Build sustainable practices for freight, logistics, and other supply chain delivery activities into contracts and into supplier collaboration activities.
Invest in better data for planning and monitoring logistics
Improve logistics planning and monitoring through data-driven systems and software. Begin by scrutinising internal practices and equipment for optimal storage and use of supplies.1 Collaboratively model suppliers' delivery sources and methods, striving to achieve efficient resource utilisation.2 Recognise that this requires specific skills, often housed in specialised departments or through external services, to ensure effective implementation.
EXAMPLE: Cargo owner builds transparency to inform decision-making on transport decarbonisation
Unilever’s logistics network is responsible for 2% of its total value chain-related GHG emissions. The company aims to address this by factoring CO₂-efficiency into how it chooses logistics solutions. Efforts to improve were sanctioned by a quantifiable goal to improve CO₂-efficiency by 40%. However, the inconsistency of emissions measurement made it difficult to measure CO₂-efficiency. To make informed decisions Unilever had to work with carriers to gain visibility on operations and efficiencies. The company was supported in this work by the Sustainable Shipping Initiative, which aims to drive standardisation in CO₂ emissions measurement.3
Consider both social and environmental impacts of logistics
While it is important to work to optimise the carbon footprint of logistics, there are also important social issues such as human trafficking, forced labour, poor working conditions, and land acquisition and resettlement to consider.4 Contract conditions and management can require your logistics contractor to perform due diligence and highlight high-risk areas, collaborate with independent monitors, and remedy breaches of labour rights and safety through programs, policies, and codes of conduct.
Plan for reverse logistics
Reverse logistics in sustainable supply chains include collecting, transporting, and reusing or disposing of end-of-life products. This solution ensures that your logistics fleet optimises its utilisation by maximising product traffic both ways and saving operational costs. Strategies include repurposing waste, sourcing raw materials from others' waste, and using advanced recycling methods. Suppliers are encouraged to reduce waste, price down products nearing expiration, and use technology for product recycling and resale. Contracts should include defined roles, performance metrics, and clear liability provisions.5
Include contract terms that support sustainable logistics
Adapt contracting terms to allow suppliers longer lead and delivery times, flexible time windows for orders, bundling orders and shipments, or propose innovative packaging alternatives.6 Adapt your own stock management processes to create space for sustainable solutions and innovations in logistics. These ideas can already be explored at the planning stage.
EXAMPLE: Ikea efficient packaging
Ikea found that its “Glimma” tea candles were taking up a lot of transport capacity. After considering how to reduce packaging volumes to reduce energy and costs, the company changed the candle shape so that items could be stacked more efficiently increasing capacity per pallet by 30%.7
Invest in sustainable logistics solutions
Invest in new low-impact logistics solutions, such as eco-efficient transport infrastructure, mode shifting, and training. Create contracts and supplier agreements that support suppliers with initiatives such as fleet replacement with electric vehicles or sustainable fuels, freight mode shifting (from road to rail, or air to sea), driver training and TeleMatics.8 These investments require collaborative investment across value chains and sectors, so be prepared to support suppliers with financial and other contractual resources, including increasing the procurement budget for sustainable logistics.
EXAMPLE: AB InBev “beer train” reduces transport emissions
AB InBev transports its Belgian-brewed beer to the port of Antwerp for export. Until 2020, the company relied on trucks to make 20,000 deliveries per year. In 2020, the company decided to make this transport route more efficient by mode shifting from truck to rail. The result? A 75% reduction in CO2 emissions.9
EXAMPLE: Woolworths works with its logistics provider to improve sustainability performance
The supermarket chain, Woolworths SA, had its logistics teams work closely with its logistics provider to explore and pilot a myriad of transport decarbonisation solutions. These include optimising route networks; powering trailers with rooftop solar; spraying cold stored food with liquid nitrogen to save energy; using longer more aerodynamic trucks with larger capacity; optimising diesel use via mixed fuels; and trialing EVs.10 11
EXAMPLE: L'Occitane's Sustainable Transport Initiative
L'Occitane Group has reduced its environmental footprint by limiting air transport. Since 2018, the company has used a rail/road corridor from China to Europe, ensuring 100% of goods between key warehouses use this sustainable method. As a result, only 1.4% of products were transported by air in 2019.12
Diversify your supply chain network
Events such as pandemics, armed conflicts and extreme climate events expose value chains to disruptions.13 You can better manage uncertainties and buffers against shocks by diversifying your supply chain and logistics network.14 There are many ways to do this including; sourcing supply and products in closer proximity, avoiding geographic concentration of supply, weatherising distribution infrastructure, capacity building to identify alternative suppliers or production sites, reconfiguring logistics networks, or pivoting into alternative industries.