Sustainable supply chains and the drive to implement a green last mile

INCORPORATING a sustainability focus into freight and logistics is on the rise as businesses seek to demonstrate leadership and embed social responsibility goals within their operations. There is increasing awareness across the fast-moving consumer goods sector that sustainable supply chains are not just for corporate governance and a driver of operational savings; they are also a tool to attract or retain environmentally conscious customers who are choosing businesses based on their green credentials.

According to a report by Australia Post, the key concerns for online shoppers are sustainable packaging and delivery, returns policies and processes and additional costs such as shipping, taxes, and duties. We can expect New Zealand customers undoubtedly hold similar concerns to our Australian counterparts. Almost half of the respondents want recyclable packaging, and nearly 30 per cent prefer carbon-neutral delivery. Some 28 per cent are willing to wait longer for delivery to reduce environmental impact. Clearly, there has been a marked shift in the consumer expectations around sustainability and businesses environmental initiatives are now under examination.

This push for sustainability has coincided with an e-commerce boom, with customers driven online and the rise of next day delivery changing the way businesses interact with them. It has also changed consumers’ buying experiences, shifting the retail landscape. As retailers benefit from strong consumer demand and a colossal increase in e-commerce orders, the focus for some is now on controlling emissions within the supply chain.

The uptake of green warehousing has been rapid, with many businesses installing solar panels and water recycling plants within warehouses to up their sustainability credentials. Industrial occupiers across New Zealand have been incorporating sustainable practices in their facilities for a while now, which is driving green initiatives in the industrial property market. Many have been investing in solar panels and water recycling plants among other environmental-friendly initiatives in industrial property, ultimately reducing carbon emissions. the spotlight, with businesses ramping up their efforts to ‘green’ their operations from warehouse dispatch to delivery on the doorstep.

Reviewing the configuration of your network design to ensure that the distribution centres and fulfilment centres are configured in a way which reduces travel is a good starting point. Going a step further and developing a comprehensive network strategy which outlines current and future infrastructure and transport routes, location of physical stores, fulfilment centres and dark sites plus identifying where customer demand is coming from is even better, and should be a priority for businesses serious about making their supply chains more sustainable.

It’s unlikely that the explosion in online shopping is going away any time soon and companies need to find ways to become more efficient and ultimately more sustainable. Part of this equation is understanding the cost to service or their logistics profile by expanding from a large warehouse into multiple smaller ones in order to deliver on time, like Amazon in the US has done. Another option is to look at the current delivery vehicle fleet and considering whether electric vehicles can be adopted. NZ Post’s work in electrifying their fleet is a prime example, 100 per cent of their delivery buggies, designed for neighbourhood deliveries, are electric.

Companies need to find ways to become more efficient and ultimately more sustainable. Another option is to look at the current delivery vehicle fleet and considering whether electric vehicles can be adopted. NZ Post’s work in electrifying their vans is a prime example. Photo: NZ Post

who have a focus on sustainability and who demonstrate their green credentials, making sustainability a key objective of procurement contracts can also ensure your last mile is as green as it can be.

Making tangible efforts to implement a more sustainable supply chain should be a focus for businesses, especially those in the B2C market, with customer expectations around sustainability only likely to grow. Focusing sustainability efforts on greening the last mile is where the biggest gains in reducing emissions can be made and as business shift away from sustainability initiatives within physical infrastructure ‘greening’ the last mile should be next on the to do list.

Caleb Nicolson, General Manager, TMX New Zealands Caleb leads the TMX New Zealand office delivering a world class supply chain, industrial project delivery and property offer in the New Zealand market.