The impact of Supplier Sourcing on Sustainability

Freightender – Supplier Sourcing Solution in the Cloud

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It might not be the first thing you think of…supplier sourcing and global sustainability. Nevertheless, Logistics buyers and sourcing specialists have a far greater impact on emissions than expected!

 

Freight shippers have a great influence on the GHG emissions through their transportation sourcing and supplier management practices. This according to a study conducted by Professor Garland Chow* from the University of British Columbia, Canada. So how come we know so little about this, and more important, does sustainable supplier sourcing pay off!?

 

Screen Shot 2016-07-19 at 16.05.44Carrier sourcing and carrier supplier management least used ‘best practice’

 

When shippers implement sustainability in their LTL / FTL carrier selection procedure and reward and educate it their supplier relationships, logistics service provider have a tendency to be greener. Insights in this matter were gained during a research / survey about supplier sourcing & supplier management and their impact on sustainability, conducted in 2014 by Canadian Shipper.The result of the survey tells us that both supplier sourcing and supplier management are some of the least used tactics of shippers to reduce GHG emissions. On first sight, this sounds strange. Especially when you consider the fact that an analysis of the motivations / barriers for adopting more sustainable carrier sourcing practices indicates that the motivation of firms to include sustainability in their sourcing decision is increasing. But the reason for the low adoption hides chiefly in the fact that shippers are unaware of the (financial) benefits sustainable freight sourcing brings along road.

 

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While both strategies have high potential to attribute to the complete sustainability picture of a company, motivations indicate that there are still  a few roadblocks. The major barriers for sustainable freight sourcing are:

 

1. Profit. Will the move to sustainable freight sourcing impact profit?
2. The lack of effective GHG footprint measurement

 

A fundamental side note to the second point is that this barrier is slowly breaking, because carbon measurement programs are increasingly available, also thanks to third-party logistics suppliers.The findings of this survey are extremely useful for shippers seeking to implement sustainability in their (strategic) supplier sourcing programs. Many leading companies are turning supply chain sustainability into a competitive advantage thanks to close cooperation with their suppliers. By measuring, monitoring and better communication both parties reduce pollution, reduce overall freight spend (operational costs) and gain awareness among their customer base. Also, carriers can take advantage in terms of product differentiation in the “green” dimension and the public sector, which can influence the motivations and barriers.

189dfcd8-128e-43a7-850b-41e81bcec7f8 (5)The benefits of sustainable Supplier Sourcing for Global Shippers

 

Achieving sustainable logistics does not mean sacrificing profits. this is an important point shipper need to make their own. We have listed the three largest benefits of sustainable supplier sourcing:

 

1. The reduction of emissions. Because transportation is all about the shipment of goods from A to B, the very first responsibility of shippers is clearly the reduction of carbon emissions. By reducing the amount of overall kilometers / miles driven for your truckload shipments (or any other transportation mode!), the total amount of noxious gasses released is reduced. Also shifting between transportation modes can increase sustainability. Next to fuel and time savings, the decrease of the carbon footprint will increase customer affinity for your brand.

 

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2. Shipment Consolidation (reducing energy waste). Shippers can improve packaging processes, transport loading or shift to transporting multiple small parcel shipments via LTL shipments ( this can still guarantee on-time shipment without increasing the carbon footprint). Shipping multiple items by load consolidation is without a doubt cleaner than shipping 20 different items in 15 different trucks. The fastest option is not always the most efficient, yet the most efficient option is usually the fastest.

 

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3. Integrated packaging design process. Packaging is seen as one of the key elements that support an efficient and sustainable Supply Chain. Transportation leaders are striving for competitiveness and sustainability by eliminating activities that do not add value and by developing innovations in processes and products. The concept of a Sustainable Packaging Logistics design is designing, implementing, and controlling the integrated packaging, product and supply chain systems in order to prepare goods for safe, secure, efficient and effective handling. This will benefit the transportation side, but also the storage, distribution and even the disposal of goods. This approach works very well with the implementation of “meta-standards” (ISO 9000 and ISO 14000). In the end, a sustainable Supply Chain saves resources, reduces waste, and provides competitive advantages.

 

*Garland Chow is Associate Professor, Operations and Logistics Division in the Sauder School of Business at the University of British Columbia. He teaches and writes in the fields of supply chain, business logistics, freight transport and supply management.

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Pieter Kinds

Pieter Kinds

CEO Freightender.com

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