Manage Logistics

Consider the social impacts of logistics

While it is important to work to optimise the carbon footprint of your logistics, there are also important social issues such as human trafficking, forced labour, poor working conditions, and land acquisition and resettlement to consider.⁴ To address these issues, consider making them a part of your contract conditions. For instance, you can implement conditions that require logistics contractors to perform due diligence and highlight high-risk areas, collaborate with independent monitors, and remedy breaches of labour rights and safety standards.

Plan for reverse logistics

Reverse logistics is the process of moving products or materials upstream. Traditionally this is used for product returns and recalls but is an increasingly important part of product end-of-life management. Reverse logistics enables you to capture value through reuse, refurbishment, and recycling; or ensure appropriate disposal of products and materials. To support reverse logistics processes, specify the responsibilities of suppliers, buyers, and any third-party logistics providers or recycling partners in contracts. This includes defining roles, performance metrics, and clear liability provisions.⁵

Use contract terms to reduce logistics emissions

You can increase logistics energy efficiency by adapting contract terms to allow suppliers longer lead and delivery times or flexible time windows for orders. Adding such flexibility to your contracts creates space for slower, but more efficient, modes of transportation, route optimisation, and bundling of orders or shipments. Another strategy is to propose innovative packaging design that reduces the weight or volume of shipments.⁶ Consider also how you can adapt your own stock management processes to create space for sustainable logistics solutions. These ideas can already be explored in the PREPARE 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 logistics decarbonisation solutions

Decarbonise your logistics network by investing in new low-impact logistics solutions. These may include fleet replacement with electric vehicles or sustainable fuels, freight mode shifting (from road to rail or air to sea), and driver training and TeleMatics.⁸ Implementation requires collaborative investment across your value chain to enable suppliers and other logistics providers to transition. You need to be prepared to support these investments by including them in supplier agreements and by providing financial resources. This may include 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 was 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

Develop your supply chain network’s resilience

Events such as pandemics, armed conflicts, and extreme climate events expose value chains to disruptions.¹³ You can better manage uncertainties and buffer against shocks by diversifying your supply chain and logistics network.¹⁴ There are many ways to do this, including: sourcing inputs in closer proximity to manufacturing, avoiding reliance on geographically concentrated supply, weatherising distribution infrastructure, identifying alternative suppliers or production sites, reconfiguring logistics networks, or being prepared to pivot into alternative industries.