Logistics leaders must pursue three strategic external partnerships to reduce greenhouse gas (GHG) emissions to contribute to their organization’s sustainability goals, according to Gartner, Inc.
“Organizations on an emissions reduction journey initially leverage optimization strategies. These strategies include modal shift, load optimization and network design all aimed at emissions reduction,” said Sarah Watt, senior director analyst with the Gartner Supply Chain practice. “However, for organizations with significant emissions reduction goals, these initial inhouse activities don’t go far enough.”
In addition to internal GHG emissions reduction activities, the three external partnerships logistics leaders should pursue to improve their organization’s emissions footprint include:
Third-Party Logistics Providers (3PLs)
While the C-suite may set ambitious emissions reduction goals for Scope 3 emissions, transportation and logistics leaders rely on 3PL partnerships to meet these expectations. Ambitious GHG reduction goals can’t be achieved through optimization alone. It will require investment in new vehicles and engine technologies to move goods.
“Before contracting a 3PL, logistics leaders should ask three questions. Firstly, does the 3PL’s ambition for emissions reduction match that of the organization. Secondly, what investments will the 3PL be making to improve emissions management, such as new vehicle technologies. Lastly, logistics leaders must understand if there is an investment gap, and if the enterprise is willing to play a part to bridge this gap,” Watt said.
Some GHG emissions created by customers could be avoided by offering greater transparency about emissions impacts. For example, demand for short delivery times may increase the use of airfreight. While many customers want to create less GHG emissions, they lack visibility into how their decisions can impact the environment. Logistics leaders need to challenge the assumption that faster is always better and communicate that some shipping options may take longer to arrive but are more sustainable than same-day-delivery.
Watt said: “This is not about taking away shipping options from clients to enable emissions reduction. This is about client choice of shipping options by creating visibility.”
For many organizations, reducing GHG emissions is a precompetitive issue. By working together, for example in an industry association, leaders from different organizations can share their experience and best practices and bring their collective effort to the challenge. This may also lead to co-investment in opportunities or collective collaboration with 3PL partners.
“It’s important to evaluate an industry association before joining. Significant time can easily be sunk into collaboration, with no clear outcome or benefit. Take an outcomes base approach when assessing where to join or to continue to engage with an industry association,” Watt concluded.
Gartner clients can read more in the report “3 Partnerships to Drive Reduction in Transportation Emissions and Logistics Costs”.
More information on the sustainable supply chain is available in the webinar “4 Strategies to Embrace the Future of a Circular Economy”.