OCI: How to Measure Carbon Footprint in Logistics

In logistics, Scope 3 emissions, which encompass indirect emissions from the supply chain, account for an estimated 40-50% of total emissions. This reality presents a formidable challenge for procurement professionals striving to minimise environmental impact.

For procurement teams, tackling Scope 3 emissions is both a challenge and an opportunity. 

Oliver Chapman is the Founder and CEO of OCI, which specialises in commercial process outsourcing around the world.

Here, he speaks to Procurement Magazine about reducing carbon throughout the logistics operations  

What are the most effective methods for measuring carbon footprint in logistics operations?

In measuring carbon footprints across logistics organisations we need to take into account:

1) Green house emissions that an organisation is directly responsible for;

2) Emissions created in producing the energy it purchases;

3) How it applies to an organisation’s value chain.

It’s important to start with the biggest contributors to emissions which typically include business travel, employee commuting, waste, goods purchased, services purchased, emissions from the use of a product and product dispersal. But in the case of logistics organisations the process of transporting goods and storing them often have an especially high carbon footprint – my three examples all apply. 

Many of these considerations apply across the supply chain and entail what at OCI, we call KYSS: know your supplier’s supplier. Useful tools for measuring the carbon footprint include a carbon calculator.  But remember the 'Pareto principle' often applies within logistics organisations - 80 per cent of the carbon footprint often relates to 20 per cent of activities so it is important to focus on the 80%.

How can AI and data analytics contribute to reducing carbon emissions in supply chains?

AI and data analytics are not always the solution – it depends on the volume of data that can be realistically collected. In some cases, the data is not great and applying AI might be seen as overkill. However, AI can be especially useful for processing unstructured data – data gathered from disparate sources, such as from recorded voice messages, meeting notes, prescription and emails. 

But how it applies to an organisation's value chain the challenge is greater with logistics considerations adding an extra dimension – monitoring the carbon footprint across the supply chain is complex. AI can be a useful fit tracking suppliers and even in finding out which organisations make-up a supply chain such as tracking the websites of particular suppliers to find out who their suppliers are.

Generative AI can be useful for research and defeating reports. It can also be trained to provide real-time updates to monitor significant changes. For logistics organisations AI can be an essential tool for real time tracking and their analysis of goods." 

What innovative technologies are companies using to achieve more sustainable logistics?

It is possible to overstate the volume of carbon footprint calculations that are best achieved manually. AI can be an important tool in areas where accumulating data is time consuming or data is unstructured. 

Carbon calculators are an important tool for measuring carbon footprint and, in combination, often simple tools we are all familiar with such as Excel or Google drive are sufficient. But specialist ESD data tools can be essential. They offer many benefits including greater accuracy, long-term cost savings, tools to help visualise the carbon footprint and tools to support regulation compliance can be essential. 

For physical logistical processes such as product delivery clearly electric vehicles are important but also of importance is connectivity of goods either being transported or in storage to the Internet of Things (IoT) or Internet of industrial things and real-time analysis.

How do carbon reduction efforts in logistics impact overall supply chain costs and efficiency?

It is possible to overstate the costs of efforts in logistics to measure the carbon footprint. Although there is a cost to measurement - both in terms of internal labour and tools and outside help bought in, the resulting data can not only help provide information on the carbon footprint but that information can also be used to save costs - reducing energy usage for example can not only reduce carbon footprint it can save money.

Likewise, waste not only costs carbon emissions it often incurs unnecessary costs. This is especially true with logistics organisations during a product's transit or storage when energy saving simultaneously reduces costs and carbon footprint.

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