No matter where you stand in the climate change debate, there’s little doubt the world is warming up. With the smart money betting that global industry is the major culprit, governments across the world are urging businesses to embrace sustainability. In Europe, the transition towards a lower-carbon economy is presenting manufacturers and logistics with significant challenges. Failing to adopt sustainable practices not only risks revenue loss and reputational damage for companies – it also exposes them to legal and regulatory repercussions.
While companies may be implementing different approaches to tackle the increasing pressure of environmental compliance, they all agree on one thing – collaboration is crucial to the process.
In this article, we’ll look at…
- The current regulatory state of play
- Success stories in the sustainability arena
- Forms of collaboration that are making an impact
- The benefits of collaboration and how 4PL solutions are improving their effectiveness
Environmental challenges: manufacturers feeling the heat
In the words of Kurt Vonnegut, “We’ll go down in history as the first society that wouldn’t save itself because it wasn’t cost-effective.” With this being an amusing – and largely true – observation, governments are having to step in to help companies ‘see the light’ whether they want to or not.
2024 is set to witness significant developments in sustainability-related regulations. Initiatives such as the EU’s Corporate Sustainability Reporting Directive (CSRD) will profoundly impact how businesses operate. From in-depth sustainability reporting requirements to circular design mandates and decarbonisation targets, businesses – and manufacturers, in particular – will need to deal with an increasingly complex regulatory framework.
Supply chain sustainability is also under scrutiny, with regulations requiring companies to report on their entire supply chain’s environmental impact. As mentioned, decarbonisation remains a core objective, with emissions tracking and reduction targets becoming mandatory for companies across numerous sectors.
In addition to this, companies must align their environmental messaging with concrete actions and avoid vague or misleading claims.
Collaboration in practice
Faced with these challenges, collaboration is emerging as the central strategy by which manufacturers and logistics providers are meeting sustainability regulations. By pursuing collaborations with suppliers and partners, companies can develop comprehensive strategies that not only align with regulatory requirements but fortify their own business objectives, too.
For instance, Procter & Gamble’s joint venture with Tesco resulted in significant reductions in both transport costs and carbon emissions. By adopting a “one-company approach” to their supply chains, both companies were able to boost on-shelf availability while minimising their environmental footprint.
Similarly, initiatives such as backhaul transportation have served as an effective strategy for reducing CO2 emissions and promoting green logistics. CEMEX Egypt’s implementation of backhaul trucking services led to a substantial decrease in carbon emissions, highlighting the ecological benefits of sustainable logistics practices.
Success stories
It’s not just Tesco and Procter & Gamble that have made a success of collaboration. A number of large-scale partnerships have showcased the power of collaboration to drive sustainability initiatives.
- Royal Philips, the Netherlands-based health technology company, is partnering with other manufacturers to develop circular manufacturing systems. In circular systems, resources, materials and products undergo reuse, remanufacturing and recycling processes. Philips has set an ambitious target of generating 25% of its revenue from circular products and services by 2025. To achieve this, the company initiated the Capital Equipment Coalition, which includes other organisations like ASML, Cisco and Dell. Together, they develop and share best practices for refurbishing and repurposing large medical systems, reducing waste and carbon emissions.
- Ingka Group, the largest IKEA retailer in the IKEA franchise, is also developing a circular system by investing in RetourMatras, a company that specialises in mattress recycling. With the capacity to recycle all mattresses disposed of in the Netherlands annually, Ingka Group aims to expand its recycling efforts to other countries, collaborating with various stakeholders to make efficient mattress recycling a reality worldwide.
- Unilever, the global consumer goods company, collaborates extensively with suppliers and technology partners to reduce emissions and promote sustainable sourcing. Through its Clean Future strategy, Unilever aims to replace fossil-fuel-derived carbon with renewable or recycled carbon in all its cleaning and laundry products by 2030. Moreover, Unilever is committed to achieving a deforestation-free supply chain and helps smallholder farmers adopt regenerative agricultural practices.
