Rob Wright, executive director at SCALA Consulting, provider of management services for the supply chain and logistics sector.
The recent growth of the e-commerce sector, triggered largely by nationwide lockdowns throughout the pandemic, has caused the sector’s supply chains to impact the environment with a renewed force. Larger fleets, longer journeys, and shrinking warehouse space are delivering a collective blow to sustainability endeavours that cannot continue.
Though some businesses are demonstrating awareness of this recent, enhanced environmental impact, around a third (32%) have no measures in place to monitor their carbon footprint. This suggests that either businesses are ill-equipped to monitor their carbon footprint, or they are failing to understand the true impact of their emissions.
While greener initiatives are now appearing on corporate agendas, fuelled in part by COP26 and the revived focus on sustainability, businesses are also facing growing pressures from the consumers they serve. In a 2021 survey, a third of consumers claimed to have stopped purchasing from certain brands because of ethical and sustainability concerns.
Against this backdrop, we look at how establishing greener supply chains must become a core business objective for 2022 and beyond, and how businesses that fail to implement change risk reputational damage and increasingly difficult trading futures.
Fleets go green
The transport sector alone accounts for 27% of the UK’s national carbon emissions and is under governmental pressure to make reductions. As newer hybrid and electric vehicles become more available, businesses must radically alter their approach to fleets.
Businesses need to shift their approach from viewing transport as a commodity to be acquired at the lowest price to an approach that is more strategic. This might take the form of developing relationships with ‘green-first’ third-party providers or investing in their own e-fleets. Either way, government and local authority ‘go green’ initiatives will see a rise in both support for and expectation on businesses to move away from fossil fuels.
Warehousing logistics will change
During the various lockdowns, online shopping and expectation for next-day deliveries intensified and turned attention towards the need for better warehouse logistics. UK warehouses risk running out of space as contingency stocking increases and global supply chains are accordingly disrupted.
One way to mitigate this disruption while preserving sustainability goals will be for businesses to look at inventory as more of an asset and less as a waste. Proximity to customers will take on a renewed importance and a migration to smaller warehouses, located close to urban areas, will likely follow.
To support this migration, businesses will also look towards decentralising logistics networks, shortening their supply chains, and implementing deeper automation into core processes. Together, these steps should lead to more agile operations and smaller carbon footprints.
New challenges await
Developing greener supply chains will not be without fresh challenges as we dive deeper into 2022. Among the most taxing of these will be inflation levels which are set to rise to record highs. This will be a new reality for many businesses, and how costs are managed and passed along supply chains will require careful thought. Inflation will also continue to impact wages as staff shortages, most notably among HGV drivers, propel salaries upwards.
The threat of new Covid variants also remains ever-present and another variant could stall economic recovery again with potential lockdown measures and hobble supply chains as infected workers isolate and recover at home.
These challenges notwithstanding, the move to greener supply chains must gather pace. Though it may require a level of upfront investment that causes a degree of discomfort, it is a discomfort dwarfed by that meted out by damaged reputations and loss of custom.
