Logistics ensures the smooth flow of materials and international trade by transporting, storing and delivering goods for different business entities and consumers. Customer satisfaction, timely deliveries and reliable trade all hinge on logistics. However, without innovation and sustainable transformation, logistics contributes to growing resource extraction, waste and carbon emissions.
Global logistics plays a critical role in making the shift towards a sustainable, circular economy. Currently, today's "take-make-waste" economic approach wastes 90% of the 110 billion tons of materials consumed each year ¹. Research suggests that a circular economy can cut carbon emissions from heavy industry by 56% by2050² and reduce global material extraction by athird³.
Demand for sustainable logistics is growing as more large companies seek to lower their environmental impacts across supply chains. A total of 330+ companies accounting for $6.4trn in purchasing power made 50,000+ requests to suppliers using CDP's supplier disclosureplatform⁴ for information on carbon emissions, water and deforestation.
Advancing sustainability and circularity in logistics at once depends on two main approaches: reverse logistics and green logistics.
reverse logistics + green logistics = sustainable logistics
Logistics companies that can both drive forward their own sustainability while enabling circularity will gain competitive advantages by lowering costs and helping business partners and municipalities meet their sustainability targets.
reverse logistics
Standard logistics focuses on delivery, moving goods in a downstream direction along supply chains. In contrast, reverse logistics enables returns and material recovery by collecting and distributing materials to upstream manufacturers, repair shops or buyers of secondary materials.
Given that material recovery is a key function within a circular economy, logistics functions–especially those operating in resources and recycling–havean important role to play in building reverse logistics networks. This is visible today in common programs such as deposit refund schemes for beverage containers and Extended Producer Responsibility (EPR) take back schemes.
They can help companies and cities meet stringent waste reduction targets by looping resources back into the economy. Recovering the value of end-of-life materials can occur in a variety of ways:
- Product or resource sharing
- Direct reuse through used product resale
- Repair and refurbishment to enable resale
- Remanufacturing with used components
- Recycling materials for use as manufacturing inputs
To enable these diverse connections, reverse logistics implies a wider range of networks and business partnerships than currently exist in standard supply chains. Key differences between standard logistics and reverse logistics are worth noting:
- Flexibility: Reverse logistics requires more flexibility to move goods on-demand between parties.
- Variability in Material: The composition, volumes, quality and how the material is presented will vary significantly in the circular economy. These will all be considerations in the planning of logistics.
- Changing roles: Suppliers' and purchasers' roles may swap, depending on whether logistics is delivering goods or recovering goods. In fact, logistics may involve both delivering goods to and collecting materials from the same customer.
- On-demand capabilities: Transactions may occur in a less predictable fashion, requiring the adoption of on-demand logistics capabilities for transport and storage. The use of IoT sensors to detect material levels is becoming more common, and these data points can be used to forecast optimal collection times. The growing use of neighborhood parcel depots accessible by multiple delivery companies and e-bike food delivery networks represent great examples of building out on-demand capabilities.
Whereas standard supply chains often rely on primarily fixed relationships, demand chains can be more flexible. Returns of secondary materials could span a broad network of interested buyers. This creates the need for greater connectivity, resource pooling and on-demand services.
green logistics
In recent decades, the growth of e-commerce has led to significant transformations in logistics operations. Known as the "AmazonEffect⁵," growth in ecommerce has led to extremely rapid order processing-sometimes with half-full loads in vehicles-and an increase in returns, since customers test the products upon delivery.
Growth in urban deliveries is expected to increase daily commutes by 11 minutes and increase global carbon emissions 30% by2030⁶ unless companies address issues of inefficiency and carbon pollution.
Lowering the carbon emissions footprint of logistics, while maintaining extremely efficient operations, are dual aims of green logistics. The most common ways companies are greening their logistics include:
- Order processing optimization
- Using IoT sensors on containers to trigger optimal collections
- Route and scheduling optimization
- Electric vehicle (EV) and alternative fuel fleets
- Green packaging and packaging reuse
Nearly all of these changes can benefit from cloud computing and connectivity to forecast demand, optimize resource efficiency and plan and schedule equipment use.
EV fleets and those powered by alternative fuels such as CNG are obviously great for lowering carbon emissions. They also bring added benefits for logistics, including:
- Greater connectivity through integrated cloud computing
- Quieter engines enabling night deliveries
- A wide range of size and modality configurations
- Opportunities for resource sharing among business networks
- Lower operation and maintenance costs than internal combustion engine (ICE) vehicles
Logistics companies that can demonstrate sustainable operations gain a threefold advantage. On one hand, they can reduce operating costs internally by optimizing resource use and lowering fuel costs. On the other hand, they can better attract external business partnerships by demonstrating sustainable operations that support lower supply chain operations. Finally, they can improve customer trust by showcasing their corporate responsibility.
business innovation necessary to achieve sustainable logistics
AMCS Group has specialized in creating the digital infrastructure for resources and recycling logistics to enter the circular economy and improve its environmental impacts. Our technologies incorporate innovative industry 4.0 technologies such as AI and routing algorithms to dramatically enhance optimization, so companies can build out circular supply chain networks.
Here's a list of business model innovations that can support this shift:
dynamic order processing and routes:
- Flexible loading: Coordinating shipments with similar routes and ETAs, instead of by size or order of entry. This helps eliminate half-loads.
- Dynamic route optimization: Cloud-connected route allocation tools can assess traffic congestion, site rules and road constraint details, giving intel into real-time route planning.
cloud connectivity and transparency:
- Forecasting: Greater demand and supply chain forecasting based on historical and predictive analytics.
- Transparency and data intelligence: Greater visibility into operational resource use, dependencies and cost savings, which can be reported to partners and investors or communicated to customers for added value insights on lead times or order fulfillment sustainability.
IoT and smart logistics technologies:
- Evaluating secondary materials loads: Smart bins can automatically measure the volume in containers while AI imaging can assess contamination and load quality.
- Digital product passport scanning: Products with digital passports, even QR codes can support stronger inventory assessment for secondary materials to re-enter the value chain.
sustainability as standard
Emissions reporting: This is critical across the supply chains, as more companies aim to include Scope 1. 2 and especially Scope 3 reporting. In many cases, companies rely on third-party logistics companies.
Extending Lifetime of Fleet Assets: Automatic transmission of data points on the fleet health can provide insights and inform effective preventive and predictive maintenance of the fleet. This reduces unexpected service breaks, improving the eco-performance of the fleet and extending asset lifetime.
Safety: Advances in technology such as Video, camera vision and AI-powered detection of risks are becoming standardized across the modern fleet and will boost safety outcomes.
These changes require a comprehensive, flexible solution designed for agility, lean operations and approaches. The AMCS Transport solutions is purpose built to help logistics companies transition to an operational model that is focused on both operational efficiency and sustainability.
Get in touch to learn more.