1. Green supply chain and importance of Sustainabilty metrics 1
White paper research on -
Green Supply Chain
and Importance of sustainability metrics
in decision making for transportation
Team Prudent
Institute for Technology and Management
Kharghar, Navi Mumbai
Faulty guide - Prof. Deepa Nair
Submitted to – Mahindra Logistics
Contact – Parnika Awasthi (parnika.a@itm.edu)
Mamta Jaiswal (mamta.j@itm.edu)
PGDM – International Business (14-16 batch)
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Acknowledgement
We are thankful to Mahindra Logistics for providing us an opportunity to write White Paper
research on “How green is your supply chain and importance of Sustainability metrics in
decision making for transportation.
We are fortunate to be provided with an opportunity to write our project report under the
guidance of Prof. Deepa Nair (ITM faculty).
This project would not have been possible without his valuable inputs, honest remarks and
earnest effort to guide us throughout the drafting of the project.
We are highly indebted to Kaval Kaur Mam & other Faculties of ITM to help us and motivate us
during the research paper.
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Abstract
The purpose of this study is to identify and analyze the metrics on green supply chain
management (GSCM) and sustainable supply chain management (SSCM). The metrics were
identified based on a structured content analysis of 445 articles. A total of 2555 unique metrics
were identified. The majority of the metrics were used only once, which indicates a lack of
agreement on how performance should be measured in these areas. Five metrics were used more
than 20 times: quality (31 times), air emissions (28), greenhouse gas emissions (24), energy use
(24), and energy consumption (21). As highlighted in that list, multiple metrics were used to
measure similar issues in many cases. . As a part of the analysis conducted, each metric was
classified according to 13 key characteristics of SSCM drawn from the literature. The analysis
showed that environmental issues were represented to the greatest extent. Over one-third of the
identified metrics were classified as cross-cutting metrics, meaning that they addressed more
than one key characteristic of SSCM. Based on the analysis conducted, an original conceptual
framework for structuring the development of metrics in GSCM and SSCM is presented.
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Index
Sr. No. Topic Pg. No.
1 Abstract 3
2 Introduction 5
3 Literature review 5
4 Research objectives 7
5 Green Supply Chain & its benefits 7
6 Sustainability metrics 7
7 Observations 8
8 Methodology 9
9 Analysis on research 9
10 Conclusion 14
11 Suggestions 15
12 Bibliography 16
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INTRODUCTION
In recent years the natural environment became a major issue as global warming and resource
scarcity became more prevalent and oil prices continued to rise. In addition, there is a need for
sustainable growth where better usage of natural resources creates the potential to develop a
greener economy. The impact of business operations on the natural environment is one of the
main areas in which societies and governments have become more sensitive. That is why
companies need to react to the challenges of green issues by implementing sustainable (or green)
logistics and supply chain management (SCM).
At a macro level transport and logistics related activities are the most important contributors of
greenhouse gas emissions. That is why transport and logistic companies (3PLs) are increasingly
being asked to respond to the challenges of green logistics by implementing more
environmentally sustainable strategies. From the research point of view, on the one hand, it
appears that the focus of environmental impact research has been almost exclusively on
manufacturing industries rather than service. On the other, environmental initiatives have been
mainly explored with reference to different stages of the supply chain with a specific focus on
single functional areas. Environmental research specific to 3PLs has been neglected despite the
fact that these companies have assumed a more critical role in supply chain orchestration and
management. The main aim of this paper is to explore the range of initiatives that 3PLs are
implementing to reduce the environmental impact of transport and logistics activities and also
identifying the sustainability metrics.
The overall research approach is based on a case study analysis investigating a sample of 3PLs
operating in Agility Logistics, Services, Hyundai, Mobis Caola. Given the lack of theory in this
field, the case study approach is ideal in this context as a theory building strategy. The interviews
were conducted through a data collection guide compiled on the basis of the literature review on
green supply chain initiatives. The results of the case study analysis identify how 3PLs are
responding to the environmental pressures on their businesses. Considering the scarcity of study
on 3PLs’ green initiatives, this paper provides avenues for future research in the field.
Literature review
The evolving 3PL industry scenario
The logistics service industry is undergoing a major transition as a result of a number of changes
affecting logistics and SCM such as economic, social, technological and environmental
sustainability .In the context of evolving SCM, to meet the new customer requirements 3PL
companies have gradually transformed scope and characteristics of their service offering in order
to improve customer service levels .For many 3PL companies this evolution consisted of a
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transition from a single-activity company toward a business model based on providing a wider
range of integrated services. New services must have additional features for improving value
creation for the customer . Logistics service providers are under constant pressure to enhance
their customer relationships and continually expand the range of services offered. Core service
offerings are being commoditised (e.g. transportation), while value-added services and
technological capabilities are considered points of differentiation.
