Investigation of environmental logistics strategies

Inhalt

II List of figures

III List of tables

IV abbreviations

V Terms of reference

VI Abstract

1. Introduction

2. Literature review
2.1. Introduction
2.2. Green logistics strategies
2.2.1. Levels of logistics strategies
2.2.2. Inbound logistics
2.2.3. Outbound logistics
2.2.4. Internal logistics
2.2.5. Transportation strategies
2.2.5.1. Modal change
2.2.5.2. Improving and redesigning logistical system
2.2.5.3. Improving design
2.2.5.4. Improving vehicle utilization
2.3. Environmental management system and policy
2.3.1. Environmental policy and corporate culture
2.3.2. ISO 14001 and EMAS
2.4. Motivation for green logistics
2.4.1. External factors
2.4.2. Internal motivators
2.4.3. Levels of motivation
2.5. Main problem areas
2.5.1. Ecological vs. economical factors
2.5.2. Organizational limitations

3. Methodology

4. Findings and Analysis
4.1. Introduction
4.2. Information about participants
4.2.1. Survey questionnaire
4.2.2. Secondary data
4.3. Importance of environmental issues
4.3.1. Survey questionnaire
4.3.2. Analysis of secondary data
4.4. Environmental management system and policy
4.4.1. Survey questionnaire
4.4.2. Analysis of secondary data
4.5. Implementation of environmental logistics strategies .
4.5.1. Survey questionnaire
4.5.2. Analysis of secondary data
4.6. Reasons for Implementing green logistics strategies
4.6.1. Survey questionnaire
4.6.2. Analysis of secondary data
4.7. Main problem areas
4.7.1. Analysis of secondary data

5. Conclusions

VII PROJECT EVALUATION and supervision

VIII References

IX Appendices
A. Survey Questionnaire
B. Statistical tests performed for the analysis of primary data
C. Overview of the secondary data

II List of figures

Figure 1: Scope of logistical environment conservation strategies

Figure 2: ’Supplier collection’ and ’onward supply’

Figure 3: Participants’ length of time spent in business

Figure 4: Importance of environmental issues

Figure 5: Future importance of environmental issues

Figure 6: Level of implementation of environmental logistics strategies

Figure 7: Primary reason for implementing green logistics strategies

III List of tables

Table 1: Overview of the surveys used as secondary data

Table 2: Survey sample breakdown

Table 3: General importance of environmental issues (percentage of respondents)

Table 4: Environmental policies (percentage of respondents)

Table 5: Selected green logistics strategies

Table 6: Rankings of reasons for implementing environmental strategies

IV abbreviations

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V Terms of reference

The following report aims to investigate proposed and currently adopted environmental strategies within the logistics field. It will also examine further issues associated with green logistics, including motivational aspects and problem areas.

Three main approaches will be adopted. First an extensive literature review will be carried out to establish the theoretical basis. Second, an online survey will be conducted to provide insights to current situation in the UK. Third an analysis of the secondary data, involving three previously conducted surveys will be carried out.

Results should reveal what is the current situation regarding environmental performance of logistics activities and whether there are any differences between companies depending on their size and field of business.

VI Abstract

The following report investigates the environmental strategies within the logistics field. It provides an overview of the proposed green logistics strategies and insights regarding currently adopted environmental logistics strategies in the UK.

In order to achieve this, a broad literature review was carried, using wide variety of primary and secondary sources. Further an online survey questionnaire was sent to a large sample of companies within the UK, including manufacturing firms and Third Party Logistics Providers of all sizes. In order to reinforce results from primary research, secondary data, including three previously conducted surveys will be consulted.

Report provides an overview of a wide range of proposed environmental strategies. The research revealed that the environmental performance of the logistics sector is developing; however, it is still in its early stages as there are still great potentials to be explored. It was further revealed that the environmental performance of large companies is superior to the smaller companies. While this was expected, it should be noted that on average manufacturing and 3PL companies of all sizes considered environmental issues as currently important and increasingly important in the future. No differences were revealed between manufacturing companies and 3PL providers, with an exception of the institutionalization of environmental measures. The level of adoption of environmental policies and environmental management systems (EMS) among the 3PL companies were extremely low.

The main issues associated with environment were considered energy and materials conservation and waste disposal. Accordingly, strategies most adopted include reduction of energy consumption and material recycling. Secondary research revealed that strategies involving suppliers are also popular.

Results clearly indicated that the compliance with the legislation is the primary reason for implementing green logistics strategies. For small companies more often the reason was demand of the customers. Main problems associated with implementation of green logistics strategies were lack of information and complexity associated with environmental issues.

1. Introduction

As the 21st century unfolds, it is becoming widely accepted that the current levels of economic activity place an enormous burden on the natural environment. While, despite overwhelming scientific evidence (IPCC, 2007, pp2-10), some still remain sceptic with regards to the true origin and scope of the climate change (Svensmark, 2007 and Bloom, 2009), other issues are more undisputable. With a help of several accounts Cherni (2002, pp184-190) proves that there is an interconnection not only between economical activities and air pollution but also between air pollution and ill health of humans. He further argues, that globalization of the economy is the major contributor to the air pollution, in particular in urban areas.

The rise of ecological disasters and the realisation that environmentalism is not just another fashion trend has led to calls for a more sustainable development. Walsh (2001, p3) defines sustainable development as the integration of economic, social and environmental policies “to ensure a better quality of life for everyone, now and for generations to come”.

