It feels like the whole world is aiming for sustainability right now. Considering the global attention that sustainability efforts are attracting, it’s not surprising that many organizations are taking a closer look at their supply chains with sustainability in mind. Many experts believe that third party logistics providers can play an integral role in helping companies to achieve their supply chain sustainability goals. Here’s what they say about working with a 3PL to boost efficiency and enhance sustainability efforts.
The ESG Framework
When looking at 3PL in the context of supply chain and sustainability, it’s helpful to understand the entire concept of ESG. You can think of ESG (environmental, social, and governance) as a sort of anchor that impacts everything that forward-thinking companies are doing. According to an annual report by CSCMP’s Supply Chain Quarterly, the ESG framework provides an understandable approach to better understanding the progress being made towards environmentally friendly, socially acceptable, and ethically responsible business practices. Under each of the segments of ESG, there are elements that can be related to ESG. For example:
Environment:
- Carbon and greenhouse gas emissions
- Reverse logistics
- Packaging
- Sustainable sources
- Climate change
- Renewable energy
- Product quality
Social:
- Diversity, equity, inclusion (DEI)
- Fair labor practices
- Work-life balance
- Human rights in supply chain
- Workforce health and safety
- Supply chain visibility
Governance:
- Supplier and customer relationships
- Data and cybersecurity
- Risk management
- Business ethics and integrity
- Anti-corruption and bribery
- ESG metrics, analytics, and compensation goals
How a 3PL Can Make an Impact
A 3PL can support ESG initiatives across the supply chain. An expert 3PL is likely to have implemented sustainability efforts into their own operations process, and be able to find new ways to support their own activities. Various tactics like reducing their transportation needs and carbon footprint, optimizing their waste output, using recycled or sustainable packaging materials, and conserving warehouse energy are just a few of the ways that modern 3PLs focus on going green.
Here are a few of the specific ways that working with a high-quality 3PL can streamline your sustainable supply chain goals.
- Reducing overall carbon footprint – The term carbon footprint refers to the amount of carbon dioxide that is discharged in the environment from burning fuel, typically while transporting goods. Research shows that carbon dioxide is increasing in the atmosphere and the transportation of goods across the globe is a major contributor (things like trucks, planes, etc). A 3PL partner can work with customers to create a credible carbon impact analysis. This will help to measure carbon emissions and also look for ways to improve in that area. They can also assist businesses in increasing the fill rate per transport unit which means transporting more goods per gallon of fuel. It can also mean deploying bigger capacity vehicles, scheduling more regular maintenance for transportation vehicles, and trying other greener fuels.
- Sustainable transportation – Another area that can create a positive impact on a more eco-friendly supply chain is transportation. Ideally, a 3PL provider has a lot of experience and can offer strategic transportation operations. They can look at your entire logistics process and figure out how to remove unnecessary legs of transportation. They can use their vast oversight to shift transportation, such as from air freight to by sea. They can also guide you in relocating inventory to more optimized locations and finding the most efficient routes for co-loading. A reputable 3PL probably also works with greener carriers that are continuously focused on implementing sustainable transportation solutions. All of these items can reduce costs and align with sustainability goals.
- Greener packaging – In the old days, packaging materials were not really an environmental consideration. Safety and timely arrival were the primary objectives. That means that decisions to use eco-friendly packaging materials are typically made by manufacturers in conjunction with shippers. In today’s landscape, it’s actually required that some companies must pay for the cost of disposing of packaging materials. A 3PL can assist in several ways by using greener, recyclable, and sustainably sourced packaging materials. Obviously, this is particularly true if you are using a 3PL to help with packaging or repackaging your products. In these cases the 3PL will be responsible for collecting and disposing of the wasted packaging material in an environmentally friendly way. As ecommerce continues to expand, it’s a good idea to choose a 3PL that keeps a close eye on environmental regulations. An added benefit is that this effort provides opportunities to lower both packaging and disposal costs, while improving sustainability.
- Optimizing energy use in warehouses – It can be surprising how much energy is consumed in warehouse operations. Consider their sheer size, and then the lighting, equipment, IT infrastructure, and office needs as well. Energy usage is a large part of any warehouse operational costs and can impact the all-important carbon footprint if you don’t take the right measures. An experienced 3PL is conscious of how their warehouse operations contribute to environmental impacts. Many of these companies have implemented sustainable processes and more energy-efficient floor designs. Some have also taken things a step further and experimented with things like solar panels or other renewable energy sources. Talk to your 3PL about ways to create greener systems without affecting performance negatively.
Focusing on an environmentally-friendly supply chain is a worthy goal, but one that requires collaboration. Even if your own company is doing all the right things, it’s important to choose partners that have similar goals around sustainability. Only then can you trust that their efforts do not undermine your own, and that together you can use your combined knowledge to come up with new and intelligent ways to meet sustainable supply chain goals. If you are interested in partnering with a 3PL who can help you to reduce your overall carbon footprint, create energy-efficient systems, reduce waste, or find other environmentally-conscious transportation partners, let us know. We can help you to create a plan for focusing on sustainability while growing your business.
