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Going Green: The Business Benefits of a Sustainable Supply Chain

Green logistics is growing in popularity as more companies work to minimize their environmental footprint. The move makes sense considering that 80% of greenhouse gas emissions and 90% of the average consumer company’s impact on air, land, and water resources comes from its supply chain. As a result, some of the world’s biggest companies now are leading the way in “going green.”

Efforts in this area make for a cleaner, healthier planet for all of us. But they also generate a different kind of green—long-term financial gains that benefit the bottom line.

Research shows that companies highly focused on environmental sustainability outpace peers in a lower cost of capital, better market performance, and accelerated investment growth. Global consumers want sustainable goods too with 66% willing to pay more for them. That number increases to 73% for millennials, the world’s largest consumer group.

Opportunities abound to help the planet while improving profits. When it comes to sustainability, even small moves can create big gains.

Eliminating Warehouse Waste

Warehouse location makes a big impact on carbon emissions. Every transportation mile to and from the facility consumes fossil fuels. Relocating warehouses closer to large consumer populations minimizes the daily environmental effects of moving goods while reducing paid transportation miles.

Warehouse configuration also makes a difference. With shovel-ready land in short supply, making the most of the space available is important. Innovations in reducing aisle widths, maximizing vertical space, and reconfiguring racking allow warehouses to improve inventory capacity without physically expanding the size of the building and consuming more natural space.

Reductions in energy consumption provide some of the biggest cost savings and environmental improvements. Making the move from fluorescent to LED lighting can save companies up to 61% in energy costs. That number goes up when adding motion sensors and wireless controls. Warehouse rooftops also provide the perfect location for solar panels. Companies recapture their investment within an average of eight years and benefit from a 75% reduction in energy bills for the remaining lifespan of the panels.

Reducing on the Road

Transportation, which currently relies almost exclusively on fossil fuels, was responsible for about 26% of the world’s CO2 emissions in 2018. That is the equivalent of more than 8 gigatons or operating 37 million trucks for one year. Freight movements alone account for 7% of global GHG emissions.

Fuel represents the second largest cost for transportation providers. Therefore, truckload carriers already have a financial incentive to run their equipment efficiently. SmartWay Carriers voluntarily work to reduce fuel use and emissions through environmentally friendly practices that also save money. Strategies often include installing auxiliary power units (APUs) to eliminate fuel use when not moving. Instituting fuel-efficient equipment designs like trailer tails, wheel covers, and speed governors. And rethinking truck maintenance with improved systems and materials. A 2019 study of nearly 75,000 trucks using various fuel-efficient technologies showed an annual fuel savings of nearly $900 million compared to standard trucks. Average mile per gallon improved nearly 22%. Within the next 10 years, hydrogen and electric-powered trucks will be more common on roadways helping to reduce carbon emissions further.

Shippers can improve these numbers even more by leveraging rail. With railroads up to four times more fuel efficient than trucks, moving freight by rail can lower greenhouse gas emissions by an average of 75%.

Another area for investment is in how companies ship products. Business consumers often prefer drumbeat shipments—smaller quantities of product received more frequently. That can create significant waste in the supply chain from underutilized trailers and containers to additional fuel-consuming miles traveled. Working with buyers to maximize orders can generate up to 50% in transportation cost savings while reducing emissions. Minimizing shipment dunnage and instituting recycling (or reusing) programs for packaged materials offers another area for cost and environmental benefits. For example, one of the world’s largest food companies saved $44 million by switching from single-use corrugated material to reusable plastic shipping containers.

Improvements Inside the Office

Pursuing more sustainable supply chain practices need not just happen far from home. Inside the office provides plenty of opportunities for improvement.

Consider energy consumption costs. A groundbreaking study by the Alliance to Save Energy found that companies wasted $2.8 billion annually just by leaving computers on overnight. When it comes to paper use, things are equally as bad. The average person uses 48 sheets of paper per day, more than 70% of which ends up as waste. That means a company of about 175 people is using one tree’s worth of paper every day—and throwing away almost all of it. The environmental impact gets worse when considering the energy and water needed to make paper. Moving to digital document systems, turning off technology, and using cloud-based servers can generate thousands in annual savings.

Another benefit companies may overlook is the impact on employee recruitment and retention. The Society for Human Resources Management (SHRM) found that 38% of employees are more loyal to companies that prioritize sustainability. In a time called “The Great Resignation,” an environmental focus pays off in talent management.

“Going green” really does have its benefits—to the world and company wallets.

Langham’s Green Initiative

When Langham Logistics helps clients create more sustainable supply chains, we speak from experience. That is because we transformed our own company first.

Our energy-efficient warehouses eliminate more than 1,100 metric tons of CO2 emissions annually. Daily recycling programs reduce landfill waste. Sophisticated scheduling limits truck idling during loading/unloading. On the road, we partner with SmartWay-certified carriers to maximize fuel efficiency and do our part in reducing emissions. We leverage rail and help customers craft smart supply chains that reduce transit and fuel usage. Environmentally friendly office management strategies have our team operating 88% more sustainably. Digital document management has us printing 500,000 less sheets of paper per year despite our double-digit annual volume growth.

We see sustainability as more than a feel-good initiative. At Langham, sustainability is a core business strategy. Discover our other improvements and how we help clients protect the planet and their profits.

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