For five years now, we have been arguing that sustainable transportation and logistics practices had to become the new way forward. We believed that with the transportation sector being the second largest source of greenhouse gas emissions in Canada, it was prudent for supply chain professionals to become actively involved in driving this new way forward rather than to be left reacting to eventual government edicts. During the past five years, we also witnessed increasing awareness of sustainable transportation and logistics practices as they became a topic of discussion in the boardrooms of many major shippers and carriers.
Supply chains today are in the spotlight. With more than 50% of the average corporation’s CO2 emissions occurring within the company supply chain, companies are beginning to scrutinize their logistics and transportation activities for ways to “decarbonize” and reduce risks. In addition, the supply chain will become one of the first places informed consumers will look to see what sustainable practices are associated with a given product or service, as Andrea Bolger, head of business financial services at Royal Bank of Canada (RBC) points out. Consumers now better understand and take into account the environmental impact of the transportation of the goods they buy.
Naysayers choosing to ignore the trend towards sustainable transportation and logistics practices believed it was a fad that would grow out of fashion with time or a recession that focused the attention of carriers and shippers on cost control. Well, we have been through the worst recession since the 1920s, yet we continue to write about sustainable practices in this magazine, we have just published our fifth annual green transportation supplement in our motor carrier focused sister publication Fleet Executive, as well as dedicating several of our award-winning Web TV (TMTV) episodes to the subject. Why? Because the interest in sustainable transportation practices is justified and it is growing.
Further evidence of this interest in sustainable transportation and logistics practices, and the informational tools being made available to supply chain professionals in this regard, is the report “Focus forward: Enhancing supply chain value with green logistics and transportation,” published by SCL and RBC. The report (the highlights of which are being presented across Canada this fall) is aimed at deepening executive understanding of the top five environmental issues relevant to the logistics sector, with a focus on the business risks and opportunities currently associated with each issue.
Of course, not all opposition to adoption of sustainable transportation practices has to do with a refusal to look forward. As Bob Armstrong, head of SCL, attests: “Every day, I interact with dozens of members from all corners of logistics and have been greatly impressed by the industry’s resilience and capacity to innovate. Having said that, I still find myself bumping up against a common barrier when it comes to managers taking action to reduce their company’s environmental impacts; ‘I can’t afford it,’ they tell me. Or, ‘I need to focus on my bottom line.'”
Which is exactly what I find so helpful about this new report. It provides many examples of companies that have gone beyond the misperception that sustainability is too expensive to implement and actually saved money – in some cases lots of money – in doing so.
Consider the example of footwear giant R.G. Barry Corporation whose story is included in the report and also in greater detail in this issue of CT&L. The company saved more than $2.5 million just by thinking inside and outside the box, so to speak. R.G. Barry engaged Jack Ampuja, president and CEO of Supply Chain Optimizers SCO, to help optimize its packaging as part of a larger turnaround effort. Ampuja discovered that while the recycled corrugate cardboard boxes produced by R.G. Barry’s manufacturers appeared stronger, they were actually heavier and weaker than they could be. Optimizing the cartons through a packing redesign resulted in $200,000 savings on R.G. Barry’s total corrugate spend. Cutting the total corrugate spend also drove additional savings throughout the supply chain because of reduced costs related to handling and transporting of the optimized packaged goods, which cascaded into even bigger savings: $1.6 million from lower inbound freight costs and $1 million from less ocean container freight and storage space.
It’s one of several examples of how smart business goes hand-in-hand with environmental sustainability, or as we like to say, how you can turn green into gold.
The report is available at www.sclcanada.org. It’s worth reading.