Prioritizing sustainability can deliver significant benefits to all aspects of an organization, regardless of industry. Within the supply chain, many businesses are acknowledging the many benefits that sustainable operations offer, and are pushing to advance their green initiatives.
A recent research study, conducted by Coyote Logistics in partnership with Martec, found 81% of supply-chain professionals claiming that their companies have increased their focus on sustainability in the last three years. This shift comes in part from the pressure that key stakeholders put on supply-chain members to apply additional efforts toward sustainable operations and practices, and join the global demand to go green. As a result, supply-chain professionals are becoming a driving force behind the development and execution of their companies’ sustainability programs, as they search for ways to reduce costs, miles and emissions.
Cutting down on empty miles and costs, however, are only a few of the benefits that come with prioritizing supply-chain sustainability. Going greener supports organizations’ customers as they advance their own sustainability initiatives, delivers a tangible return on investment potential, and reduces the supply chain’s overall impact on the environment.
Grow Consumer Interest
Consumers consistently purchase from companies that utilize sustainable business operations and practices. The Coyote study examined 250 global shippers across industries, company sizes, verticals and seniority levels to investigate buying habits and perceptions around sustainable supply chains. Notably, 84% of respondents claimed that a brand’s sustainability practices influence their ultimate purchase decisions.
Readjusting priorities to keep consumers engaged and loyal is vital. If consumers value sustainability, companies should increase their focus on sustainable practices. According to the study, 77% of companies with revenues between $1 million and $199 million have done so after realizing the importance of sustainability. This demonstrates that consumers care about green practices, and that shippers acknowledge it.
The need for supply-chain sustainability resonates with business leaders because of the ROI potential. From the study, the most common key performance indicators (KPIs) used to measure ROI from implementing sustainable practices include cost savings (67%), benefits to company reputation (59%) and reflection of industry leadership (52%).
While companies may incur initial expenses when implementing green initiatives, the potential long-run cost savings largely outweigh the upfront spend. To maximize results, 98% of global shippers in the study employ at least one member dedicated solely to managing green initiatives.
A more efficient approach to fuel types and usage presents the greatest immediate ROI. This comes from reducing idle times, optimizing routes to reduce fuel consumption, and switching to alternative fuels. Other immediate sources of cost savings include inventory forecasting and working with green carriers.
Make an Impact
Consumer loyalty and ROI represent great benefits of implementing sustainable supply-chain practices from a business standpoint, but the positive environmental impact can’t be overstated. In fact, 61% of consumers said they’d willingly wait longer for their purchases if they were shipped via an environmentally friendly method.
Consumers do value an organization’s sustainability efforts, but it’s incumbent upon shippers to prioritize supply-chain initiatives, report the impact of their green operations, and communicate their improvements to consumers. Of the short-term programs already implemented across shippers’ networks, four of the top five are centered around practices with a direct environmental impact. Organizations should also set long-term goals, as currently only 71% of surveyed shippers have measurable goals in place.
Whether they utilize short or long hauls, shippers have a variety of opportunities available to them when determining the necessary steps to improving their environmental impact. Short and regional hauls offer the best opportunity for direct investment in today’s market, for such items as electric and lightweight assets. For long hauls, dynamic route optimization and intermodal conversion are practical solutions, leading to fewer turns and a reduction in modal complexity. Efficient warehouse optimization and operations are critical for any length of haul. Eliminating waste via reducing empty miles and idle time goes a long way toward making shippers more sustainable.
In 2021, shippers’ understanding of the sustainability landscape will further evolve, and they’ll establish a baseline to introduce short- and long-term greener supply-chain initiatives to maximize business outcomes. It will also require a long-term commitment and collaborative effort across business functions to drive positive change. The supply chain has begun to realize that sustainability should be a priority for achieving lasting success, and 2021 is the year to further emphasize it.
Mike Sinkovitz is senior vice president of Coyote Transportation Management at Coyote Logistics.
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