Organizations that are serious about reducing greenhouse gas (GHG) emissions should go beyond in-house activities and incorporate three strategic external partnerships—with third-party logistics services providers (3PLs), sustainability-savvy customers, and industry peers, according to a report from industry analyst firm Gartner, released earlier this month.
“Organizations on an emissions reduction journey initially leverage optimization strategies. These strategies include modal shift, load optimization, and network design all aimed at emissions reduction,” Sarah Watt, senior director analyst with the Gartner Supply Chain practice, said in a statement. “However, for organizations with significant emissions reduction goals, these initial inhouse activities don’t go far enough.”
Collaborating with 3PLs, customers, and peers can help push companies beyond the basics to reach long-term sustainability goals.
Working with 3PLs can help companies reduce so-called Scope 3 emissions—the indirect emissions that occur in a company’s value chain—according to the survey. These goals can’t be reached by optimization strategies alone, and require investment in new vehicles and engine technologies to move goods.
“Before contracting a 3PL, logistics leaders should ask three questions,” according to Watt. “Firstly, does the 3PL’s ambition for emissions reduction match that of the organization. Secondly, what investments will the 3PL be making to improve emissions management, such as new vehicle technologies. Lastly, logistics leaders must understand if there is an investment gap, and if the enterprise is willing to play a part to bridge this gap.”
Appealing to sustainability-minded customers can also help. Organizations could avoid some GHG emissions created by customers by offering greater transparency about emissions impacts. Gartner gives this example: Demand for short delivery times may increase the use of airfreight. Although many customers want to create less GHG emissions, they lack visibility into how their decisions can impact the environment. Logistics leaders need to challenge the assumption that faster is always better and communicate that some shipping options may take longer to arrive but are more sustainable than same-day-delivery, according to the research.
“This is not about taking away shipping options from clients to enable emissions reduction,” Watt explained. “This is about [the client's] choice of shipping options by creating visibility.”
Working with peers via trade associations is another example of how companies can push forward with sustainability strategies. Sharing experiences and best practices can benefit all parties and may also lead to co-investment in opportunities or collective collaboration with 3PL partners, according to the research.
“It’s important to evaluate an industry association before joining. Significant time can easily be sunk into collaboration, with no clear outcome or benefit,” Watt also said. “Take an outcomes [based] approach when assessing where to join or to continue to engage with an industry association.”
Gartner will discuss sustainability and other supply chain trends and strategies at its Supply Chain Symposium/Xpo being held online next week.