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Our minds may automatically picture excess packaging or leftover materials on the factory floor, but supply chain wastage goes much deeper than that. It can also refer to employees’ time – due to a poorly-designed warehouse layout, for example – or wasted stock due to inadequate inventory planning. And those are just a couple of examples.
In short, by optimizing all processes within their supply chains – from the point of manufacture to delivery and even returns – companies can reduce wastage and transform their bottom line. This may require the adoption of smart and innovative technologies that streamline processes the whole way along – whilst being highly responsive to customer demand.
Here's where to start…
The impact of end-to-end supply chains on emissions is more than five times that of companies’ direct operations. - Source: CDP Worldwide1
Online shoppers are increasingly conscious of the environmental impact of their orders – from the materials used in the manufacturing of the products, to the carbon footprint of the delivery.
Nearly eight in 10 consumers indicate sustainability is important to them2. Of those who say it is very/extremely important, over 70% said they would pay a premium of 35%, on average, for brands that are sustainable and environmentally responsible.
In recent years, many multinational corporations have pledged to work only with suppliers that adhere to social and environmental standards. In 2021, 21% of UK retailers cut ties with suppliers due to their inadequate ethical or sustainability standards – such as the use of non-renewable materials or unfair working hours for employees. The research, by Barclays Corporate Banking3, found these cancelled contracts were worth US$9.6 billion.
“We are seeing a marked acceleration and shift among retailers towards prioritizing sustainable and ethical standards in every part of their business operations,” explained Karen Johnson, Head of Retail and Wholesale at Barclays4. “Retailers must continue to monitor and improve their ethical and sustainability standards if they are to appeal strongly to younger demographics.”
Carbon offsetting – the process of neutralizing the carbon emissions (or greenhouse gases) that your business emits into the atmosphere through daily operations – is one way to “balance” your carbon footprint. Logistics leader DHL Express offers a range of climate-neutral shipping options through its GoGreen portfolio. These allow customers to offset their shipments’ carbon emissions with investments in climate protection projects around the world – including planting one million trees a year!
Elsewhere, brands are exploring new and innovative materials to meet sustainability goals. Apparel brand Pangaia5, for example, defines itself as “a materials science brand on a mission to save our environment.” Its clothes are made from recycled cotton, environmentally friendly dyes, and grape leather as an alternative to animal leather. It has even launched a capsule collection printed with water-based black ink made from carbon emissions.
Whatever your business’s sustainability practices are, just be sure to shout about them on your e-commerce website, social media pages and marketing comms. These are the things customers care about so you should be sharing your message wherever possible.
Being completely in control of your inventory is a guaranteed way to cut waste from your supply chain. Overproduction of products means you’ll have to pay for warehouse space to store the excess. Worse still, if the products in question are perishable (such as food goods), you could end up having to throw some away if they expire.
Fortunately, there are plenty of inventory-management technologies out there designed specifically for e-commerce businesses. SkuVault6, for example, is a user-friendly, web-based inventory and warehouse management system for e-commerce retailers, that integrates with the leading online marketplaces including Amazon, eBay, and Shopify.
Clear planning for expected peak periods (such as Christmas or Black Friday) is also key for inventory management. And, if you do still find yourself with stock left over, turn it into an advantage – a flash sale or special discount code for loyal customers will help you shift the excess.
One of the biggest hurdles to a waste-free e-commerce supply chain is the transportation of the products. It’s common practice for sellers to source products and materials from overseas manufacturers, where production is cheaper. There has been some positive change though; during the pandemic, amidst border closures and disruption to cross-border trade, some businesses made the switch to domestic manufacturers.
Transportation accounts for approximately 23% of global energy-related greenhouse gas emissions, and road transport makes up 72% of that, according to the Intergovernmental Panel on Climate Change7. Yet, the increasing adoption of electric vehicles across the supply chain is a positive sign.
DHL has used electric vehicles for its last-mile deliveries for many years now. Today, with some 12,000 e-bikes and e-trikes, Deutsche Post DHL Group operates the largest electric fleet in Germany, whilst around a fifth of DHL's global delivery fleet now consists of zero emission vehicles.
DHL has also invested in Greenplan8, a solution which uses a unique algorithm to optimize route planning during the movement of goods. It considers local traffic flow and the time of day to find the quickest route to delivery for DHL’s fleets so that they arrive at their destination on time.
It’s not just the roads which are looking greener for DHL deliveries. This year, in a landmark deal, bp and Neste committed to supply DHL Express with more than 800 million liters of Sustainable Aviation Fuel until 2026. The move – one of the largest SAF deals in aviation history – marks a significant step towards DHL Express’ goal of decarbonizing aviaton logistics, and is expected to save over two million tons of carbon dioxide emissions over the aviation fuel lifecycle. All of which is helping the company move closer to fulfiling its GoGreen pledge to achieve net-zero emissions by 2050.
Optimizing the last-mile delivery journey is one thing, but completing the delivery is another – and is where costs and emissions can shoot up.
A failed delivery of a parcel means that the courier will have to return and attempt delivery another time – a wasteful and expensive exercise. To mitigate this, ensure you offer your customers a wide range of delivery options. A “leave with neighbor” option, delivery to a parcel locker, or offering On Demand delivery so they can choose a precise delivery slot will help to reduce your failed delivery rate. Don’t forget to give them full tracking and notifications of their order too, so they can ensure they’re in at the time of delivery.
Your packaging choices can reduce wastage, too – and that applies to more than just using recycled and sustainable materials. Items damaged in transit will have to be returned and replaced, a process that wastes emissions, time, and money, so invest in high quality packaging that will get your customers’ orders to them in perfect condition.
Finally, the dreaded product returns that e-commerce retailers simply cannot escape is another way costs and emissions are driven up. Fear not, we’ve got some dedicated tips to help you reduce your returns rate.
A final tip: engage with your employees to find further weaknesses in your company’s supply chain efficiencies. It’s a fair bet that they will know where time and money is being wasted.
For more supply chain insights, check out our articles, ebooks and case studies. You may just find an innovative idea to transform your business’s success.
1 - CDP Worldwide research, BCG, July 2020
2 - Meet the 2020 consumers driving change, IBM, 2020
3 - Barclays Corporate Banking research, Ecommerce News Europe, February 2022
4 - Karen Johnson, Ecommerce News Europe, February 2022
5 - Pangaia
6 - SkuVault
7 - PWC, Accessed April 2021
8 - Greenplan