2Sustain

A year ago, when transportation costs were at record highs, logistics managers everywhere were re-designing supply chain operations to reduce their transportation expenditures. But, now that energy prices have retreated, are supply chain re-designs still a top priority? Over the past year, did companies realize that by improving the efficiency of their logistics operations, they could not only lower transportation costs, but reduce their carbon footprint –and overall supply chain risks –as well? 

According to a recent reader survey conducted by Logistics Management, the answers to those questions vary, depending mostly on the size of the company you ask.  

Logistics Management polled more than 130 transportation and logistics executives about their supply chain re-design plans, and the majority (78%) said re-thinking logistics operations remains a top priority. However, the survey results suggest that the drivers for supply chain changes have shifted. These days, businesses are revamping logistics operations in order to survive the current economic downturn and better manage risk. Some are also beginning to focus on sustainability issues, but the survey data suggests that green initiatives are limited mostly to larger shippers. 

“Some of the larger shippers who typically have very well-developed strategic planning efforts, business plans, and sustainability plans are more likely to continue to re-design their supply chains and also realize the recession we are in and these relatively low fuel prices are not likely to be with us for very long,” says John Larkin, managing director of the Stifel Nicolaus transportation and logistics group, in a Logistics Management article that discusses the survey results. “The more sophisticated and larger shippers are often the ones pushing supply chain re-design to become more energy efficient to reduce their carbon footprint even if it costs them in the interim, whereas smaller shippers may take a shorter view and focus on driving down costs.” 

According to the survey results, logistics executives say they’re continuing to take re-design steps such as consolidating shipments from suppliers, re-negotiating fuel surcharges, and re-structuring transportation networks. While activities like these can certainly help a company weather economic hard times, it also makes sense to look even further down the road –to a re-designed supply chain that can help you meet potential environmental regulations and even broader CSR goals. Based on the data collected in this survey, it seems that some companies are showing signs that they are out well ahead of regulations. To me, it’s clear that these organizations “get it” and intend to use their re-worked supply chains to capitalize not just on cost savings, but on risk management and sustainability issues, as well.