Supply chain management and sustainable logistics
In this step, you will be introduced to the concept of green logistics and how businesses can incorporate sustainable principles into their logistics processes.
Logistics and supply chain management
According to the Council of Logistics Management (CLM 2002), logistics is:
…that part of the supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers requirements.
Although the terms ‘logistics’ and ‘supply chain management’ are often used interchangeably, they refer to two aspects of the process. According to the following diagram, logistics refers to what happens within one company and forms one of the many supply chain processes. Supply chain management, on the other hand, encompasses a wider number of operations run by a larger network of businesses that work together to deliver goods to customers and manage returns and wastes.
Logistics management is an integrating function which coordinates and optimises all logistics activities which may include orders processing, inventory management, materials planning, warehousing, network design, inbound/outbound transportation, fleet management, outsourcing and to varying degrees sourcing and procurement, data processing, production planning, packaging and customer services. The main aim of logistics is to coordinate these activities in a way that meets customer requirements at minimum cost (Green Logistics 2010).
The relationship between supply chain, logistics and transportation
Defining sustainable logistics
With the growing importance of sustainable supply chains, the focus has been inevitably placed on the greening of logistics activities, as well, with the aim to meet customer requirements not only by reducing costs in monetary terms but also costs associated with climate change, air pollution, noise, vibration and accidents. In line with the definition of sustainable development as part of the 1987 Brundtland report (see Week 1), sustainable logistics can be defined as:
…producing and distributing goods in a sustainable way, taking account of environmental, financial and social factors.
(Sbihi and Eglese 2009)
To achieve a more sustainable balance between economic, environmental and social objectives, businesses must make decisions about their logistics practices that encompass the environmental, economic and social elements of the Triple Bottom Line.
The triple bottom line of sustainable logistics
(Adapted from Greenlogistics.org n.d.)
The economic dimension
The economic importance of logistics is two-fold: to maximise the value-added to the business (eg revenues, assets and customers’ service levels), and also to reduce the related logistics costs by utilising more effectively available resources. To achieve that, businesses must invest in both service quantity and quality and encourage the development of innovative and efficient logistics services (El-Berishy, Rügge and Scholz-Reiter 2013).
The social dimension
Similarly, the social dimension of logistics has more than one aspect. First, logistics businesses must develop policies and management processes to protect labour rights in accordance with the current legislative requirements. Second, businesses have a responsibility to respond to growing consumer awareness on environmental practices by sourcing eco-materials, using renewable forms of energy and reducing the environmental impacts of logistics activities. Third, measures such as the shift to more sustainable transport modes or traffic reduction require consumers’ and acceptance (Klumpp 2016).
The environmental dimension
Finally, the environmental dimension of logistics refers to the eco-efficient management of the forward and reverse flows of products and information between the point of origin and the point of consumption. Lee and Klassen described green logistics as:
…business activities taking into account environmental issues and integrating them into logistics management in order to change the environmental performance of suppliers and customers.
Lee and Klassen (2008)
Green logistics activities may include the measurement of the environmental impact of distribution and collection strategies, the reduction of energy usage in logistics activities, the minimisation of waste outputs and the management of their treatment (Sbihi and Eglese 2009).
CLM (2002) ‘Logistics Terms and Glossary’. Council for Logistics Management (CLM) [online]. available from http://www.clm1.org/[8 July 2019]
El-Berishy, N., Rügge, I., Scholz-Reiter, B. (2013) ‘The Interrelation Between Sustainability and Green Logistics’. IFAC Proceedings Volumes 46 (24)
‘6th IFAC Conference on Management and Control of Production and Logistics’. The International Federation of Automatic Control (IFAC). 11-13 September 2013. Fortaleza, Brazil
Green Logistics (2010) ‘What is Green Logistics? Research into the Sustainability of Logistics Systems and Supply Chains’. Green Logistics Project [online]. available from: http://www.greenlogistics.org/ [8 July 2019]
Klumpp, M. (2016) ‘To Green or Not to Green: A Political, Economic and Social Analysis for the Past Failure of Green Logistics’. Sustainability 8 (5), 441
Lee, S.,Y., Klassen, R. D. (2008) ‘Drivers and Enablers that Foster Environmental Management Capabilities in Small- and Medium-sized Suppliers in Supply Chains’. Production and Operations Management Society. 17 (6), 573-586
Sbihi, A., Eglese, R. W. (2009) ‘Combinatorial Optimization and Green Logistics’. Annals of Operations Research 175 (1), 159-175
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