As every company is embedded in the environment to some extent, environmental issues will imply a variety of consequences for the business. However, each business sector will be affected differently. Due to its nature, logistics activities, in particular the transportation function has a high impact on the natural environment. According to Hensher and Button (2003, p3) main environmental issues associated with the logistics sector are:

- air quality
- enhanced GHG emissions (mainly CO2)
- noise
- impact on biodiversity and
- land use.

CO2 emissions are considered to be the main problem. According to the estimates from McKinnon (2007, p17) UK domestic freight transport contributed 33.7 million tonnes CO2 in 2004^[1]. This represents 21% of all CO2 emissions from the transport sector and approximately 6% of the total CO2 emissions in the UK. In addition, the transportation sector is the only sector with an increasing GHG emissions profile, recording an average annual increase of 1.5% as opposed to the average total decrease of 0.5% over the period from 1990 to 2006 (European Commission, 2009, p168).

This tendency is in line with the recent developments in freight transport sector. The amount of freight moved^[2] in the UK amounted to 244 billion tonne kilometres in 2008, an overall increase by 40% from 1980. The total weight of domestic UK freight lifted increased by 27% over the same period, from 1,769 to 2,241 million tonnes. This further implies that the average length of haul has also increased (Department for Transport, 2009, pp79-80).

As a result of technological advances, particularly in communications and transport technologies as well as reduction of trading barriers (e.g. EU, WTO, GATT) international trade has been rising considerably. This has led to an enormous increase in international freight transport, 90% of which is carried alone by the shipping industry. International seaborne trade has risen by 76% since 1995 to approximately 8,100 millions tons loaded in 2008 and is expected to continue to rise further (UNCTAD, 2009, p11). Increase in the air freight transport has been even stronger. It has doubled since 1995 and, according to estimates from Airbus is expected to grow further at an annual rate of 5.2% reaching nearly 400 billion tonne kilometres by 2028 (Airbus, 2009, p146).

Given the high impact logistics sector has on the environment, it is crucial to develop and implement sustainable strategies to reduce or where possible to eliminate the negative consequences of logistical activities. The purpose of this research project therefore is to investigate the environment conservation strategies within the logistics field. The research project involved both theoretical and practical investigation while the latter included an analysis of the results from a survey questionnaire and secondary data.

Three main objectives for the research can be distinguished. First, the current situation in the logistics sector with regards to the environmental issues in UK will be examined and compared to secondary data. Second, it will be investigated, whether there is any difference between the manufacturing companies and Third Party Logistics (3PL) provi-ders. Third, the environmental performance of small, medium and large companies will be compared and analysed.

The remainder of the report is structured as follows. The next chapter presents an extensive literature review, beginning with a short introduction to explain the terms involved. This is followed by the proposed ecological logistics strategies from the literature and a short introduction of the environmental management systems (EMS). Further, the motivational factors behind implementation of green logistics strategies as well as levels of motivation will be explored. Finally, main problem areas associated with green logistics will be identified.

Chapter 3 provides a detailed description of the methodology and research techniques employed, while chapter 4 presents an analysis and discussions of the results from the survey questionnaire and secondary data. It comprises an overview of the participants’ demographics, attitude towards environmental issues, companies’ environmental performance, including implementation of EMS, environmental policy and green logistics strategies as well as reasons behind and problems when implementing green logistics strategies. Finally conclusions will be drawn in chapter 5.

2. Literature review

2.1. Introduction

The term logistics refers to the part of the supply chain process that plans, implements, and controls the efficient and effective flow and storage of goods, services and related information between the point of origin and the point of consumption in order to fulfil the customers’ requirements (Council of Logistics Management, 2003). An integrated logistics management include both the traditional forward flow as well as the out of environmental considerations borne backward flow, which is defined as the reverse logistics (Rahman, 2003, p688) (s. figure 1).

illustration not visible in this excerpt

Figure 1: Scope of logistical environment conservation strategies.

Source: Own illustration adapted from Stock, 2008, p 25-2.

Green or environmental logistics while primarily concerned with the forward distribution of goods and services is defined by Rogers and Tibben-Lembke (2001, p130) as the “efforts to measure and minimize the environmental impact of logistics activities”. As figure 1 de-monstrates there is some overlapping between the green and the reverse logistics as some activities, such as recycling, reusing or remanufacturing can be attributed to both concepts. In this report the focus will be on the green logistics strategies.

2.2. Green logistics strategies

2.2.1. Levels of logistics strategies

Strategies involving logistics operations can be generally divided into three levels (McKinnon, 2003, p666):

- strategic
- operational and
- tactical.

At the strategic level decisions about such issues, as numbers, locations, and capacity of factories, warehouses, shops, and terminals as well as decisions relating product sourcing, outsourcing and distribution system are made. These establish the physical infrastructure of the business and determine the links between the company and its suppliers, distributers and customers. The decisions made at strategic level will have a high impact on the decision making at lower levels.

Operational decisions relate to the planning and scheduling of purchasing, production and distribution activities thereby translating trading links into discrete freight flows. Tactical decisions involve the day-to-day management of logistics activities. These will be made within the framework defined by the previous levels and include such decisions, as routing and vehicle choice and planning.

As the benefits of environmental measures at one level can be offset or reduced by decisions made at other levels, there is a strong need to take a holistic view of the logistics activities and related externalities

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^[1] Excluding CO2 emissions from international freight and other GHG emissions.

^[2] “Freight moved” means the amount of freight carried (in tones) multiplied by the distance it travels (in kilometers).