This has given 3PLs a new potential role in customising the supply chain as a growing number of
activities beyond transportation and warehousing can be carried out by logistics service providers
. Offering these services gives 3PLs the opportunity to penetrate segments of supply chains with
higher added-value services compared to traditional transportation and warehousing services.
The supplementary customised services provided may give a differentiation edge, while raising
added value in services which can improve margins, as well as deepen the relationships with
customers . As a result, 3PLs play a more important role than in the past insofar as they are
entrusted with the task of integrating and accelerating physical and information flows at multiple
levels of the supply chain .
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Research objectives
The purpose of this paper is to investigate the role of green supply chain initiatives in the service
strategy of 3PLs. The analysis proposed in this work is explorative in nature as sustainability in
the logistics service industry is an emergent issue with limited discussion on the subject in the
logistics and SCM literature.
OBJECTIVES
The specific objectives of the paper are as follows:
1. to analyse awareness of the importance of sustainability in 3PLs;
2. to analyse the adoption of green supply chain initiatives by 3PLs in reference to transportation
Green Supply Chain & its benefits
Green supply chain improves the supply chain process. Companies when choose to get green in
their supply chain process, it means that they are cutting on the misuse of resources and
machinery.
With this green process they improvise on the way they produce and what they use to produce
their products. It helps cut on the costs of production and increase their profits.
By re-evaluating the process in terms of planning, buying, distributing and use of resources many
reduction of cost can be done in managing supply chain in an environmental friendly manner.
A sustainable supply chain is one that includes measures of profit and loss as well as social and
environmental dimensions.
What is sustainability metrics?
Sustainability Metrics are tools that measure the benefits achieved through the implementation of
sustainability.
Some of the metrics and decision criteria follows:
• Disposal and waste management policies and practices,
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• Water conservation and consumption,
• Green House Gas (GHG) footprint (Aggregate CO2 number),
• Paper and paper product consumption ,
• Packaging reduction initiatives,
• Energy consumption (power, gas, electric),
• Buildings and construction (LEED Certification, Green Globes, Energy Star, etc.),
•Transportation and logistics management including routing and consolidation, fleet
management ,
• Travel policies and statistics (miles driven, miles flown, nights away from base, etc.),
• Education and communication initiatives, and
• Contact information for Chief Sustainability Officer publicly available. (ISM)
Observations and Methodology
Our observation on Mahindra Logistics:
As per our study we got to know about Mahindra logistics is that :
Green Logistics:
Mahindra Logistics has embarked on a journey to reduce the intensity of Green House Gas
emissions as part of its sustainability initiatives. Since more than 80% of MLL revenue is from
transportation, the management has clearly identified the focus area of intervention as the Green
House Gas reduction in transportation in the first three to five years.
Mahindra Logistics handles the following transportation activities
(I) Primary Transportation-Domestic Long Haul Transportation by Road and Rail,
Exports and Imports by sea or air, VAS like optimization of routes, network design,
specialized vehicles design
(II) Secondary Transportation-Break bulk and transportation, Scalable to different
demand scenarios, consideration of specific nature & type of goods being transported
(III) Tertiary Transportation-Distribution management solutions, Last Mile Logistics,
COD(cash-on-delivery model)
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(IV) Reverse logistics-Reverse movements like repairs and returns, warranty spares,
product recall/replacement, parts claim, crucial inventory logistics.
Methodology
The methods which we used is Primary & Secondary techniques.
Primary technique (major part)
Secondary technique (minor part)
Analysis on research
On our study visit to Europe, we came across various logistics companies. Our studies with
Agility Logistics we would like to showcase as our primary research.
Agility Logistics -
Building more sustainable supply chains and mitigating the environmental impact of its
operations is Agility's long-term, multi-faceted commitment.
To that end, the 3PL focuses its efforts on green supply chains that enable the company and its
customers to jointly address
energy issues;
energy efficiency achieved by preserving natural resources and reducing greenhouse
gases;
waste management measurements and widespread adoption of "recycle, reuse, reduce"
practices;
policies that integrate environmental stewardship into its operations and culture.
The analysis of 75 companies that follow green supply chain has led us to the following
initiatives that are taken by
1. Load & Vehicle Optimization:
This initiative is about designing the vehicle and the fixtures / packing carrying the items
to maximize the capacity utilization of the vehicle. This directly results in lesser per unit
consumption of fuel thereby reducing Green House Gas emissions.
