Gartner: Logistics Pros Need GHG
October 19, 2021
leaders must pursue three strategic external partnerships to reduce greenhouse
gas (GHG) emissions to contribute to their organization’s sustainability goals,
according to Gartner.
“Organizations on an emissions reduction journey initially leverage optimization
strategies. These strategies include modal shift, load optimization and network
design all aimed at emissions reduction,” said
Sarah Watt, senior director analyst with the Gartner
Supply Chain practice. “However, for organizations with significant
emissions reduction goals, these initial inhouse activities don’t go far
In addition to internal GHG emissions reduction activities, the three
external partnerships logistics leaders should pursue to improve their
organization’s emissions footprint include:
Third-Party Logistics Providers (3PLs)
While the C-suite may set ambitious
emissions reduction goals for Scope 3 emissions, transportation and logistics
leaders rely on 3PL partnerships to meet these expectations. Ambitious GHG
reduction goals can’t be achieved through optimization alone. It will require
investment in new vehicles and engine technologies to move goods.
“Before contracting a 3PL, logistics leaders should ask three questions.
Firstly, does the 3PL’s ambition for emissions reduction match that of the
organization. Secondly, what investments will the 3PL be making to improve
emissions management, such as new vehicle technologies. Lastly, logistics
leaders must understand if there is an investment gap, and if the enterprise is
willing to play a part to bridge this gap,” Watt said.
Some GHG emissions created by customers could be avoided by offering greater
transparency about emissions impacts. For example, demand for short delivery
times may increase the use of airfreight. While many customers want to create
less GHG emissions, they lack visibility into how their decisions can impact the
environment. Logistics leaders need to challenge the assumption that faster is
always better and communicate that some shipping options may take longer to
arrive but are more sustainable than same-day-delivery.
Watt said: “This is not about taking away shipping options from clients to
enable emissions reduction. This is about client choice of shipping options by
General Manager with SmartSolve added, “Only through true partnership
is the achievement of GHG reductions and other sustainability goals possible.
Time after time, SmartSolve has witnessed how collaborative and engaging
partnerships lead to better results across the board.”
For many organizations, reducing GHG emissions is a precompetitive issue. By
working together, for example in an industry association, leaders from different
organizations can share their experience and best practices and bring their
collective effort to the challenge. This may also lead to co-investment in
opportunities or collective collaboration with 3PL partners.
“It’s important to evaluate an industry association before joining. Significant
time can easily be sunk into collaboration, with no clear outcome or benefit.
Take an outcomes base approach when assessing where to join or to continue to
engage with an industry association,” Watt concluded.
Ken Bays, Vice President Product Development
with Inmar Intelligence explained, "I agree with Sarah Watt’s comments;
however, I think the first step should be an evaluation of a
provider’s current, internal processes. We have found that many
times companies can reduce emissions by increasing visibility
into their own operations. For example, product returns from
online purchases continue to increase at unprecedented rates.
Reverse logistics can be more costly than forward-based
logistics because returns have more moving parts and are
typically done in smaller quantities.
Even companies that aggregate returns
before shipping may be limited by the quantity and/or locations
of their returns processing facilities. One company, with east-
and west-coast returns processing centers, will add significant
mileage, costs, emissions and time to the returns process when
compared to a company that has access to return processing
facilities across the country.
By having access to more processing
centers, companies can get returned merchandise back into the
marketplace through return-to-stock, return-to-vendor,
liquidation and remarketing, and donations. The remaining goods
can be processed through waste-to-energy programs. Additionally,
applying advanced analytics can help companies determine the
optimal disposition method, which factors in
transportation-related costs. From an environmental perspective,
the value derived from these tactics is twofold. First is the
reduction in mileage which directly translates into less
emissions. Secondly, these approaches keep products from being
sent to landfills as a point for final disposition. Landfill
diversion is critical to the reduction of GHGs because landfills
generate high levels of methane, a greenhouse gas that is 84
times more potent of a climate warming gas than CO2."