Society is demanding that companies and the products they sell become more sustainable. Logistics management has a significant role in making that happen. By making changes in how they transport, store, package, and source products, companies can significantly reduce their environmental footprint.
In the first article on this topic, which appeared in our Q1 2023 issue, we defined “sustainability” as the ability to meet the needs of current generations without compromising the ability of future generations to meet their needs. To accomplish this, many experts recommend thinking about sustainability from a “triple bottom line” perspective, where companies consider their impact in three key areas: “people, planet, and profit.”
But although there is growing pressure from consumers, shareholders, and employees to increase sustainability in the supply chain, many companies struggle to know which initiatives to pursue. This two-part series attempts to provide a collection of best practices that could be implemented by multiple organizations and accomplished quickly and/or at a reasonable cost. For our first article, we examined sustainability best practices in: (1) purchasing/procurement; (2) transportation; and (3) warehousing. In this follow-up article, we examine additional areas of logistics management sustainability: (1) packaging; (2) reverse logistics, product returns, and recycling; and (3) technology.
Sustainability has been a driving trend in the packaging space for many years and is only expected to grow in importance. Environmentally friendly products and packaging is especially important to millennials, who will represent the largest consumer segment by 2026, with an estimated 46% of the market.1
Packaging utilizes many materials, including paper, cardboard, and plastics as well as a number of others. Many sustainable packaging initiatives are focused on plastic packaging due to the climate and environmental pollution issues associated with plastic’s creation and disposal. The production of the majority of plastics used today currently requires the consumption of nonrenewable fossil fuels and produces significant carbon dioxide emissions. At the other end of the product life cycle, almost 95% of plastic packaging is lost to the economy after being used one time.2
There have been several research efforts focused on making plastic production more sustainable. Chemists at the University of Toronto and Stanford University, for example, have produced small quantities of plastics from CO2, water, and electricity instead of using fossil fuels.3 However, there is still a long way to go in these and other approaches to creating renewable plastics.
In the meantime, many companies, industries, and governments have attempted to reduce the use of these materials. Both large companies and small entrepreneurs have implemented innovative approaches to minimizing packaging, reducing plastic waste, and identifying substitutes for plastic packaging.
Below are brief descriptions of some innovative ways that organizations have addressed the issue of packaging sustainability within logistics management. Some organizations have shifted from plastic packages to various forms of nonplastic packaging. Others are reducing their packaging, and still others are utilizing reusable packaging.
Similarly, the Italian food company Pedon, which makes snacks from legumes, partnered with the paper company Favini to create paper made from the vegetable waste accumulated during the cultivation and processing of its legumes. This paper is then used in the company’s primary packaging. The packaging is 100% recyclable and is certified for direct contact with food. As a result of the switch, Pedon was able to eliminate the inner sleeve within the pack. The packaging reduces the use of virgin tree pulp by 15% and decreases greenhouse gas emissions by 20%.6
REVERSE LOGISTICS, PRODUCT RETURNS, AND RECYCLING
Throughout the world’s economies, getting rid of waste has been an issue for centuries. However, it was not until the 20th century that organizations began to think about new ways of disposing of waste materials, minimizing the creation of waste, and the possible reuse of waste materials.
With the advent of omnichannel retailing, which was accelerated by the COVID-19 pandemic, the number of products being purchased online has increased significantly, and concomitantly, the volume of products being returned has increased dramatically. Given the rising importance of reverse logistics, firms that are able to innovate in this area will reap market advantages. Some innovative practices include the following:
Another example of remanufacturing waste comes from clothing manufacturer Sea Threads. Sea Threads has become one of the first companies to make clothing from 100% Certified Ocean Plastic. Sea Threads sources raw plastics for textile production directly from the ocean, a source from which very few plastics are recycled. The company collects ocean plastics from the region around Indonesia, where 60% of plastic pollution occurs. The plastics are cleaned, broken down, and extruded into fibers for yarn. They are then woven with textiles and shipped primarily to U.S. companies that then cut the fabric and sew and/or print it into finished garments. One shirt requires one pound of plastics. The effort thus far is limited, but it has significant potential growth as more companies shift toward marine plastics, resulting in economies of scale and the potential for greater growth in various types of clothing. While this company is utilizing marine plastic waste, all types of recycled or used plastic could be utilized. The firm hopes to be a catalyst for companies to move away from the use of virgin plastics to make clothing.11
A similar thought process is utilized by the ethical and sustainable clothing enterprise Progetto Quid. Quid uses production surpluses and end-of-series fabrics that are either donated or purchased at a low cost from other fashion and textile companies to create its own line of limited-edition “unique casual-chic clothes.”
The approach is similar to what Volvo does at a facility in Sweden where end-of-life automobiles are disassembled and recycled or refurbished and sold as spare parts. In order to get full utilization of its processes and equipment, Volvo takes in other brands of automobiles as well as its own. With product stewardship directives and regulations proliferating in the European Union (EU), this approach helps Volvo reduce the costs of its reverse logistics activities, which transforms the process from a cost center into a profit center.
