Customer demand drives focus on supply chain sustainability
Written by: Jamie Dixon, Director at TMX
An incorporated sustainability focus is on the rise in freight and logistics as businesses respond to increasing customer demand for more environmentally friendly supply chains.
Increasingly, customers are choosing to buy from businesses that demonstrate leadership and embed social responsibility goals within their operations. There is also increasing awareness across the FMCG sector that sustainable supply chains are not just good corporate governance and a driver of operational savings. They are also a tool to attract or retain environmentally conscious customers who choose 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. 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.
This push for sustainability has coincided with an e-Commerce boom, with customers driven online and the rise of next-day delivery changing how 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 many businesses is now on controlling emissions within the supply chain.
In response, the uptake of green warehousing has been rapid, with many businesses installing solar panels and water recycling plants to reduce carbon initiatives. The focus has now shifted to the last mile, with businesses ramping up their efforts to 'green' their operations from warehouse dispatch to delivery on the doorstep in response to heightened customer expectations.
So how can you meet the demands of environmentally conscious customers?
Reviewing the configuration of your network design to ensure that the distribution centres and fulfilment centres are configured in a way that reduces travel is a good starting point. Going a step further and developing a comprehensive network strategy that 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 sustainability.
Businesses should also understand the cost to service their logistics profile by expanding from a large warehouse into multiple smaller ones to deliver on time, as Amazon in the US has done. Another option is to look at the current delivery vehicle fleet and consider whether electric or hybrid vehicles can be adopted.
Businesses should consider implementing robust order management systems (OMS), which serve the dual purpose of improving customer experience while driving sustainability. OMS combines inventory, booking and route systems to use despatch points, delivery addresses and flexible timeslots to supply customers with ultra-convenient but cost-effective solutions from the right place to the right place without splitting orders. Hybrid operating models can enhance customer experience and optimise your fleet and transport modes, reducing cost and carbon emissions. Importantly, talk to your customers and let them know if a delay can be expected.
Finally, who you choose as your freight and logistics provider can make all the difference in achieving a greener 'last mile'. Using the procurement process to identify providers who focus on sustainability and who demonstrate their green credentials and making sustainability a key objective of procurement contracts can also ensure your last mile is as green as possible.
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.
As businesses shift away from sustainability initiatives within physical infrastructure ‘greening’ the last mile should be next on the to-do list. Communicating these efforts to customers should follow as a priority.
