result, you might begin realizing cost savings immediately, and the environment will thank you as well.

Reducing costs and improving sustainability with Agility

The two key ways that a green warehouse provides a competitive advantage are by improving company image and decreasing expenses. Anytime you can accomplish the same objectives at a lower cost without reducing quality or other metrics, it’s in your best interest to do so.

One of the most efficient ways to implement green warehouse practices while reducing costs is to partner with a third-party or second-party logistics provider like Agility. Not only does Agility offer scalable warehousing and distribution capabilities worldwide, but it is actively working to build a greener and more equitable supply chain.

Agility has implemented multiple ongoing efforts to reduce hidden environmental and social costs associated with supply chain logistics. Independent sustainability analyst EcoVadis ranks in the top 5 percent industry-wide for environmentally friendly practices.

By partnering with Agility for your warehouse or supply chain solutions, you are working with an industry leader that actively engages in sustainability efforts to support the environment. Contact Agility’s contract logistics team today to learn how it can help you save money while minimizing your impact on the environment.

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Sustainability in business—demonstrated by companies that operate with concern for natural and human resources—can mean increased customer loyalty. Incorporating green logistics into warehousing as part of the supply chain can also yield better business productivity and improve a business’s bottom line.

Applying green trends in warehousing offers nearly immediate return on investment (ROI) plus longer-term global improvements while satisfying stakeholders’ desires.

Today’s green warehousing practices

As warehouse managers consider green warehousing in today’s business climate, they need to know how to measure results and where to find available, effective products and practices.

Key performance indicators in green warehousing

In global supply chains, warehouses produce environmental pollution mostly from heating, cooling, and lighting. Generally, the bigger the warehouse, the larger the carbon footprint. Warehouse managers can measure the carbon footprint of their operations by considering key performance indicators: emissions, natural resource use, and amount of waste and recycling.

Studying total carbon dioxide emissions, as well as energy consumption, water consumption, and rate of product or material use, will reveal areas where companies can apply green initiatives.

For example, a warehouse with a high electricity bill might discover that alternative lighting sources—like natural light, automatic lights, or other renewable energy options—offer savings. Likewise, the discovery that a warehouse consumes large quantities of water from a natural source might inspire change. By installing water flow reduction mechanisms or a rainwater capture system, warehouses can reduce, offset, or optimize water use.

Green warehousing technologies and products available today

After assessing their warehouses to identify logistics solutions for environmental sustainability, businesses have various green warehousing products to consider that will promote sustainable logistics:

• A warehouse management system (WMS)
• Order-picking technology
• Bar coding
• Radio frequency identification (RFID)

A WMS allows for the digital coordination of stores, distribution centers, and warehouses while coordinating shipping and transportation. Better inventory control through a WMS means green warehouses can operate with the ideal amount of product, thereby reducing excess inventory and maximizing storage space.

Technology to enhance order picking through automation or digitizing can increase accuracy and speed up warehouse orders. Order-picking technology has the added benefit of reducing paper consumption.

Also reducing the need for paper are the sustainable distribution practices of bar coding and RFID. These technologies improve processes and increase the visibility of goods throughout the supply chain.

Additional sustainable products include skylights to let in natural light, ceiling fans to control warehouse temperature, energy-efficient lights and fixtures, green building materials, and building insulation. Eco-friendly warehouses reduce waste, another important principle of sustainable business.

Challenges facing green logistics today

Implementing green initiatives along the supply chain is difficult. But with the right tools and management practices, companies can confront any number of challenges:

• The vastness of the global supply chain: Supply chain logistics covers a wide range of shipping types, routes, sizes, configurations, and more. Lessening environmental impact across the entire network can be challenging.
• Fewer green solutions for warehousing: Compared to other parts of the supply chain, such as transportation, fewer green solutions exist for warehousing. Yet many of the available solutions prove effective, and the number of solutions is growing.
• The up-front costs of green warehousing solutions: These costs might prevent some operations from converting. However, the initial investment for green logistics often pays off with time.

Even if the path to green warehousing presents challenges, companies wanting to stand out from their competitors can prioritize sustainability to make a difference in the world and in their accounts.

Effectiveness of green warehousing

In a global market, businesses need to stand out from their competitors. Success hinges on providing consumers with what they want: companies that go green in all aspects of their operations. A green supply chain satisfies stakeholders’ desires while positively impacting operations and finances.

