There’s no question about it: Talk about sustainability has become pervasive. So, you might think our resource-intensive supply chains would be at the forefront of adopting environmentally friendly approaches.
Think again. DHL Global Forwarding CEO Tim Scharwath put the problem bluntly in a recent interview. “If you talk to purchasing guys they have one thing to do: get the best deal. And they get paid for less spend.”
It’s as simple as that. Sustainability is nice, but we aren’t willing to pay more for it. Or enough more, according to Boston Consulting Group. It reported that while 82 percent of companies will pay some premium for clean shipping, the extra amount they’ll approve isn’t nearly enough to make a real difference in emissions.
In our practice, we’ve found this isn’t as hopeless a standoff as it seems between better versus cheaper. Modern day supply chains have massive waste. Estimates vary, but somewhere around 20 percent of all trucks on the roads are empty at a given time. And that doesn’t account for the wasted space in partial loads…
…Or the fuel burned waiting in line at warehouse docks…
…Or shipments that move by air instead of ocean or ground just because “they need to get there” and visibility is lost in transit…
…And it doesn’t account for any extra buffer inventory taking up space in warehouses “just in case,” either.
We could go on (and when we analyze client supply chain designs, we do). The point is that all these situations present opportunities to ship smarter, save money and save on resources. What’s lacking are the tools and awareness to turn these inefficiencies into green savings and saving some green on the bottom line.
Here are some places to start your smart green strategy:
This can be a daunting task, but recent RFPs are a gold mine of data. Combine information from different business units or manufacturers to uncover common movements. If you have software platforms like our own ChronosCloud, which integrate data from various suppliers to aid in your supply chain design, so much the better.
Too often, supply chain managers start by picking from a menu of offered transportation choices, none of which match their requirements well. We turn that approach on its head by first imagining the ideal supply chain design. What would it look like if everything moved perfectly just as you want? With that ideal in mind, start looking for ways to come as close to it as possible.
This needs-first thinking helps you find better solutions that might not initially be obvious. For instance, where shipping volumes and frequency allow, you might consider contracting with a partner for guaranteed full truckload movements instead of relying on spot networks. (We’ve pointed out before how contracted rates are almost always better over the long run versus the spot market.)
It may be cliché that knowledge is power, but that doesn’t make it any less true in supply chain. Often, things move faster, less efficiently, with more resources and at higher cost simply because managers are scared of running out. Having better control over your goods in transit and a team to manage risk and efficiency reduces that fear.
Being green in business isn’t easy just like being good in business isn’t easy. It takes effort to achieve bottom line and quality results. So, we should expect the same for our sustainability initiatives. Thankfully, you don’t have to be alone on your journey to peak sustainable supply chain design.
At Morgan, we’ve been optimizing multi-party manufacturing supply chains for more than 30 years. Along the way, we’ve won multiple Supply & Demand Chain Executive “Green Supply Chain” awards and been recognized by Cisco Systems for “Excellence In Sustainability.”
Connect with our team today and see how we can help you find a new kind of green as you green your supply chain.