2. Commuter Options:
Explore developing a commuter benefits program, such as free or low cost bus passes,
strong telework programs, carpool matching and van pool subsidies.
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3. Alternative fuel:
Using the Green Vehicle Guide can help you identify a SmartWay certified vehicle that
will help you save fuel, money and the environment. biofuels made from readily
renewable resources like camelina and jatropha plants show great environmental
pollution reduction.
Explore the use of environmentally beneficial alternative fuels and vehicles.
Options include: ethanol, E85, biodiesel, electric motors, natural gas and propane.
Used Oil :
Used motor oil is insoluble, persistent in the environment and can contain toxic chemicals
and heavy metals. EPA provides extensive information on proper management of used
motor oil, including the "You Dump It, You Drink It" campaign.
4. Usage of polymers : Environmental impacts found using life cycle assessment (LCA)
methodology. A case study of 12 polymers is presented, seven derived from petroleum,
four derived from biological sources, and one derived from both. The environmental
impacts of each polymer's production are assessed using LCA methodology standardized
by the International Organization for Standardization (ISO). Each polymer is also
assessed for its adherence to green design principles using metrics . Metrics include atom
economy, mass from renewable sources, biodegradability, percent recycled, distance of
furthest feedstock, price, life cycle health hazards and life cycle energy use. A decision
matrix is used to generate single value metrics for each polymer evaluating either
adherence to green design principles or life-cycle environmental impacts. Results from
this study show a qualified positive correlation between adherence to green design
principles and a reduction of the environmental impacts of production. The qualification
results from a disparity between biopolymers and petroleum polymers. While
biopolymers rank highly in terms of green design, they exhibit relatively large
environmental impacts from production. Biopolymers rank 1, 2, 3, and 4 based on green
design metrics; however they rank in the middle of the LCA rankings. Polyolefins rank 1,
2, and 3 in the LCA rankings, whereas complex polymers, such as PET, PVC, and PC
place at the bottom of both ranking systems.
5. Green Suppliers Network: A collaborative venture among industry, the EPA and the U.S.
Department of Commerce's National Institute of Standards and Technology's
Manufacturing Extension Partnership (NIST MEP), a leading provider of technical
assistance to manufacturers. Green Suppliers Network works with large manufacturers to
engage their small and medium-sized suppliers in low-cost technical reviews that focus
on process improvement and waste minimization. EPA provides program support and
funding.
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6. Installing auto-inflation systems for trailer tires and skirted trailers where possible. The
carrier extends its commitment to green into its facilities—all docks are paperless, new
shops have radiant heat flooring, and concrete terminal ramps have radiant slab, activated
by snow detection devices.
7. Maintaining trucks and equipment using low-viscosity lubricants and engine oils;
implementing recycling programs; using energy-efficient fluorescent light bulbs in its
facilities.
8. Replacing heany and large-volume materials with lighter composite materials.
Lufthansa Cargo also replaced heavy, large-volume materials used in cargo transport
containers with lighter composite materials to reduce weight and save fuel. The airline
has been operating with ISO 14001 environmental management certification since 2008.
9. Zero discharge. Matson Navigation Company implemented its zero discharge policy in
1994, and is the only carrier to have a fleet-wide zero discharge program.
10. Other initiatives includes –
10.1 Employee recycling and carpool programs,
10.2 Retrofitting equipment, and using low sulfur fuels to minimize harmful air
emissions;
10.3Use of electronic documents rather than paper; and
10.4 Cold ironing in ports where possible to reduce fuel usage and engine idling.
South Carolina Ports Authority - Electrify ship-to-shore cranes, and plans to electrify the rubber-
tired gantry cranes at the new Inland Port to protect air quality. The port is also installing an
electrified agricultural commodities transload facility to replace existing diesel operations,
completely eliminating all emissions from the activity.
Werner Enterprises utilizes industry-leading sustainability technologies such as diesel-fired
heating systems to reduce truck idle time; aerodynamic trucks; trailer skirts; tire inflation
systems; and the latest diesel technology. Werner also maintains a small fleet of compressed
natural gas trucks.
11. Installing environmentally efficient LED lighting , leading to a reduction in energy
usage; like YRC Freight company does it.
12. Using LED task and overhead lighting with sensors to activate lighting only when
required;.
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13. Recycling lift truck batteries, tires, and oil; using storm water retention ponds to control
run-off; utilizing pollution-filtering plants; and operating a modified work week structure
at manufacturing facilities to reduce the impact of employee commuting.