Green warehousing for the bottom line

Thanks to the digital proliferation of information, customers know the environmental impact of their buying habits. Those who want to reduce their carbon footprint seek out companies that prioritize green initiatives, from raw material source to warehouse to packaging to transportation. Conscientious consumers are willing to pay more for green products and services.

Businesses gain a competitive advantage by reducing environmental impact through supply chain management, including through green distribution. And publicizing details of these sustainable practices—such as using solar panels or green building materials—creates customer loyalty because the buyer perceives the company as environmentally responsible.

Benefits of moving to a green economy

Green logistics plays an important part in a larger undertaking: to move the world toward a green economy. A green economy focuses on low carbon emission, is efficient with resources, and is socially inclusive.

Benefits of a green economy include reduced pollution, enhanced efficiency of energy and resources, a slowdown in the loss of biodiversity, and preservation of the services that the ecosystem provides.

A successful green economy allows economic growth and improves people’s ability to coexist with nature. Economic growth might move slowly at first, but the benefits play out in the long run. Lasting benefits of sustainable development include reducing the risks associated with climate change, energy shocks, and water scarcity.

Green practices can also reduce poverty and help developing countries via new export opportunities. Businesses that embrace responsible supply chain practices stage themselves for success in emerging markets.

Results of a greener warehouse on a company’s ROI

Although the benefits of green warehousing might seem intangible or too far off, supply chain managers who invest in going green see a fast ROI.

Energy-efficiency measures, such as switching lighting sources to reduce electricity consumption, have a quick payoff. Installing a WMS could deliver an ROI in a matter of months.

Importance of green warehousing

Because supply chains are a major source of environmental impact in the consumer sector, sustainability in the industry can have a positive impact on the environment.

Importance of green practices for warehouses

As stakeholders demand that businesses reduce their carbon footprints, green practices become increasingly important for eco-friendly warehouses. They must keep up with government regulations, meet insurance requirements, and satisfy the demands of customers.

A green warehouse aims to lessen its environmental impact through practices such as an automated warehouse, lean warehousing, and green building.

Green warehousing to reduce a company’s environmental footprint

Companies can focus on decreasing the carbon footprint of their warehouses through various methods:

• Decreasing demand for electricity: Companies can accomplish this by reducing heating, cooling, and lighting demands, by generating power on site, or by taking advantage of energy management systems.
• Reducing waste: Companies can limit waste by ensuring efficient inventory management, going paperless, and using eco-friendly packaging.
• Building warehouses efficiently: By cutting back on the size of warehouses, building vertically, or using green building materials, companies can diminish their footprints on the land itself.

Goals of green warehousing

As a strategy, sustainable logistics aims to reduce environmental costs, resource waste, and business risks—moving the world toward a green economy. And with a strategic approach to supply chain sustainability in the warehouse, a company can accomplish many of its green goals.

The future of green warehousing

The warehousing industry continues to evolve, finding new ways to improve operations and reduce environmental impact. Green warehouses, whether new or retrofitted, have allowed leaders to emerge among warehouse operators, and the principles they use can help transform warehouses around the world.

Projected features of new green warehouses

New green warehouses prioritize efficiency and sustainability. Features of eco-friendly warehouses include the following:

• Recycling areas
• Solar panels or other power-generating features
• Xeriscaping and drought-tolerant plants
• Green building practices
• Skylights
• Roofs and walls that are appropriate for the climate
• Low-emitting paint
• Energy-efficient lighting
• Regionally sourced building materials

Leaders in the green warehouse movement

Warehouse operators that stand out in the warehouse industry for embracing green warehousing practices include many well-known brands. For example, retail and outdoor recreation services consumer cooperative Recreational Equipment Inc. designed a net-zero energy distribution center in Arizona.

Another outdoor apparel company, Patagonia, embraced sustainable concepts and materials for energy efficiency in its Nevada warehouse construction and expansion. And Amazon, an online retailer and cloud services provider with fulfillment centers worldwide, states that it is working to reduce greenhouse gas emissions and improve resource efficiency across the globe.

Conscientious companies, including Agility, operate under guidance from the United Nations’ Sustainable Development Goals to end poverty and protect the planet. Two of those goals promote affordable, clean energy and climate action, and both apply to green warehousing.

