Last week’s report from the UN’s Intergovernmental Panel on Climate Change (IPCC) has called on the world to take urgent climate action. If we don’t start making changes toward sustainable supply chains, the consequences of climate change are likely to be catastrophic. In fact, the IPCC advises that carbon emissions need to peak by 2025 and then be reduced by half by 2030.
Until recently, the prospect of eliminating 50% of your carbon emissions would have felt overwhelming. Even now, with all of the technological advances and green investments happening, the transition to sustainability presents a substantial financial risk for most businesses. But it doesn’t have to. In fact, reducing your organisation’s carbon footprint can be effective simply by optimising these five key areas of your supply chain:
Believe it or not, the carbon footprint of individual warehouses has far less impact on your overall emissions than you might expect. While important as part of a greater strategy, we estimate that simply increasing the sustainability of your warehouses only makes a 7% impact. Combined with the investment of time and resources needed to make changes here, lowering the carbon output of your warehouse doesn’t need to be your highest green priority. That said, it does rank in the top 5, so consider including it in your strategy still.
This is all about your (or your logistics provider’s) fleet. Greener vehicles and efficient driver allocation all have a role to play in your carbon footprint. Changing to green fleets needs to happen, but it’s not the silver bullet that many think it is. Much like lowering the carbon footprint of your warehouse, transferring to green vehicles works best as part of an overarching strategy rather than as a separate project.
And, again like the warehouse footprint above, this can take significant time and investment. Making adjustments that have immediate impact requires you to look at more agile changes like the ones below.
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Do your customers ever make multiple orders in quick succession? Or perhaps they make one order that comes from multiple fulfilment locations? Do your vehicles sometimes go out at less than full capacity? If you answered yes to any of those, optimising this element of your supply chain can definitely reduce your carbon emissions.
Having the visibility and understanding of how your customer’s needs and your working capital interact is vital here. By consolidating multiple orders into one delivery or keeping ‘frequently bought together’ stock in one fulfilment location, you can limit the number of trips it takes to deliver all of the ordered product to a customer.
Similarly, that consolidation can be used to ensure vehicles don’t get sent out unless they are loaded fully. Making sure that your vehicles make fewer journeys to deliver the same amount of products is an important part of optimising your supply chain for sustainability.
With customer expectations pushing the bounds of speedy delivery, balancing between rush orders and sustainability can be extremely difficult. However, if you can build slower (but greener) expectations into the customer journey, you can enable greater shipment optimisation.
Although setting out slower delivery rates may seem counterintuitive, your customer success and marketing teams can work together to make sure your customer and prospect base are both aware of and happy with that timeline. The constant immediacy with which things are delivered now can be shifted with gentle guidance and transparency around its impacts.
Beyond all else, how far each item has travelled is the most significant factor in your supply chain’s carbon impact. Between manufacturing, fulfilment and the many other stops along the way, keeping a product’s mileage down is key. This means you need to have a method of ensuring you have the right stock in the right places to minimise the length of delivery trips.
Moving products efficiently is the easiest way to make a significant impact on your carbon emissions. In addition to its individual impacts, when the other four variables in this list are implemented alongside optimising total distance, they can create an enormous difference.
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These factors can all be optimised most effectively by accessing and utilising the wealth of data in your supply chain. Artificial intelligence and machine learning can be great ways to implement those optimisations without relying on excessive manpower, costs and time. With the right platform, you can also use tools like a digital twin of your supply chain to perform more effective demand planning, optimise your working capital and understand how making different choices can impact your supply chain sustainability in the future.
In fact, all five of these factors can be combined with AI to reduce carbon emissions by 51%. Our AI makes complex calculations that balance all of these elements to ensure the optimal decisions are made across a supply chain.
Embark on the optimal path to decarbonising your supply chain with the Green Ratio. Get your copy now!