Table of Contents
- Sustainability in Logistics: Challenges, Opportunities, and Solutions
- What are the drivers and goals of sustainability in logistics?
- What methods exist to measure sustainability in logistics?
- Which innovative technologies support sustainability in logistics?
- What challenges and success factors characterize sustainable logistics?
- References
Sustainability in Logistics: Challenges, Opportunities, and Solutions
The ever-increasing CO2 emissions have a negative impact on the global climate – this is nothing new. The German logistics sector, with emissions of around 20 percent of all greenhouse gas emissions, makes a significant contribution to this and is therefore faced with various challenges. The industry is caught between reducing transport costs and the pressure to reduce emissions in order to comply with increasingly stringent legal requirements. There are several legal regulations such as the Climate Protection Act and, in shipping, the IMO regulation, which limits the sulfur emissions of ships and increases the prices for fuel for ships and trucks.
However, the implementation of climate neutrality is not progressing as quickly as it should. A major reason is that many approaches to reducing greenhouse gases represent a significant financial burden for companies. Arguably the biggest challenge facing the logistics industry is the ability to use sustainably produced fuels and modernize its own vehicle fleet. It is more necessary than ever to introduce green technologies in the logistics sector in order to promote sustainability. At the same time, this offers the opportunity to increase efficiency and save costs in the medium to long term. However, this requires innovative solutions and the commitment of companies throughout the supply chain.
Sustainable logistics deals with all processes related to the life cycle of products throughout the entire value chain. Areas that are affected by this are procurement, production, delivery, and disposal. However, it is not just about the supply and delivery of goods, raw materials, and/or product parts. It also includes the design of the underlying manufacturing and delivery processes as well as the optimization of both data and information flows. The movement of goods by road, rail, air, and water must be taken into account, as must the processes underlying the supply chain.
The German logistics sector, responsible for around 20 percent of greenhouse gas emissions, faces the challenge of reducing CO2 emissions and promoting sustainability through innovative solutions and green technologies.
What are the Drivers and Goals of Sustainability in Logistics?
It is undoubtedly clear that climate change will continue to accelerate in the coming years – with devastating consequences for people and nature. The state is reacting to this by setting up increasingly strict rules and laws that force companies in the industry to operate more sustainably. Furthermore, the opinion of customers, the pressure of public opinion, and the changes in the market make it necessary to build sustainable supply chains against all odds. Ethical aspects are also playing an increasing role, so that the traceability of deliveries in particular is of increased relevance. In this context, the so-called “Supply Chain Due Diligence Act” (short: Supply Chain Act), which regulates corporate responsibility with regard to compliance with human rights within global supply chains, is important.
To date, the logistics sector, which is exposed to extremely high competitive pressure, does not comply with the legally prescribed limits for CO2 emissions. The goals that are intended to lead to more sustainability in this sector are broadly based. To provide an insight into the various benefits, some are listed here as examples:
- Reduction of the CO2 footprint for more climate protection
- Higher resource efficiency, for example through reuse
- Increased profitability and many competitive advantages
- Compliance with various legal standards and avoidance of penalties
- Building a positive brand image and greater customer loyalty
In order to effectively implement these goals in the company, all participants in the logistics sector, such as freight forwarders, railway operators, airlines, and shipping companies, including their upstream and downstream supply chains, must proactively address this change process. Many competent and innovative consulting companies reliably help to optimize their own environmental footprint.
What Methods Exist to Measure Sustainability in Logistics?
For companies in the logistics sector, it is becoming increasingly important, and for many it is a real concern, to reduce their own CO₂ emissions. However, making the reductions achieved fully measurable is not easy – especially when considering the entire supply chain. In order to make the emissions that a company emits measurable, three dimensions must be made visible. This includes
- making visible the total amount of climate-damaging gases emitted by the company itself
- measuring the emissions of energy suppliers
- tracking the emissions of upstream and downstream companies in the supply chain.
Companies must define meaningful Key Performance Indicators (KPIs) in advance in order to be able to actually measure and understand the success of their own company’s sustainability strategy.
To achieve this, there are various software programs from specialists that provide companies in the logistics sector with the measurement values that are necessary for determining the KPIs. One of the most important KPIs is the relative emission reduction of greenhouse gases. A reference point is absolutely necessary for this measurement value. This measurement value is measured in percent and is intended to help determine whether a CO2 reduction target has been achieved.
If such software is used in the company, companies that want to reduce their CO2 footprint can gain valuable data to analyze, monitor, and, if necessary, optimize their entire supply chain. The calculations include the KPIs from the purchasing, warehousing, delivery, logistics, and transport sectors. The measurement criteria are usually time, costs, productivity, and service quality. The presentation and monitoring take place in real time via special software products.
Both Industry 4.0 and Logistics 4.0 – where software products provide valuable information and evaluations to obtain reliable results – have made it much easier to collect the necessary data for analysis in times of advancing digitalization. Therefore, a networking of the special software products of different departments, for example a warehouse management system, is absolutely necessary in order to get to this data. The company’s own ERP system also offers valuable data material from which relevant information and data can be filtered out.
Digital technologies like CarbonPath enable logistics companies to capture, analyze, and effectively reduce their CO₂ footprint.
Which Innovative Technologies Support Sustainability in Logistics?
Through the use of digital technologies, all products and processes in logistics can be designed to be more resource-efficient and therefore more socially responsible. The primary focus is on networking value chains in order to effectively use existing resources and products in the sense of the circular economy and thus strengthen the idea of sustainability. An example product will be examined in more detail.
An innovative tool that can be used in the logistics sector for more sustainability is the software CarbonPath. This software solution includes several functions and is specifically aimed at enabling logistics companies to holistically capture, analyze, and measure their ecological footprint. The goal is to identify all reduction opportunities and bring other stakeholders on board. The measured concrete values regarding the emissions of greenhouse gases from the vehicle fleet can later be exported as a PDF document at the touch of a button for documentation purposes.
What Challenges and Success Factors Characterize Sustainable Logistics?
The modern logistics sector faces various challenges that are difficult for the companies concerned to overcome. Primarily, of course, it is the excessively high CO2 emissions that must be reduced in order to achieve the climate goals. Inefficient resource management, the acute shortage of skilled workers, a lack of transparency within the entire supply chain, and an insufficient level of digitalization are further factors that lead to sometimes massive restrictions on the companies’ freedom of action. Especially in Germany – the country that elevates bureaucracy to new spheres – far too much work is still done on paper
Essential success factors for the design and strategic planning of the implementation are automation through the use of innovative technologies. Automation and robotics, for example, help with the use of warehouse systems and ensure transparency. In order to be able to use the constantly growing volumes of data efficiently, data analysis tools and artificial intelligence help. This can be used to optimize the routes of the entire vehicle fleet. Telematics systems, in turn, enable real-time monitoring of the vehicles on the one hand, and can help to avoid empty runs on the other. The implementation of an ESG concept (where ESG stands for “Environment, Social, Governance”) can be better monitored through continuous KPI measurement.
References
- https://www.imo.org/en
- https://www.bmz.de/de/themen/lieferkettengesetz
- https://gruenderplattform.de/green-economy/green-logistics#vorteile
- https://www.bito.com/de-ch/fachwissen/artikel/bedeutung-von-kpis-in-der-logistik/
- https://www.firstaudit.de/blog/allgemein/logistik-4-0/
- https://carbonpath.eu/
- https://www.bvl.de/blog/nachhaltigkeit-in-der-logistik-wege-zu-einer-gruneren-und-effizienteren-zukunft/
