The Green Rule: Measuring Progress

Tags: Green Logistics

Government, industry, and consumers are creating new standards for supply chain sustainability excellence.

Here's a simple assertion — today's sustainability innovations may be easily attainable tomorrow. Which begs two questions: Where can green supply chain best practices take industry, and vice versa? And how will businesses sustain this momentum?

Every logistics metric needs a means for documenting progress and addressing areas for improvement. From freight auditing to Lean Six Sigma, continuous improvement requires a methodology that assesses change, raises standards, and creates new goals. Then the cycle begins anew.

Supply chain sustainability is no different. Companies have to balance corporate requirements — what makes prudent business sense in terms of process improvement and return on investment — with changing market variables.

Measurability is especially important because progress rarely happens within a vacuum. Performance needs to be calculated and processes calibrated. Internal and external economics, government legislation, innovation, competition, and customer demand dictate corporate behavior to varying degrees.

The recent economic tumble presents a good example of how outside pressures impacted the green movement. Without recourse, many consumers cinched their purse strings in favor of economy rather than the environment. This actually created a measure for "greenness" among retailers and manufacturers who had to eliminate inefficiencies, and reduce inventories and waste, simply to remain in the black.

Transport carriers, 3PLs, port authorities — any businesses holding fixed assets — were similarly and summarily forced to optimize fleets, rationalize fuel use, reduce facility and labor overhead, consolidate shipments, and shorten transport mileages. The net effect is a leaner and greener supply chain.

Green has made its mark. For myriad reasons supported by fact, fiction, and faction, many consumers have become conscious about the sustainability of products and services they choose. So have shippers. In turn, transportation and logistics service providers have picked up the lead.

So what's next? How are warehouses building green into their blueprints? Where are freight transporters pushing the needle and the pedal in terms of fuel economy? How are port authorities piloting sustainable development?

The green engine isn't idling. It's beginning to pick up greater speed as businesses rise from the recession and begin investing in new equipment and tweaking their sustainability initiatives; as consumers consider the costs and benefits of buying green; and as government debates environmental regulation.

SUSTAINING EXCELLENCE

Supply chain sustainability benchmarks are broadly emerging from three different areas — government, industry, and organically within the enterprise.

Most importantly, the Obama administration has aggressively lobbied for environmental policy change, notably the Cap and Trade carbon emissions legislation being bandied about the Beltway. The U.S. Environmental Protection Agency (EPA) has also progressively rolled out vehicle emissions standards for light- and heavy-duty trucks during the past decade. Carbon emissions and alternative energy mandates have forced the issue for many transportation and logistics companies. Others, sensing what is coming down the legislative pipeline, are proactively initiating their own programs.

Beyond the public sector, industry as a whole is driving collaboration. From idling restrictions to scorecarding environmental compliance, manufacturers such as IBM, Ford, and Procter & Gamble, and retail channels including Walmart and Patagonia, are investing in, developing, and enforcing sustainability measures with the intention that transport, logistics, and supply partners will follow their lead.

Public-private partnerships such as the EPA's SmartWay program and the U.S. Green Building Council's LEED green building certification system have engendered wide support across the supply chain. The SmartWay program, specifically, fosters collaboration among shippers, transport carriers, and most recently third-party logistics providers, offering incentive for partners and affiliates to collaborate.

There are also emerging standards specific to mode — the American Trucking Associations' Sustainability Task Force, for example; there are state and regional efforts such as the NJ Green Association and Indiana Recycling Coalition; and research institutions — the University of Wisconsin's Alternate Fuels Research Project and the University of Washington's Global Trade Transportation and Logistics Studies program — are recruiting industry participation. Collectively, these partnerships are creating new measures for green innovation.

Closer to the corporate vest, companies are independently asserting their commitment to environmental best practices, talking about and walking in their own sustainability footprints. Both the Port of Long Beach and the Ports of Tacoma and Seattle have clean truck programs. DB Schenker's Green Lighthouse project that is helping shippers make smarter decisions about their carbon liability by mixing modes. Continental Airlines Cargo's Eco-Skies initiative seeks innovative ways to minimize its carbon footprint and encourages shippers and suppliers to do the same.

Some green initiatives are less overt; others are wholly transparent. FedEx and UPS' hybrid electric fleets are highly visible on the road, serving as a testament to their respective investments in carbon-less vehicles. EA Logistics' Delivered GrEAn program is core to its forwarding business — so much so that the logo is branded on its trucks.

Increasing market pressures to green the supply chain will make knowledge share a critical component in the advancement of sustainable logistics best practices. As the SmartWay program demonstrates, these partnerships will become inclusive and span supply chain functions from source to shelf. More leaders and just as many followers will emerge, as will new benchmarks for sustainable excellence.

INTRODUCING 50 GREEN SUPPLY CHAIN PARTNERS

Government, industry, and consumers each have a unique expectation and appreciation of what it means to be green. So does the press. In some measure, our standard is a composite reality of what everyone else thinks.

Inbound Logistics' methodology for selecting this year's 50 Green Supply Chain Partners takes into consideration inputs from three areas — participation in public-private partnerships; corporate sustainability initiatives; and collaborative customer-driven projects. Within this context, two benchmarks carry weight in our decision-making: measurable green results and sustainability innovation.

As part of our due diligence, we solicited transportation and logistics companies to complete a questionnaire specifying their investments in green. We also conducted our own research, online, over the phone, and in person.

Our focus centers on asset-heavy companies that are making sustainability a part of their extended enterprise — by mandate and by mission — and demonstrating qualitative progress.

Our focus does not include companies that tout technology or intellectual capital as green agents. Simply, it's not just a matter of being a facilitator and responding to customer demand. We value companies that are leading by example.

Download the Top 50 Green Supply Chain Partners PDF