Sustainability in SCM

Sustainability in logistics: challenges and paths to a green supply chain

Introduction

Logistics as the key to sustainable transformation

In a world in which the climate crisis is becoming increasingly urgent, logistics plays a central role. This sector, which according to the Federal Environment Agency is responsible for around 20% of greenhouse gas emissions in Germany, has the potential to make a significant contribution to sustainability. But how can this change be realised in practice? The answer lies in a collective effort, ranging from the increased use of rail freight transport to the introduction of a circular economy. 

The logistics industry is facing a multitude of challenges. Long-standing suppliers and customers are becoming competitors, while new digital players and platforms are entering the market. In this dynamic environment, sustainability must be driven forward in parallel with market positioning. Added to this are the shortage of skilled labour, cyber threats and high costs, which make it difficult to implement sustainable practices. It is particularly difficult to convince customers of the need for higher prices for more sustainable solutions, as the BVL study on Triple Transformation shows. 
But the signs of the times are pointing towards change. Sustainability is not only a social and climate policy necessity, it also offers strategic competitive advantages. In view of rising CO₂ taxation and higher prices for CO₂ certificates, it is worth investing in sustainability in order to contain costs. Two thirds of logistics managers have therefore set specific targets for reducing CO₂ emissions, including optimising journey utilisation and using alternative drives and transport modes. More effective management, supply chain design and optimising the use of resources offer further potential for strengthening competitiveness and reducing negative impacts on the environment.
The path to sustainable logistics

4 Steps

The path to sustainable logistics

There are various steps to sustainable logistics. We have described the 4 important steps for you below.

1. Holistic approach for a green supply chain

In order to realise the full potential of a sustainable supply chain, a holistic approach is required. This includes adapted organisational structures and networking with other players. The fields of action range from the optimisation of existing processes to the development of new markets. Short-term measures such as the expansion of rail freight transport and long-term approaches such as the circular economy are essential. A decisive factor is the attitude of those involved: they should see innovations as opportunities for further development and improvement instead of viewing them as unpleasant compulsory tasks. Logisticians and supply chain managers can play an important role here as initiators of change within the company.

2. Circular economy: the cycle as a solution

In the long term, sustainability can only be achieved through a comprehensive reorientation towards a circular economy. Traditional supply chains follow the motto ‘take, make, dispose’. The circular economy, on the other hand, aims to reuse products and materials, reduce the extraction of new raw materials and minimise waste and emissions. The transformation to a circular economy requires transparency across the entire life cycle of products. Data on the origin of products, their use and condition as well as recycling options must be collected and analysed - no small task for companies. Digital platforms offer a solution to this challenge. They connect different stakeholders and create the basis for the exchange of information and collaboration. The flexible integration of digital technologies is just as important. This enables real-time monitoring and tracking of products, which leads to more precise control throughout the entire process.

3. New business models and collaboration

Logistics companies can drive the transition to a circular economy by implementing reverse logistics concepts. In addition to the efficient processing of warranty claims and defects, the reuse of raw materials and the environmentally friendly disposal of products are crucial. These approaches offer ecological benefits, cost savings and increase customer satisfaction. There are also innovations in the service sector that contribute to increasing sustainability: for example, new sharing platforms enable the exchange of transport capacities and equipment, which reduces the ecological footprint and costs. Leasing and ‘pay-per-use’ offers complement these approaches and promote the sustainable use of resources. Instead of having to make large investments in commercial vehicles, containers, semi-trailers and other equipment yourself, you can save costs and at the same time help to ensure that logistics fleets are not unnecessarily expanded. Good for the ecological footprint!

4. Rail freight transport: the sustainable transport route

The importance of rail transport

Road freight transport causes over 95% of emissions in freight transport, as DLR figures show. Rail freight transport therefore offers great potential for more sustainable transport. However, companies are often reluctant to use rail transport due to poor experience, a lack of rail capacity or simply a lack of expertise. However, integrated digital platforms and adjustments to business models can simplify access to rail and increase efficiency and flexibility.

 

Virtual operators and Rail-Operations-as-a-Service

The digital platforms act as virtual operators. The platforms offer transparency and support when booking transport, from enquiry to invoicing. They increase the utilisation and efficiency of existing assets, resources and networks. Rail Operations as a Service models enable service providers to control the system and processes, while shippers or logistics service providers provide assets such as locomotives and freight wagons.

Getting started with sustainability requires careful planning and targeted measures. Companies should first take stock of their current processes and emissions in order to identify potential for improvement. A clear roadmap with short and long-term goals is essential. Working with experienced partners and consultants who specialise in sustainable logistics can make all the difference. These experts not only bring in-depth knowledge and innovative approaches, but also support the implementation of customised solutions and best practices to ensure that sustainability goals are achieved quickly and reliably.

Conclusion

The future of sustainable logistics

The sustainable transformation of the logistics industry is no easy task, but it offers immense opportunities. New business models, transparency, networking and digitalisation are crucial for success. Measures such as the expansion of rail freight transport and a circular approach will lead to cost savings, efficiency gains and new business opportunities. Logisticians must see themselves as innovative designers and promote cooperation between all stakeholders in order to successfully shape the necessary transformation towards sustainable value creation.

A more in-depth look at the topic can be found in our latest white paper ‘Successfully anchoring sustainability in supply chains’. 

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