SCALA Consulting Logistics Debate

What is the reality of environmentally friendly supply chains?

The logistics industry has a reputation as major contributors to the greenhouse effect and having significant carbon footprints. The reality is that they are not the biggest sinners. The problem is that transport and logistics are highly visible to consumers!
This was the view of speakers and delegates at the fifth annual SCALA Consulting Logistics Debate held at Wroxall Abbey and attended by more than 150 delegates – the best attendance to date.

John Perry, Managing Director of SCALA Logistics Consulting, said “last year's debate was also on logistics and the environment, at a time when the logistics industry was unsure how to move forward. I concluded the Government needed to think of long term infrastructure and the logistics industry needed to focus on delivering continued increased efficiencies and seeking ways to gain environmental efficiencies through supply chain collaboration”

Steve Mulvey, Food Logistics Manager – Marks & Spencer, said “Logistics is not the worst offender by any means, but we are very visible to the general public and lobby groups. We must do our very best and keep focused to achieve whatever improvement we can”. There were good options open within the supply chain, but constraining growth was not one of them “We must have ongoing GDP growth” he said.

Among the suggestions he made, which M&S is already successfully adopting or seriously considering, were:

– Reducing fuel, particularly under current conditions

– Overseas consolidation

– Less use of air freight

– M&S are actively looking at coastal shipping to Scotland to rail south as opposed to Felixstowe and road north

Trevor Ashworth, Director of Food & Retail Logistics of the Co-operative Group said the company's logistics group was reducing the environmental impact in two areas, buildings and transport. “By introducing greater capacity vehicles we saved 10 million KMS annually. We have also gained benefits from improved engine specs, including 60 vehicles running on compressed natural gas; transport collaboration with supply chain partners saved 650,000 kms in 2007 and already 450,000 kms in the first half of 2008.”

Bob Diplock, Senior Partner at SCALA logistics confessed himself as a sceptic at heart. “We must be sure that environmental improvement measurements are such that we can demonstrate improvements while delivering better service at same or lower costs.”

He said there are two groups of companies with different approaches to environmental issues. The first don't want to spend inordinate amounts of time on the exercise, only wanting to use information they are already gathering for their own management requirements. “This might show they are trying to do something positive, but little else. The second put time and effort into gathering the total detail, to get a database of information which can be used to identify changes in each area of the supply chain.”

Mr Diplock asked: “Are manufacturers likely to reverse recent decisions to make products in Eastern European Countries or the Far East to save on carbon emissions? Will retailers be prepared to cut their margins and buy their goods closer to home?”

Paul Steedman, of The Food Ethics Council, congratulated logisticians on progress to date with collaboration; new trucks and planes; bigger ships; and the use of water transport and rail. “We see the power of innovation – more efficient operations, less empty running, CO2 per tonne kilometre down. But are absolute UK emissions falling. But, it is partly as a result of developments like off-shoring and cabotage.”

“In the food supply chain, food transport is responsible for just 2.5-3.5% of total UK Green House Gas emissions. But the meat and dairy industry generates – 8%”. Maybe the future is not one of incremental efficiency gains. There will be radical reconfiguring of how people get their food. These are just possible futures, but they could come true”.

– Significant relocalisation of food systems, including growing your own

– Massive growth in online shopping

– Increased frequency of shopping; less car use.

“Will today's DC's configurations hold up in these alternative worlds? The 'local' sector is characterised by low tech penetration and small, half loaded vehicles. But what if everything were local? What ethical expectations will consumers have? What will logistics operators do without big stores? What does efficiency look like in this world? Is efficiency a reality or a pipedream then?”

Malcolm Wilson, Managing Director UK Logistics – Norbert Dentressangle believes that the Logistics industry is not as bad as its perception – just very visible.

“Public opinion and the media traditionally associate logistics with high Green House Gas emissions. However, recent carbon footprint lifecycle assessments on products such as beer, crisps and smoothies showed that the distribution element of the total footprint was only around 10%. Although we are working towards targets set on the continent, the UK market places higher environmental demands than any other market in Europe”.

“Sharing resources is core to our business so multi-user warehouses and transport networks with their associated environmental benefits are at the heart of our culture. Collaboration with our customers and suppliers remains instrumental in the development and achievement of environmental goals”, Mr Wilson added.

“The current costs of fuel intensify the pressure to find ways to use resources more sparingly. The Logistics Industry is environmentally efficient. Logistics providers have a contribution to make towards Environmentally Efficient Supply Chains, and we should do so – this is our bread & butter”, Mr Wilson concluded.