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Supply Chain Industry Updates

The Greening of the Last Mile

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Is there a unit of distance that gets more attention in the business world than the figurative “last mile” of logistics and order fulfillment fame?

The final link in the supply chain “can account for more than half of overall shipping costs. It can also be the most inefficient part of the entire delivery process, and can make the difference between a profitable venture or a money-losing business,” a co-founder of Routific blogged in Supply Chain Best Practices.

But aside from creating expensive delivery headaches, the last mile, with all those delivery trucks zooming through neighborhoods, also is seen as a natural target for emissions reduction. A new study estimates that last-mile delivery truck emissions could be reduced between 17% and 26% if businesses adopted wider use of local micro-fulfillment centers (MFCs).

“The carbon footprint of the last mile has long been an environmental and societal challenge,” said André Pharand, a managing director at Accenture and leader of the company’s postal and parcel practice. “It’s time to take action and make the last-mile supply chain more efficient, less expensive and more sustainable. Organizations with innovative local fulfillment strategies and that lead in digital adoption and sustainable business practices will become tomorrow’s industry leaders.”  

MFCs, Accenture explains, “enable inventory to be stored closer to customers in convenient suburban locations, enhancing supply chain processes, speeding up last-mile deliveries and enabling in-person pick-up of parcels. MFCs include in-store click and collect points, automated locker storage facilities and stand-alone micro-warehouse facilities.”

Accenture and Frontier Economics looked at the potential impact of MFCs on three major cities on three continents. They found that the extensive use of MFCs would reduce delivery traffic in London by 13%, equivalent to about 320 million fewer miles driven by delivery vehicles. Chicago’s delivery traffic could be reduced by 13%, and Sydney’s by 2%.

The Accenture study identifies achievable reductions in the levels of harmful air emissions arising
from a reduction in delivery vehicle volumes. 

These estimates, however, are based on an assumption: that you and your neighbors won’t increase your own carbon emissions when you’re picking up at the local MFC. “The offering of convenient click-and-collect options by retailers could encourage consumers to travel in-person — whether by low-emission vehicles such as private cars, by zero-emission vehicles such as bicycles or on foot — to collect parcels at local fulfillment centers, further contributing to reduced consumer traffic volumes and vehicle emissions,” Accenture said.

While it would be great in general if more people got around using their own two feet rather than relying on a motor vehicle, it is a little hard to see how this concept could work as well in a suburban or rural area as it might in a densely-packed neighborhood in Chicago or London. You can dig a little deeper into the report (called “Faster. Cheaper. Greener.”) here.

Green Supply Chain Management and COVID-19

Whether or not people are amenable to strolling to the local MFC, it looks like the 2020s will be a green decade for the supply chain, with more organizations drawing a link between sustainability and resilience. A study authored by a team of university researchers from around the world and released this week found that companies that practiced so-called green supply chain management (GSCM) practices “experienced less negative abnormal stock returns during the [coronavirus] crisis.”

With GSCM, environmental criteria are included in the selection of suppliers. These can include strategies such as the reduction of fuel emissions, waste reduction or elimination, lowered energy use and ethical sourcing.

The study’s authors speculate that GSCM practices might have given some companies a leg up during the pandemic by allowing them “to respond more quickly to the crisis by adapting their supply chain and avoiding costly production halts and securing the supply of imported materials.”

The study (“An empirical analysis: Did green supply chain management alleviate the effects of COVID‐19?”) can be found here.

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