Adoption of Green Logistics
In its basic sense, logistics refers to the transportation, storage and handling of goods in their movement from raw materials, through manufacturing to the point of sale for purchasing and consumption. This makes logistics one of the most important factors within commerce. Logistics in business involves a number of activities including transportation of goods, storage, and management of inventory, material handling, and processing of information related to the process. These logistics activities have been vital to economic development and social well-being. Logistics has grown over the years to become one of the key pillars of business performance, a profession as well as a field of study for academicians. With the turn of the 21st century, however, concerns over the environment and ways of doing sustainable development and business have pushed the concept of sustainability to the fore, demanding the integration of environmental management within business processes, including logistics. The result of this concern has been the birth of green logistics; a form of logistics taunted to be environmentally and socially friendly, in addition to being economically functional. Green logistics comes with a number of advantages to the firm, the environment and society as a whole. There are, however, challenges in the implementation of the idea. Such challenges are however negligible considering the advantages that green logistics promise. Moreover, advances in technology, especially Big Data and Smart Transportation, are contributing immensely to the success of green logistics towards economic and environmental sustainability.
Concerns over environmental degradation and the carbon footprint of most business activities have raised the idea of green logistics. While concerns for the environment have traditionally targeted businesses, little focus has been on logistics, with environmental initiatives within logistics enterprises being temporary and passive as adherence to government regulations. Increased public concern over environmental issues, however, has brought new developments in the field of logistics including the introduction of international standards such as ISO 14001 and 26000 as accreditation for green practices for enterprises. In addition to these government and public concerns, research indicates that logistics influences weather change, in addition to the revelation that global warming presents a greater and immediate threat, contrary to earlier predictions.
Further, research on the environmental impact of logistics points to a worrying figure over its contribution to climate change. According to research, transportation of goods is to blame for 8 percent of energy-related carbon dioxide emissions around the world. Freighting and warehousing, as parts of logistics, add an addition 3 percent to the total carbon dioxide emission by logistics. While the main objective of logistics is to facilitate the transportation of goods in a cost-friendly manner in such a way that the goods meet the customers’ requirement, green logistics goes beyond this objective. The main idea behind green logistics, therefore, is to make logistics sustainable, in such a way that it strikes a balance between economic, environmental and social objectives.
The need for green logistic emanates from several pressing concerns. Among these are the mounting energy costs in addition to raw materials’ costs, especially those used in infrastructure building and functioning. These costs have put pressure on companies and logistics service providers to look for alternative options to reduce the energy costs that they incur.
Another driver for green logistics is the alarm raised by corporates over greenhouse gas emissions. As part of this alarm, many corporate policies today include elements of environmental sustainability. Moreover, many government agencies across the world have environmental policies and regulations in place, which companies are required to follow. These regulatory policies including bans, permits environmental reporting and audits have created more awareness among corporates on the need for sound and sustainable business practices. Perhaps even more pressing on the corporates is the mounting community awareness and demand among consumers that companies use environmentally friendly business practices. Such concerns, in addition to climate change, have necessitated the growth and implementation of green business practices, green logistics being one of these practices.
The adoption of green logistics has its benefits; thus the cause for its encouragement among businesses. Given that concern for greenhouse gas emissions by the logistics industry is one of the major drivers of green logistics, this concept (green logistics) has the potential of reducing carbon dioxide emissions. Part of the green logistic movement is to encourage collaborative networking and operations among logistics companies. This collaboration means running a merged network for the transportation of goods, which has the potential of reducing by 27 percent the total amount of carbon dioxide emissions.
Green logistics additionally translate to better cost savings for logistics companies. By running the merged networks, companies are able to leverage on shipment costs through better utilization of shipment at different points of the supply chain. A merged network means expanded capacity, and therefore better carriage of goods to their destination, which translates to cost saving for the companies. Moreover, such a system brings with it heightened supply chain optimization. Logistic companies achieve this through moving high volumes of goods, which therefore result in reduced transportation rates. Within such a system, there is improved efficiency achieved through better routing and higher truck utilization from points of origin to the destination. Higher volumes of goods’ movement mean lesser trips, which consequently translate to lesser emissions.
Implementing green logistics has an impact on the image of the company. With more consumers concerned with the environmental friendliness of companies’ processes, implementing green logistics improves the company’s image among consumers, customers and potential business partners. Consumers in this case feel comfortable using green products, while such practices open the company to more business opportunities from customers and potential customers.