Tips for green warehousing

As you look for ways to create a more sustainable business, consider these green warehousing tips:

• Use natural or efficient lighting.
• Go paperless.
• Reduce warehouse waste.
• Reduce heating and cooling needs.
• Employ warehouse automation.
• Use eco-friendly packaging.
• Use green building materials.

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• Sustainable trade will require the participation of emerging economies.
• Finding the right balance between sustainability and economics is crucial.
• The technology exists; the real barrier is changing existing mindsets.
• Eliminating avoidable emissions is a good starting point.

Getting to zero emissions in logistics is a daunting prospect. Developing zero-emissions fuels and vessels is a critical pathway forward, but this approach has its limitations. In a cost-driven industry, a high-cost, high-risk focus on zero-emissions technology may position many players in emerging markets as part of the dirty past – not the clean future. We need a pragmatic approach that balances high-tech practices with practical ones that offer a role for everyone. We can reduce avoidable emissions through more efficient supply chains, but we need to shift mindsets. That’s where we should take immediate steps while continuing the longer journey.

Without the willing participation of emerging market players, a sustainable future for global trade is at risk.

Trade is growing most and fastest in emerging markets, with the growth of import volumes into Asia’s emerging markets as an example. In 2018, developing economies accounted for 64% of seaborne trade. Engaging this majority of actors is essential for the success of the zero-emissions project.

At the same time, we need to balance the environmental with the social and economic aspects of sustainability. If we require investment in new vessels and bunkering infrastructure to participate in global value chains, some actors will simply not comply, and will be left out – and if a port or a country is left out, so are its small and medium-sized firms (SMEs). For SMEs in these markets, accessing global value chains is critical to achieving stable growth and creating jobs. Keep in mind that SMEs contribute over 50% to GDP and account for two-thirds of formal employment in many countries.

Even in mature markets, the largest industry players can’t agree on who should cover the cost of transitioning to a zero-emissions logistics industry.

Logistics is a highly cost-sensitive industry. Just consider that second-generation biofuels are commercially viable, but not available, because no one is yet willing to consistently pay higher costs to ship goods. When given a chance, only a handful of shippers choose the environment over cost. The industry consensus is that a global fuel levy will be necessary to incorporate the social cost of carbon into fuel costs – but action on this has stalled, because oil companies don’t think it’s fair that they shoulder most of the cost burden, even if that cost is ultimately passed on.

Will emerging markets be able to afford the transition to cleaner fuels?

Transitioning to new fuels will be expensive in the short term. Recent research by the Global Maritime Agency – due to be published in late January – estimates that out of up to $1.9 trillion in investments needed to fully decarbonize maritime shipping by 2050, only 13% is for ships. The remaining 87% would be for land-based infrastructure and production facilities for alternative fuels. The International Renewable Energy Agency says “any shift toward a cleaner sector will require important changes to port terminal infrastructure and operational equipment [see chart below], as well as daily operational practices”.

Consider coastal African countries, or Viet Nam, where newly-discovered offshore oil resources have the potential to drive considerable growth. How should these countries consider these potential assets in a zero-emissions future? Should they not plan to benefit from their natural resources? Should they, instead, invest in port infrastructure for zero-emissions fuels that they will likely need to import? Is that fair?

The industry should mobilize around practical, system-level approaches to address avoidable emissions across supply chains.

No matter what the fuels of the future will be, it will be useful to reduce the total amount of fuel needed to power global trade. More fuel-efficient transport modes, supply-chain optimization and operational efficiency should be prioritized for their emissions-reducing potential. These solutions are not, and cannot be mode-specific, but must address global logistics as a system.

To address avoidable emissions, data-informed optimization across modes and supply chains deserves more industry attention.

Avoidable emissions are embedded into inefficiencies at every step along the supply chain. It’s tough to measure their contribution to overall transport emissions, but the share could be substantial. Consider that in many markets, sometimes more than 40% of trucks on the road at any given time are moving empty, and a much greater percentage are underutilized.

