Has COVID-19 delayed the creation of the sustainable supply chain?
In a new Reuters Events: Supply Chain report, supply chain executives asked about their business aims in 2021 said sustainability has fallen down their checklists
In a survey of almost 400 supply chain executives just 8% of retailers and manufacturers surveyed said that reducing environmental impact is their most urgent priority in their planning process.
Instead, the top goal is cost control, with 56% of respondents looking to reduce cost first and foremost. This focus appears to be undermining efforts on sustainability, especially as many in the logistics space have had to focus on the growth in the movements on goods.
Indeed, regulations to promote sustainability appear to be creating a significant headache for a some in their planning process, further reducing the interest in adopting it as a clear goal. In the survey, 12% of respondents stated that environmental regulations and innovations are making their planning more complicated and are driving up costs through their supply chain.
The sustainability of the last mile
A large element undermining the ability to balance both books and sustainability goals is the troublesome last mile. This is the part of the journey with by far the most carbon intensity.
Potentially, this is going to increase significantly unless companies commit to innovation in this area, with the World Economic Forum predicting that the number of delivery vehicles will increase 36% from 2020 to 2030, contributing to a significant increase in traffic jams and emissions.
Respondents in the survey are expecting this to be the case, with infrastructure issues among the top three planning challenges expected by logistics planners working for retailers and manufacturers (35%) and also amongst logistics service providers (44%).
However, as there is an obligation now being placed on businesses to shrink their carbon footprint, more businesses are going to have to find efficiencies in this area. However, this will help the cause of sustainability, as the two objectives of reducing costs and emissions can fit together, rather than be in opposition.
For example, there is much that can be done when planning transportation routes found the report. Currently, there are significant gaps, with only 27% noting that their inbound and outbound operations are integrated. Instead, 37% said that deliveries are typically to a single store, a quarter have a two-step planning process is two step, and 17% find store delivery windows are tight. Furthermore, 25% cross dock deliveries to stores at their distribution centres, but 10% find that dock and lane capacity is a bottleneck for their business, underlining that efficiencies are there to be found in the planning and routing of goods.
Tackling these planning issues can help to reduce the carbon intensity per item moved via more efficient routing and reduced idling from freight and therefore less vehicles and fuel usage.
The impact of the cold chain
The temperature-controlled supply chain is also being used more than ever, with the rapid increase in online grocery shopping during the pandemic, and is a major aspect of the costly last-mile. This comes at a time when the sector was under more scrutiny from both the government and public organisations to reduce their carbon footprint.
Currently, in the US 68% of consumers are having their groceries delivered, and businesses have begun to pay greater attention to supply chain planning and execution within these operations. The miles travelled from production to supermarket are becoming hotter topics for the consumer, and supply chain professionals looking into regional distribution models will assist with this in a sustainable sense, and therefore can prove popular with the consumer.
Though there may be short-term losses in the battle for sustainability as cost, risk mitigation and flexibility are the focus currently, the drive for a more accurate and reliable supply chain, driven by the intense growth in e-commerce, should create leaner processes in the long run. It is therefore hopeful that these will assist with providing a cleaner and more sustainable supply chain, which should be an aim for all providers going forward.