A grocery retailer in Europe sends texts and emails to members of its frequent shopper club offering price reductions on items nearing expiration. Those price reductions increase as the items get closer to their “best by” date.19
Similarly, New York-based Tops Market has established a “Flashfood” program. Shoppers access the store’s Flashfood app, which lists produce, meat, deli, and bakery products that are nearing their “best-by” dates. These items are marked down and located in a special area of the store where shoppers can pick them up. The discounts are then applied at checkout. As a result of the program, more than 150,000 pounds of food has been diverted from landfills, customers have saved an average of $108 on their grocery spend each month, earnings before interest and taxes (EBIT) have increased by 3% to 5%, and vehicle emissions have been reduced by the equivalent of 667,885 miles driven.20
Customers and companies utilize many connected devices that can sense, measure, order, and send alerts to all members of the supply chain. Just as these technologies are changing consumer behaviors, technology is changing the end-to-end supply chain. Companies are finding innovative ways to use not just these new digital solutions but also older technology to address sustainability concerns by improving manufacturing processes, forecasting future technological breakthroughs that have sustainability implications, optimizing transportation routing and scheduling, and calculating carbon emissions. A few examples of innovative approaches include the following:
As the examples in this article show, logistics sustainability initiatives are increasing and are not limited by geography or industry. The examples included in this article are illustrative of the many innovations occurring around the globe. Furthermore, these innovations are happening at small entrepreneurial operations as well as global Fortune 500 companies. It is hoped that readers will gain a broader understanding of the breadth and scope of innovations taking place in logistics management and incorporate them into their own innovative practices and strategies.
1. PMMI, “2021 Beverage Trends Driving Change,” white paper (May 2021): https://pmg-designer.s3.amazonaws.com/FreeDownloads/PW/159_PW_Beverage%20Industry%20Trends%20White%20Paper-FINAL.pdf
2. J. Johnson, “Year 2030: The End of Waste-generating Supply Chains,” Supply Chain Brain (February 9, 2020): https://www.supplychainbrain.com/articles/30862-preparing-for-2029-when-cp-supply-chains-can-no-longer-produce-waste
3. R. F. Service, “Hunt for Renewable Plastics Clears a Hurdle,” Science, 371, Issue 6532 (February 2021): 873: https://www.science.org/doi/10.1126/science.371.6532.873.
4. A. M. Mohan, “Reusable Corrugated Cases Save Auto Parts Supplier $10M in 24 Months,” Packaging World (March 9, 2022): https://www.packworld.com/design/materials-containers/article/22044077/yanfeng-saves-10m-with-reusable-p2-shipper
5. C. Esposito, “A Sweet Switch,” Happi (April 26, 2020): https://www.happi.com/contents/view_online-exclusives/2020-04-26/a-sweet-switch
6. Favini, “Crush Bean: The New Eco-friendly Paper” (September 24, 2015): https://www.favini.com/en/news/crush-bean-the-new-eco-friendly-paper
7. Happi Staff, “e.l.f. Streamlines Packaging Footprint,” Happi (November 13, 2020): https://www.happi.com/contents/view_breaking-news/2020-11-13/elf-streamlines-packaging-footprint
8. Company interview.
9. Company interview.
10. E. Del Valle, “The Surprising Story of How Doritos Were Invented at Disneyland,” Business Insider (May 5, 2014): https://www.businessinsider.com/doritos-are-from-disneyland-garbage-the-surprising-history-2014-5
11. T. Duong, “From Pollution to Performance Wear: Fair-Trade Clothes Made From 100% Ocean Plastic,” EcoWatch (August 6, 2021): https://www.ecowatch.com/clothes-made-from-ocean-plastic-2654502640.html
12. Company interview.
13. Dow, “Meeting your Corporate Circularity Commitments: Welcome to the Age of Advanced Recycling,” Sustainable Brands Newsletter (November 17, 2021): https://sustainablebrands.com/read/from-purpose-to-action-building-a-sustainable-future-together/meeting-your-corporate-circularity-commitments-welcome-to-the-age-of-advanced-recycling
14. Company interview.
15. M. Sedacca, “A Restaurant with No Leftovers,” The New York Times (January 1, 2020): https://www.nytimes.com/2020/01/01/business/zero-waste-restaurants.html
16. D. Bernabe, “‘Ugly’ Produce Is Finally Finding a Second Life on the Shelves of Major Grocery Chains,” Fortune (June 7, 2021): https://fortune.com/2021/06/07/ugly-produce-grocery-stores-food-waste-walmart-amazon-kroger-albertsons
17. U.S. Environmental Protection Agency, “Basic Information about Landfill Gas,” (April 21, 2023): https://www.epa.gov/lmop/basic-information-about-landfill-gas#methane
18. Bernabe, 202.
19. Company interview.
20. M. Zboraj, “Tops Expands Flashfood Program to 50 Locations,” Progressive Grocer (July 8, 2021): https://progressivegrocer.com/tops-expands-flashfood-program-50-locations
22. N. Z. Othman, “Nestlé Launches World's First Solar-powered Ice Cream Kiosk,” New Straits Times, (March 18, 2019): https://www.nst.com.my/lifestyle/bots/2019/03/470568/nestl%C3%A9-launches-worlds-first-solar-powered-ice-cream-kiosk
23. Company interview.
24. M. Douglas, “You Bet, We still Care About Sustainability,” Inbound Logistics, 41, no. 6 (June 2021): 34-39.
Paola Signori (firstname.lastname@example.org) is the associate professor in marketing, Department of Business Administration at the University of Verona in Italy.
Gyöngyi Kovács (email@example.com) is the Erkko Professor in Humanitarian Logistics at the Hanken School of Economics in Finland.
Britta Gammelgaard (firstname.lastname@example.org) is a professor at the Copenhagen Business School in Denmark.