Operational Excellence

There is natural synergy between operational excellence and sustainability. Less use of resources translates into increased efficiencies and lower operational costs. You can achieve cost savings from becoming more sustainable in four main ways:

Packaging Efficiency: Cutting down on unnecessary shrink wrap usage can increase cost-savings while reducing operational environmental footprint. Several industry players have successfully experimented with using thinner shrink wrap and with reducing the amount of shrink wrap used per object.

Energy Efficiency: Being more efficient with energy consumption will not only save costs, but also contribute to environmental goals. Energy efficiency can be achieved through behavioral changes (e.g. shutting down equipment during breaks) and through the adoption of technologies (e.g. LED lighting, experimenting with different insulating materials to reduce cooling requirements, etc).

Optimisation that results in Fuel Efficiency: Route optimisation software, telematics, and demand planning software are all technology tools that can help you optimise your fleet, and thus reduce fuel consumption. Beyond exploring technologies, other business models that could result in reduced fuel consumption would be participating in a consolidation hub and collaborating with other players in the industry.

Renewable Energy: Investing in renewable energy, such as solar panels, can be a way to manage the rising electricity costs. Industry players, particularly in the cold chain space, have mentioned that their utility bills have doubled in recent years. Leasing solar panels is less capital-intensive method, and allows companies to enjoy the benefits of solar (e.g. reduced electricity bills, profit when excess solar is sold back to the grid).

Revenue Upside

Here are some opportunities that you can gain from embracing sustainability:

Market Differentiation: Sustainability can be a way to differentiate yourself from your competitors. For instance, 3PLs could offer sustainable warehousing services, and last mile delivery providers could offer sustainable transport services. These green services could enable you to gain new customer accounts or earn a fee premium.

Capture Customer Demand: Sustainability helps you prepare your business for when customers become more environmentally-conscious, which not only helps to retain customers but also encourages brand loyalty and repeat customers. With major retailers like New Look already reducing Scope 3 emissions by 22 percent, many companies are likely to follow suit and push the pressure to reduce emissions down to logistics companies.

New Revenue Streams: You can leverage on sustainability to expand your offerings. Some of your logistics peers have launched various new sustainability-related logistics services. For example, SFS Global Logistics has introduced carbon tracking tools and ‘control tower’ visibility. CWT Logistics’ integrated warehouse and depot facilities enable them to cross-sell new logistics services, while achieving a lower carbon footprint. Tiong Woon produces and sells excess renewable energy back to the power grid.

Improved Market Access: Stricter regulations in more developed markets like EU, US, and Canada would require you to meet certain sustainability standards before obtaining market entry. Sustainability would not only be a competitive advantage for you to gain market share, but are increasingly required in a license to operate in these overseas markets. For example, by 2035, all new vans operating in the European market need to be zero emissions.