Optimising Digitalisation for Tangible Sustainable Logistics

Optimising Digitalisation for Tangible Sustainable Logistics

Green-aware customers are demanding more information to gauge sustainability of product supply chains

The prioritization assigned to sustainability by businesses is becoming emphatically more focused and strategic. With the shift in preference for environment-friendly products, green-aware customers are demanding more information to gauge the sustainability of the overall supply chain of the products they purchase.

Such as the raw materials used, the conditions under which it was manufactured and produced and the logistics operations of the movement of this product throughout its supply chain.

Additionally, businesses are also under pressure from regulators and investors to divulge their sustainability strategy, initiatives and results.

At present, intelligent supplier management, i.e., considering carbon emissions alongside price and delivery time as a selection criterion for suppliers, is becoming a decisive competitive advantage for businesses.

Furthermore, increasing their scope of monitoring the working conditions and impact within their own supply chain and their direct suppliers, companies have also taken into consideration their downstream suppliers as well.

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Thus, transparency is key as businesses are trying to implement sustainability strategies that encompass the entire value chain of their products.

As an enabler of global trade, logistics plays an important role in the growth of businesses across any industry. However, it also generates an unsustainable footprint. In 2020, the logistics sector contributed up to 21% of the total carbon dioxide emissions around the world.

With the rise in demand from customers, pressure from regulators and investors and the new green supply chain laws, sustainable logistics is a must for companies.

Sustainable Logistics

The supply chain consists of two facets – the physical and the digital supply chain. The physical supply chain involves the storage and movement of cargo through various transportation mediums and facilities until it reaches the final destination.

Whereas the digital supply chain deals with storage and movement of relevant documentation through various platforms and tools for booking, permits, re-scheduling, tracking and monitoring etc until the arrival of the cargo at the final destination.

When considered in this manner, there are a plethora of initiatives that can be undertaken by businesses for both aspects. On the physical supply chain side lies the use of alternative greener fuels like bio-fuel, electric vehicles or alternative energy sources like solar power to name a few.

When it comes to the digital front, there are already a great number of innovations being explored to make trade paperless through the use of automation, machine learning and blockchain technology.

Digital tools also helps businesses keep track of their sustainability metrics and measure of impact and supports more accurate reporting.

Although there is an increased awareness and willingness from businesses to undertake necessary sustainable actions, there are still some challenges in the use of as well as in scaling up green offerings.

Challenges in Going Green

  • Limited infrastructure to support green offerings globally, i.e., Limited availability of facilities for green fuels, energy, vehicles and equipment etc at landing or transit hubs like airports and ports

  • Higher cost of sustainable solutions. For instance, the price of biofuels is still higher than that of conventional fuels

  • Lack of an industry-wide global standard for green supply chains

But digitization can also be leveraged by businesses from the outset in order to undertake the requisite sustainability initiatives, based on accurate data analysis, that can have a larger positive impact while also optimising their costs, time and efforts.

How can digitization support the sustainability agenda of a business?

The implications of digital tools and innovations on sustainability is enormously advantageous for businesses. In general, sustainability initiatives or improvements requires a certain level of investment by businesses.

And even if some businesses are ready to pay a premium for sustainable practices, the rising costs of energy, assets and employee wages have made them be more cautious of their expenditure.

As a result, businesses seek an accurate analysis of their carbon footprint in order to help them optimise their investment and ensure that their chosen sustainability strategy has the most meaningful impact.

Most supply chains are fragmented and thus highly complex due to the larger number of stakeholders and logistics nodes involved. The resulting multitude of data points translates to a higher complexity in gauging the impact of a business’s operations in terms of sustainability.

Maersk’s Emissions Dashboard is an interactive sustainability tool that provides businesses with an overview of their carbon footprint across their entire value chain and trade channels.

It is a neutral single window that consolidates the emissions data across all carriers and transportation modes, be it Maersk or a third party. What’s more, it follows an industry leading calculation method that is GLEC-compliant, so that businesses can set science-based targets for the future as well.

Vikash Agarwal,Managing Director, Maersk South Asia said: "In today’s age, there is ample data available to you at the click of a button. What’s difficult is putting that data together into a cohesive analysis that can enable you to take the necessary decisions and actions for your goals.

"That’s what we’ve done with the Emissions Dashboard. We are addressing the primary challenge faced by all businesses of visibility on the impact of their operations.

"Having identified 5 key reporting dimensions to analyse and optimise emissions, we are providing businesses a dashboard that enables them to make informed decisions to decarbonise their logistics as per globally recognised standards."

Sustainability tools like Maersk’s Emissions Dashboard gives businesses better control over their supply chain, and it can also be utilized to gain a more in-depth view of where the sustainability gaps lie.

With this higher level of transparency, businesses can implement intelligent sustainability strategies to help them achieve science-based targets while also reducing their costs and improving their bottom lines.

Raj Tiwari,Global Chief Supply Chain Officer at UPL said: "Chemicals touch every aspect of human life today and sustainability will be a key business driver for the industry going forward.

"Being a part of the end-to-end food value chain, starting from seed to post harvest, sustainability is not a slogan for us, but rather a tool to bring efficiency in the business and to remain one step ahead.

"We’ve already prioritised 5 SDGs in our sustainability goals to creating an agriculture network that feeds sustainable growth for all.

"One of these is a climate strategy with clear reduction targets and a sustainability tool like the Maersk Emissions Dashboard really supports our goal of neutralising our carbon footprint.

"With it, we can now track our carbon emissions across our end-to-end supply chain and take corrective actions based on accurate data analysis.

"Moreover, we also get to see the results of our actions in absolute numbers, which is verified and certified by global industry standards, which is crucial for our sustainability reporting."

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