The largest source of carbon dioxide emissions in the United States currently comes from transportation, surpassing electricity emissions in 2017 for the first time since 1978. Precisely because of these daunting figures, the vast majority of the world’s largest companies are adopting initiatives to reduce greenhouse gas (GHG) emissions in their supply chains, and adopting environmentally friendly policies across their business. Patagonia, for instance, has pledged to be carbon neutral by 2025; IKEA has set steep goals to reduce its GHG emissions by at least 15% by 2030 in order to become climate positive.
While these policies used to be viewed purely as a corporate responsibility initiative, many companies now view them as drivers of competitive advantage. The Governance & Accountability Institute estimates that 85% of companies in the S&P 500 now publish sustainability or corporate responsibility reports, up from just 20% in 2011. Why? Investors understand that companies that consider their long-term environmental risks will ultimately outperform those who don’t. Additionally, according to a recent Nielsen survey, a staggering 73% of consumers are willing to change their consumption habits to reduce their environmental impact.
Despite the huge strides in reporting on environmental metrics and the establishment of clear, science-based goals to reduce harmful emissions, many companies still lack a concrete plan to achieve these goals – particularly when it comes to reducing transportation-related emissions. This is where supply chain visibility software can help.
Visibility software aggregates and analyzes data from shippers, carriers and facilities across the end-to-end supply chain, allowing companies to identify the most impactful areas to target in reducing harmful emissions. Shippers have found that visibility software plays a critical role in achieving their sustainability initiatives by helping them reduce dwell times at facilities, ensure upstream traceability and eliminate empty miles.
Reduce Dwell Time
Historically, the complexity of most supply chains made it nearly impossible to identify sources of high waste and inefficiency; there simply wasn’t a comprehensive view of the data. Visibility software has changed this for the better. Companies now have a clear understanding of their bottlenecks, and therefore can implement a highly targeted, data-driven approach to reducing waste across their logistics operations.
A great example of this is targeting a reduction in dwell time for refrigerated trailers. According to the American Transportation Research Institute, refrigerated trailers spend the longest of all truck types in detention (over 36% of deliveries spend four-plus hours in detention), and must remain on during lengthy detention periods to ensure freshness of goods. The result? Wasted fuel and CO2 emissions. Supply chain visibility software allows companies to seamlessly track detention across their facilities, and implement solutions such as strategic appointment scheduling to help mitigate dwell.
While visibility into internal supply chain operations is a great start to reducing their carbon footprint, to ensure a truly sustainable business model, companies must verify that their upstream suppliers are also engaging in environmental best practices. This is why traceability is critical. Unfortunately, traceability has long been one of the most challenging aspects of sustainability initiatives, particularly in highly complex, global manufacturing supply chains.
Unilever has been a champion of traceability in optimizing its supply chain, with one of the most powerful examples illustrated by its desire to source sustainably farmed tea. To do so, Unilever has partnered with Barclays, BNP Paribas and others to leverage blockchain as a means to verify and reward sustainable tea production in Malawi.
Fortunately, traceability is no longer limited to the most innovative Fortune 500 companies. With the right real-time supply chain visibility platform, companies can now share load tracking information upstream and downstream in their supply chains. This allows them to understand where their products are coming from, and to communicate easily regarding common sustainability goals.
Eliminate Empty Miles
Empty miles, often called “deadhead”, are one of the largest drains on efficiency in the transportation sector. Heavy duty trucks account for 57% of all logistics-related GHG emissions, and these trucks are running empty as much as 40% of the time, creating an enormous amount of waste.
Visibility software can help shippers mitigate this waste by identifying round-trip opportunities across lanes in their network, which in turn eliminates empty backhaul miles. Many times, drivers are able to pick up a return load at a nearby facility, which increases the utilization of the original asset and prevents an unnecessary trip from a different truck.
As shippers optimize their internal freight networks, they increasingly turn to each other to identify complementary lanes on which they might share capacity, thereby even further reducing empty backhaul miles. This collaboration was almost impossible five years ago, as companies lacked the data to effectively identify mutually beneficial lanes with other companies. The growing adoption of real-time visibility software has led to a network of shippers armed with the necessary information to effectively collaborate to reach their sustainability targets.
Matt Elenjickal is the Founder and Chief Executive Officer of FourKites. He founded FourKites in 2014 after recognizing pain points in the logistics industry and designing elegant and effective systems to address them. Prior to founding FourKites, Matt spent 7 years in the enterprise software space working for market leaders such as Oracle Corp and i2 Technologies/JDA Software Group. Matt has led high-impact teams that implemented logistics strategies and systems at P&G, Nestle, Kraft, Anheuser-Busch Inbev, Tyco, Argos and Nokia across North America, Western Europe and Latin America. Matt is passionate about logistics and supply chain management and has a keen sense for how technology can disrupt traditional silo-based planning and execution. Matt holds a BS in Mechanical Engineering from College of Engineering, Guindy, an MS in Industrial Engineering and Management Science from Northwestern University, and an MBA from Northwestern’s Kellogg School of Management. He lives in Chicago.