Beyond individual shippers or supply chains, optimization across the logistics system makes better use of transport assets across a country’s distribution network, or back and forth along a trade lane. On a global scale, the containerization of US agricultural exports addressed the asymmetry of cargo flows between the US and China. Digital freight booking platforms, like Cargo X in Brazil, can drastically improve asset utilization, reducing trips, kilometres, costs and emissions. In the US, when Ocean Spray and Tropicana, two fruit juice competitors, collaborated to enable sharing of empty refrigerated rail boxcars, both parties reduced transport costs, and Ocean Spray’s emissions were reduced by one-third.

The barrier isn’t tech. It’s mindset. How do we shift it?

Logistics is full of myriad actors with high levels of interdependence and competing interests, and this drives down costs. Fierce competition leads to such low prices in road freight that often it is cheaper to send a dedicated truck less than half full than it is to use a small freight carrier. From this baseline, how can industry players work together – in ways that preserve competition – for incremental environmental gains?

First, emissions should be a measured key performance indicator against which supply chain performance is evaluated. For example, some shippers have instituted an internal carbon price. Other sustainability performance rankings can help, both internally and for third-party service providers, but we must be careful to avoid the proliferation of varying questionnaires, and include incentives to improve environmental performance. Immediate exclusion of carriers that can’t meet high environmental standards won’t shift behaviour, and may bankrupt smaller players.

Second, we need to amplify the message about the business case. Logistics services providers can use their visibility across supply chains to identify collaboration opportunities and estimate cost and emissions savings, so shippers can visualize lost value. We all must be retrained and our data systems redesigned to actively look for these opportunities. When collaboration is successful, we need to transparently communicate these stories to clarify what’s possible and set higher environmental aspirations.

Reducing avoidable emissions alone won’t get us to zero. But this approach is open to everyone everywhere, starting now, and it can save fossil fuels in the present, and open the door to zero-carbon fuels in the future.

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Customers, governments and industry groups continue pressing for huge reductions in supply chain emissions, mainly in transportation. Road traffic accounts for most of CO2 emissions, 73 percent. Air traffic is 12 percent; ocean shipping 10 percent; pipeline leakage 3 percent; rail traffic 2 percent.

The maritime shipping industry has been aggressive in its attempts to tackle the emissions problem. In April, the International Maritime Organization (IMO), a United Nations body, said greenhouse gas emissions from international shipping should be slashed by at least 50 percent by 2050 from 2008 levels. CO2 emissions are to be eliminated entirely by then, the IMO said.

Agility represents the freight forwarding industry on the steering committee of the Clean Cargo Working Group (CCWG), an international coalition of logistics providers, ocean carriers and retailers committed to improving the environmental performance of maritime container transport. CCWG carriers handle 85 percent of containerized global shipments. This year, the CCWG is expanding its scope to include the airfreight industry.

In 2016, Agility teamed up with another member of the group, Maersk, the world’s largest container ship operator. The goal: to cut CO2 emissions by 15 percent per container transported on Agility shipments by 2020. Agility and Maersk are reducing emissions by shifting cargo to more fuel-efficient ships, optimizing networks, routes and sailing schedules, and integrating emissions data into their regular business information flow.

A few of the ways Agility is helping customers lower emissions:

• Modeling shipping variables with a proprietary tool that allows them to design the most efficient, low-carbon supply chain possible (see Modelling Tool).
• Measuring and reporting CO2 emissions monthly. Aggregated emissions can be integrated into monthly, quarterly and annual business reports and can be configured based on origin and destination locations, customer hierarchy of priorities, or other criteria.
• Offering pre-shipment CO2 estimates on shipafreight.com, the new self-service online portal powered by the Agility network.
• Providing CO2 emissions estimates on the Agility Android and iPhone mobile application, an easy-to-use tool even for users who aren’t shipping with Agility.
• Reporting electricity, fuel and water consumption, and waste generation via a proprietary application that converts consumed electricity into CO2 emissions using International Energy Agency standards. The application provides real-time reports on emissions and feeds data into regular reports to customers.
• Converting local fleets in places such as Thailand to compressed natural gas and training drivers to reduce idling time and cut speeds to lessen environmental impact. We also recycle tires, batteries and other truck components.
• Calculating origin and destination trucking emissions, in addition to international ocean and air shipping emissions.
• Working with CarbonTrust to provide data that enables customers to offset their CO2 emissions. Emissions from shipments typically are reported on an “at least” basis, meaning they offer an estimate of “at least” what has been emitted on a journey.

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