However, even with the potential benefits that come with the implementation of green logistics, there are numerous challenges to the full implementation of the idea. One of the major challenges is cost. It is worth mentioning that most companies look for cost effective ways of operations. The challenge, however, is to look for cost effective methods that are environmentally friendly. Given that logistics look to reduce transportation costs, there is completion between the implementation of cost-saving measures and environmentally friendly measures, which are mostly expensive.
In addition to cost consideration, logistics look to create a reliable service that delivers goods fast with the least potential for damage. The most reliable methods of delivery of goods are usually polluting to the environment, while the least pollution methods are unreliable. Moreover, logistics rely on ship and air transportation for shipment; the two are among the least environmentally friendly means of transportation with higher rates of greenhouse gas emissions.
Advancements in technology have changed retailing. Although such advances have brought efficiency in retailing, they have changed the physical distribution systems. The changes mean higher energy consumption levels, which are unfriendly to the environment.
Apart from reducing business carbon footprint, green logistics aim at ensuring economic and environmental sustainability, much as new forms of technology such as big data and smart transportation. Big data refers to society’s ability to harness information in novel ways, with the aim of producing useful insights or goods and services of significant value. Many in the technology and business world have taunted big data as the future frontier for innovation, competition and productivity. With such potential, it is also easy to see the impact big data will have on economic and environmental sustainability. Already, some organizations are using big data to discover their carbon footprint, and therefore act on reducing it. By discovering the level of their carbon footprint, as well as the source of the carbon footprint, such companies can act to not only reduce the carbon footprint, but also work on implementing environmentally sustainable processes aimed at reducing the carbon footprint.
Perhaps the most important feature of big data is its ability to help companies fully understand their operations and the impact these operations have on the environment. Before the advent of big data, most information was kept in different locations, documents, and formats. It was therefore difficult to get the full picture of the operations. However, with big data, companies have a wholesome data set, enabling them understand the complete end-to-end impact of their operations throughout the value chain. Big data goes further into helping companies understand the events outside their boundaries with the inclusion of suppliers, raw material, customer use of the products and investment among other features. Such information is vital in decision-making, refining goals and focusing effort in the organization’s activities. Organizations can therefore implement environmentally friendly strategies, having a better understanding of the impact of the strategies on the sustainability of the company and the environment.
The power of big data goes beyond transformation of big businesses towards taking action on sustainability; it can additionally provide incentive to suppliers and other players in the supply chain to be responsible in their business operations. The action therefore creates a domino effect in the business cycle, creating an economic and environmentally sustainable business environment.
Smart transportation on the other hand, has its own potential in creating an economically and environmentally sustainable business environment. Through the implementation of smart traffic lights and street lighting, in addition to in-vehicle information systems, smart transportation not only ensures economic sustainability, but also environmental sustainability. The system ensures energy efficiency by directing drivers to road with less traffic, ensuring that they move faster, thereby consuming less fuel. Less fuel means less emission.
One of the fundamental features of smart transportation is the use of renewable energy and green cars. Renewable energy in solar panels and green cars that include hybrids and electric vehicles has smaller carbon footprints in comparison with full combustion vehicles. Smart transportation in this case works with big data in collection of information aimed at improving the system.
Energy is one of the most important factors in business and human life. The search for alternative sources of energy has so far hailed some alternatives to fossil fuel including solar panels in combination with batteries, which store the solar power that is later used to power devices and machines. Solar is a renewable source of energy, and although the technology is currently in use, there are not enough incentives for its use.
Another environmentally sustainable technology is hydrogen fuel cell, which is an alternative to fossil fuel. The fuel cell is pollution-free and therefore friendly to the environment. The cells emit water through the fusion of hydrogen and oxygen. Although this alternative is pollution-free, it presents a challenge in the acquiring of the hydrogen. The extraction of the hydrogen involves the use of other sources of energy, which then puts to question the sustainability and cleanliness of the hydrogen cell alternative.
Green logistics has potential for the environment and consumer goods companies in working towards environmental and economic sound practices. One of the challenges that most companies face is lack of information on supply chain best practices. However, with big data, it is possible to collect information on different entities within the supply chain system and learning from them. The future, therefore, will see an increase in the use of big data, not only as a leveraging tool, but also as an implement for gaining competitive advantage and researching on environmental and economic sustainability. As aforementioned, big data will indeed be the frontier for competition in the future, as companies collect, process, analyze and use information, not only from the supply chain, but also from consumers on trends and preferences. Moreover, with consumers becoming increasingly environmentally conscious, companies will need to work towards implementing environmentally sustainable business processes, if they are to win the consumers. Concerns over economic and environmental sustainability additionally will push governments into passing legislation that is more stringent to push organizations into adopting environmentally sound business practices.
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