Can Green Logistics Deliver on Procurement’s Net-Zero Goals?

As businesses worldwide strive to meet Scope 3 reduction goals, green logistics is increasingly crucial for achieving net-zero targets in procurement.

McKinsey projects that demand for green logistics will reach around US$50bn by 2025, constituting approximately 2% of the total logistics spend, and expand to US$350bn (15%) by 2030.

Green logistics involves a comprehensive approach to lessening the environmental impact of logistics activities by integrating environmentally friendly technologies and practices.

For the procurement sector, this involves balancing economic performance with ecological responsibility, aiming for supply chains that are efficient and sustainable, cutting down greenhouse gas emissions, energy consumption and waste throughout the product lifecycle.

Transportation innovations in procurement

As transportation is the primary contributor to emissions in logistics, procurement executives are focusing on transitioning to cleaner transport options and optimising routes.

Amazon's logistics, involving a workforce of 1.5 million delivering 1.6 million packages globally, confronts the significant environmental impacts from packaging to transportation.

"Decarbonising our transport network is key to helping us achieve our goal of reaching net zero carbon emissions across our operations by 2040,” says Nicola Fyfe, EU VP of Amazon Logistics.

Amazon's achievement of delivering one billion packages using electric vehicles in the US highlights the importance of sustainable transportation in procurement.

"It couldn't have happened without the incredible delivery associates and more than 20,000 electric vans now delivering to customers in thousands of cities from coast to coast," she adds. 

"Our one billionth delivery didn't arrive with a big red bow, so the customer probably didn't know the difference. But, that's the point. We want every customer to experience reliable and fast delivery, regardless of the changes we're making behind the scenes.

"Every new EV signals an important shift and we're on our way to hitting our goal of at least 100,000 electric delivery vans on the road by 2030."

Electric vehicles not only reduce up to 90% of greenhouse gases compared to internal combustion engines, but they also lower fuel costs by up to 80% and maintenance by 70%, making them a viable option for sustainable procurement strategies.

Optimising warehousing in the supply chain

Beyond transportation, warehousing holds significant opportunities for reducing environmental impacts.

To streamline procurement, sustainable warehouses are incorporating energy-efficient designs, renewable resources, and smart technologies to minimise waste and energy consumption.

With the influx of customers, Walmart innovates its supply chain by investing in high-tech consolidation centres within its infrastructure.

“We’ve made continued investments in our people, facilities and technology to ensure we have the right product, in the right place, at the right time,” says Mike Gray, Senior VP of Ambient Operations at Walmart.

Consolidation centres allow Walmart to merge products from suppliers into larger freight loads, enhancing the efficiency of product shipments to stores, thereby reinforcing sustainable procurement practices.

Packaging and waste management in procurement

Packaging waste poses a considerable challenge in sustainable procurement, especially in e-commerce.

Businesses like Unilever are adopting sustainable packaging strategies, focusing on reducing virgin plastic usage, enhancing recyclability and fostering collaborative efforts on plastic management.

Unilever has reduced virgin plastic use by 23% since 2019, with 21% of its product packaging now using recycled plastic.

Unilever's commitment to the Global Plastics Treaty further illustrates its dedicated efforts in addressing packaging waste in procurement.

Rebecca Marmot, Chief Sustainability Officer at Unilever, says: "We were hoping, and have worked extensively, for an international legally binding instrument that would harmonise the policy landscape, strengthen national legislation and help businesses scale proven solutions for priority sectors, such as packaging.”

Technology integration for efficient supply chains

Advanced technologies like AI, IoT, and cloud solutions are reshaping logistics by providing real-time data for optimising supply chains.

"You can't predict disruption, but what you can do is be set up and work with a partner like Coupa who can help you react quickly," explains Bill Wardwell, General Manager and SVP of Payments, Treasury and Supplier Services at Coupa.

"It's all about how you react and react quickly. The tech we provide at Coupa makes customers both faster and better."

Coupa utilises a multiagent AI portfolio for aligning buyer and supplier needs, improving supply chain operations.

"Coupa is transforming global trade by using multiagent AI capabilities to dynamically and autonomously match the needs of buyers and suppliers,” says Salvatore Lombardo, Coupa’s Chief Product and Technology Officer.

As companies continue advancing these initiatives, incorporating sustainability within procurement strategies is recognised not only as an environmental necessity but as a source of competitive advantage and customer loyalty.