14. Reduce carbon emissions in the manufacturing and outbound logistics phases
15. Voluntary participation, includes such certification programs as LEED (eco-friendly
building), EnergyStar (energy efficiency), and SmartWay (fuel saving practices).
A company will typically undergo an audit to pass certification, enabling it to use a logo
or be listed in a directory of other compliant practitioners, both of which may help
generate business.
16. The energy used in transport and in controlled climate storage is often substantial.
Air-freighting is very emission intensive, while water and rail are the least.in terms of energy
usage It covers larger amount of the transportation cost.
Clearly, reducing the amount of distance a vehicle has to travel has both environmental and
economic benefits, and the most emissions intensive modes are also the most expensive.
However, transportation costs are dependent not only on distance and mode, but on additional
overhead (insurance, legal fees, etc.) needed to make sure the delivery actually happens in a
manner that the goods are delivered on-time and intact, with guaranteed speedy delivery
typically costing extra.
17. Reduction of Carbon emission: More electricity is generated from renewable fuels or
cleaner energy can significantly reduce overall carbon emissions.
18. Simple re-design of packaging or optimised packaging processes.
19. Use of hybrid vehicles.
20. Use aluminum wheels on its tractors, theoretically reducing road friction and thus
increasing fuel efficiency and reducing emissions.
21. Smarter Delivery Routes: Office Depot uses Roadnet Transportation software to arrange
smarter delivery routes, eliminating 30% to 50% of local shipments by enabling more
first-time deliveries. Tyson Foods Inc. uses software to remotely monitor engine
diagnostic information to help reduce truck engine idle time.
22. Automatic shutdown systems on its locomotives to reduce fuel usage.
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23. Decisions made with respect to positioning local offices and distribution centers to
decrease the physical distance between themselves and supply chain partners.
Cardinal Logistics
As a SmartWay partner, and to ensure it operates as safely for the environment as possible,
Cardinal Logistics has made fleet advancements including operating new, lower emissions
equipment and reducing fuel consumption. It has governed speed, installed Auxiliary Power
Units, and implemented automatic idle shutdown and other modifications to increase MPG. In
addition, the 3PL is testing renewable fuels, including adding CNG trucks to its fleet. Cardinal
trained its team on proper maintenance and driving habits, and offers incentives for high MPG
rates. The company's proprietary technologies help lower fleet emissions by reducing miles and
monitoring for efficient performance.
Companies such as HP, Dell and Estée Lauder probably reduced their overall supply chain costs
in converting air shipments to ground or ocean transport.
Saddle Creek Logistics Services
Saddle Creek's CNG fleet helps shippers in the Southeast and Southwest make deliveries while
reducing their environmental footprint. To date, the fleet has logged more than 35 million miles
on CNG and reduced its carbon footprint by 38 million pounds—equivalent to planting 800,000
trees. By using CNG trucks instead of diesel fuel, Saddle Creek has replaced more than four
million gallons of diesel with natural gas. The company is completing a $1.5-million upgrade to
its fueling facility to accommodate a complete fleet conversion to CNG in the next few years.
BNSF Logistics
A SmartWay partner since 2005, BNSF Logistics continues to partner with leading retailers to
develop and implement recycling programs for plastics, paper, technology, and other naturally
replenished resources. The company embraces intermodal as an alternative to highway
transportation, which increases energy efficiency and reduces emissions. The 3PL has
demonstrated a year-over-year reduction in CO2 grams/mile output from the use of contracted
carriers and mode conversion, leading to a reduction in greenhouse gas emissions.
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CONCLUSIONS
After thorough study we came to conclusion and implication for further research.
The research described in this paper is exploratory in nature as a result of the dearth of literature
in this specific area. The findings presented in this paper, along with the results of similar studies
in other countries, are being used to inductively develop a model that attempts to rationalize the
adoption of green supply chain initiatives in 3PLs. Such a framework is important as it provides
the basis of a better understanding in this increasingly important area of logistics and SCM.
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SUGGESTIONS
1. Automatic shutdowns of the vehicles when idle
2. Applying fleet management systems
3. Applying intermodal transport
4. Usage of hybrid vehicles.
5. Packaging must be simple and optimised packaging processes must be followed.
6. Carbon emission must be reduced and control check should be done
.
7. Overhead lighting with sensors to activate lighting only when required
8. Recycling of batteries, tires, and oil;
Many of the initiatives which we analysed can also be considerd as suggestions.
