Making Sustainability More Sustainable
Sustainability as a corporate objective has been growing in importance year after year. Recently, Manhattan Associates launched a new podcast episode about sustainability in the supply chain and more specifically in transportation. We touched on issues like balancing sustainability with meeting customer demands, companies’ responsibility to environmental efforts and the natural fit for transportation management systems (TMS) in sustainability. If you want to listen to the whole podcast, go here.
Sustainability in name only?
In the episode, Steve Banker, ARC Advisory Group Vice President, Supply Chain Management, reports that 85% of S&P 500 companies publish some form of corporate sustainability report. One major reason for this is because consumers, and the public at large, are focusing more on green initiatives, and they prefer to do business with companies that are making an effort to become more sustainable.
Perhaps just as important, but less publicized, are the benefits of adopting sustainable practices for employees. According to a recent Forbes article, research shows that workers at companies that take sustainability measures are 16% more productive. A piece in The CEO Magazine echoes this assertion, stating that sustainability efforts give employees a greater sense of purpose, which leads to higher motivation and retention.
However, a major issue in measuring progress in corporate sustainability is what Banker calls “greenwashing,” meaning companies focusing on positive areas while ignoring those that need improvement. For instance, a car manufacturer is anxious to talk about the electric vehicles it is producing, but not the carbon footprint it takes to make them. There’s similar tension on the consumer side. Younger, tech-savvy individuals are reported to be very concerned about environmental issues. They’re also the same shoppers who are powering the e-commerce revolution, with demands for non-sustainable fulfillment methods like next-day delivery and ship to home.
Turning to technology
E-commerce, by its very nature, lacks sustainability. For decades, companies loaded trucks with pallets of product and delivered them to stores. Now, they’re shipping specific items, sometimes one at a time, to customers across a wide area. Many of those deliveries require air travel, which is the least environmentally friendly mode of transport. To be able to accommodate changing customer demands, businesses must be flexible. But how do you combine these two demands – flexibility and sustainability?
At Momentum 2019, Manhattan’s annual customer conference, CEO Eddie Capel had a novel idea. He suggested retailers offer customers a choice between a normal delivery option and one that may take longer but is more sustainable. Capel was confident that in many cases, consumers would be willing to wait a few extra days if they knew it was helping the environment.
Banker agrees. “I give Eddie Capel a lot of credit for talking about this,” he said, “and I thought it was a trigger of an idea.”
Banker also believes that supply chain software, and TMS specifically, turns the tide back toward sustainability. The core functions of these technologies are all designed to do the most possible with fewer resources. The specific benefits that TMS delivers – fewer miles driven, fewer trucks on the road, more-efficient routing, improved cubing – all help in the sustainability effort. Better yet, organizations can reap the benefits while also getting an ROI on their investments. It truly is a win-win scenario.
As Banker stated, “The average business puts in a TMS and reduces its freight spend by 8% while maintaining or even improving its service levels. So, that's one area where sustainability comes for free. I honestly don't know why more companies aren't pursuing it.”
The key is collaboration
How can you get started? Banker says that a critical best practice is to ensure supply chain professionals and sourcing professionals work closely with the sustainability team. Often, these groups are siloed, and their objectives can be at odds with one another. By collaborating, everyone involved can share an understanding of what is needed from the business side of the equation while also pursuing environmental goals. That’s when real change can occur.
In the end, Banker believes that working together, leaning on technology and being ambitious will lead to rewards when it comes to sustainability. “If you want to make progress, you set big hairy goals and attack them with continuous improvement projects year after year after year.”
To listen to our TMS sustainability podcast, click here.
For more on Manhattan TMS, visit manh.com/tms.