Forms of collaboration
When it comes to collaboration strategies, manufacturers and logistics companies have a number of proven options they can explore. One form that has gained traction in recent years is the adoption of shared sustainability goals, where manufacturers and logistics providers work together to reduce their carbon footprint. This involves setting joint targets for emissions reduction and implementing energy-efficient practices such as optimised transportation routes to lower fuel consumption.
Investments in green technologies are another area where manufacturers are collaborating to promote sustainability. From the use of eco-friendly vehicles like electric and hybrid trucks to the adoption of solar panels in warehouses and distribution centres, companies are joining forces to shoulder the initial investment. By pooling resources, these businesses are not only reducing their environmental footprint but achieving long-term cost savings.
4PL solutions
Cooperative efforts in logistics, such as combined warehousing and 4PL management, are arguably among the most cost-effective ways to drive meaningful sustainability in a supply chain. By centralising logistics management through a 4PL provider like X2 (UK), manufacturers and logistics companies can optimise inventory levels, reduce transportation costs, and minimise waste.
Additionally, the benefits of asset-light logistics, involving the use of third-party assets and resources, allows for greater flexibility and efficiency in transportation operations while reducing the environmental impact of the supply chain.
Backhauling
Another strategy that has proven remarkably effective is leveraging complimentary return journeys, or ‘backhauling’, in logistics operations. By transporting goods on return trips, logistics providers can improve the efficiency of their transportation networks and reduce the number of empty miles travelled, lowering fuel consumption and emissions.
Benefits
Collaboration between manufacturers and logistics providers yields a multitude of advantages for all involved. Needless to say, from an environmental perspective, collaboration enables the development and implementation of sustainable practices. Sharing resources and expertise enables partners to optimise transportation routes, implement green technologies and invest in renewable energy solutions that heighten sustainability efforts.
The balance sheet
From an economic perspective, collaboration results in cost savings and operational efficiencies. Combining resources and streamlining processes allows manufacturers and logistics providers to achieve economies of scale, reduce overheads, and improve supply chain resilience. Moreover, collaborative efforts often result in innovation and product/service improvements that boost competitiveness and market positioning.
Social and corporate
Collaboration also promotes transparency, trust and accountability. When companies work closely together towards shared goals, they build stronger relationships and nurture mutual understanding that creates value for stakeholders. Collaboration also enables companies to address social and ethical issues, such as labour rights and diversity, contributing to positive societal impact and improving corporate reputation.
Overcoming collaboration obstacles with 4PL
As positive as collaboration is, it comes with its own set of challenges. From coordination issues to inefficiencies in supply chain management, keeping manufacturers and logistics providers with different histories and methodologies on the same page can be a complex task.
Fortunately, Fourth-Party Logistics (4PL) providers like X2 (UK) can effectively address these obstacles. A 4PL service acts as a single point of contact, orchestrating and optimising logistics operations across multiple parties, streamlining communication and improving coordination. Through the use of advanced technologies and analytics systems, X2 (UK) offers comprehensive visibility into the entire supply chain, enabling proactive decision-making and superior risk management.
What’s more, 4PL solutions are highly scalable and adaptable, accommodating to the evolving needs and complexities of collaborative ventures. With a 4PL at the helm, manufacturers and logistics companies can unlock the synergies that drive operational efficiency and sustainability.
Going green with sustainable 4PL
As manufacturers and logistic companies increasingly recognise the importance of environmental sustainability, working with a 4PL provider presents a practical and compelling opportunity to drive positive change. By drawing on our expertise in sustainable logistics practices, both manufacturers and logistic companies can significantly reduce their environmental footprint throughout the entire supply chain.
Partnering with X2 (UK) allows manufacturers to optimise transportation routes, reduce emissions and implement innovative solutions such as backhauling to improve resource efficiency. With collaboration as the heart of our 4PL methodology, we serve as much more than just an efficient logistics solution – we deliver the sustainability results needed to help companies remain compliant and keep the planet a far more pleasant shade of green.
To find out more about X2(UK) and how our 4PL solutions can help your company to stay both green and profitable, contact us here.