Is Green Logistics a Sustainable Option for Your Business?
Sustainability and green operations are the heart and soul of environment-friendly business operations. But are these factors attainable and cost-effective? What are the costs and benefits of making your operations greener?
This post will discuss the impact of green logistics on your business health.
What is Green Logistics?
Green logistics refers to redesigning your business operations – with a focus on supply chain management – to reduce their environmental impact. Particularly for the supply chain, the management will prefer green suppliers and transportation providers.
At the time, it may also mean building an in-house transportation team to decrease reliance on external sources to move away from a just-in-time model to more sustainable options. Those businesses that go with this route will have to fulfill licensing documentation requirements in related countries. For example, they may need to hire those heavy goods transporters who have passed their HGV theory test and practical test and acquired their licenses in the UK.
Companies have various reasons to start taking responsibility for their carbon footprint. The biggest one of these reasons is customer demand. Otherwise, companies adapt this move to foster their corporate citizenship and reduce long-term costs.
Why You Should Implement Green Logistics?
Against its upfront costs, the benefits of green logistics are multi-fold. They will be rewarded with customer loyalty, more business, and reduced cost of operations in the long term.
Customer Satisfaction
Customers are increasingly demanding eco-friendliness from their vendors. This has translated into an urge to scrutinize the whole supply chain to minimize its carbon footprint. In other words, whether you operate in the B2C industry or B2B industry, your business prospects will increase as you shift to greener operations.
Lower Transportation Costs
Order planning is the most important bottleneck that prohibits businesses from shifting their logistics away from the prevailing just-in-time model. But general awareness among buyers and consumers is decreasing this pressure a little.
Businesses, including e-commerce businesses, have to potential to utilize this impact of awareness and adapt to fewer deliveries that are well-planned and carbon-efficient. However, B2B businesses will find that fewer deliveries are easier for them than for their B2C counterparts.
Exemption from Carbon Tax
The carbon tax is the tax on carbon emissions levied by the government on certain industries including the petroleum industry. While that tax cannot be eliminated by adopting green technology for such industries, it does get impacted by using better technology and operations.
Lower Costs from Suppliers
Green is more often than not synonymous with cost-effectiveness. The operations go minimal and only focus on primary business activities. Renewable energy carries lower costs than non-renewable energy. At the same time, fewer operations will result from adapting green operations in a business.
In short, green logistics is cost-effective in the long run. You may feel the brunt of implementation costs in the initial stages of implementing this strategy but consider it as an investment that will pay back for the rest of the business’ lifespan.
Costs of Adopting Green Logistics
Most costs of making your supply chain operations green are incurred in the initial stages of implementation. Here is an overview of all the related costs of switching to greener strategies for logistics and operations.
Research and Negotiation
Researching environmentally aware suppliers is a key step in going green. Sure, it will take time and effort, but it’s a one-time investment that will have recurring pay-offs in terms of marketing and customer retention.
If environmental awareness hasn’t impacted the operations of your suppliers’ industry too much extent, you may have to include a step of negotiation for getting greener and more products. It may include giving a premium price. So, that will translate into an ongoing cost for your business.
Cost of Changing Technologies
Many ways of making the operations greener include using more sustainable technologies in place of more energy-draining ones. So, the business may have to buy new equipment, change the steps of different processes, and change the raw materials used in production.
These changes will need considerable research and development costs.
Implementation May be Impractical
Not every business is green or environment-friendly these days. While the demand for green products and services is increasing, its preference isn’t defined among customers who also want to keep the costs low and deliveries fast.
At the same time, technology is only gaining pace in favor of greener solutions. We have a long way to achieve optimal energy efficiency and sustainability in our everyday processes. If a business sets out to search for sustainable suppliers for its production operations, it may have to search a lot because not every supplier is focused on this factor of quality.
Lack of operations and quality suppliers may make completely green operations impossible for many industries.
Take Away
Consumers, nowadays, are waking up to the need for environment-friendly solutions against traditional more wasteful ones. Businesses are responding to this need with more efficient processes and sustainable ties in the industry. This post discusses some ways this decision to go green can change the dynamic of a business.
