Green Logistics 2

Green Logistics as a competitive advantage– Part 2

Green Logistics and resilient supply chains:

A contradiction in terms or a chance in the crisis?

Part 1 of our Green Logistics series, Fashion trend or chance? was written at a time when our outlook on a lot of things was very different to that of today. Europe had only just begun to shut down. The supply chains of goods from China, where the COVID-19 pandemic had already led to production stoppages, had been seriously disrupted. The world had already felt the impact of those disruptions. Back then, however, nobody could even have begun to imagine what was about to happen.

One virus changes everything

Now – three months on –  the future still remains uncertain. Although production is being ramped up again worldwide, the Corona virus can be felt everywhere. The pandemic also has an influence on the issue of “sustainability” because, inevitably, the focus is more on the economy than on environmental protection during the Corona crisis.

Corona Crisis versus Climate Crisis?

In fact,  although the issue of sustainability has become something of a backburner over the last few weeks, it hasn’t been entirely forgotten. This can be perceived in the economic package that the Government Government has agreed upon: Setting the rates for car tax based on CO2 emissions and promoting hydrogen technology are just a few of the cornerstones of the package. Furthermore, the EU Commission still intends to adhere to its European Green Deal – for a sustainable new start and a change in climate protection.

Resilient supply chains versus sustainability?

The Corona crisis has clearly proven that delivery failures can have drastic consequences.  Resilient supply chains are  imperative, especially for import sensitive goods such as medical PPE and medicines. Companies will now try to diversify supply chains by deploying alternative suppliers worldwide.

In order to increase resilience towards global crises, supply chains need to become more robust. In this respect, companies now need to rethink their supply chain network and perhaps completely restructure them. Why not grasp the opportunity and, as an additional strategic target, strengthen sustainability, thus giving the company another clear advantage? (Green Logistics as a competitive advantage – Part 1)

The optimized supply chain: cost-effective or vulnerable to disruption?

Cost reductions and increased efficiency determine procurement in most companies – with the result that we have a world economy that is characterized by global purchasing. Long supply chains and constantly increasing complexity in logistics are the consequence – and in connection with this high vulnerability.

Political unrest, natural catastrophes or crises like the Covid-19 pandemic are disruptions which have a major domino effect. To avoid production standstills resulting from delivery failure and delays, the possiblity to change suppliers quickly and easily is of the utmost importance.

Plan, but how?

In times of crisis such as these, companies know that cost-effectiveness alone is not sufficient as a primary strategic target. They begin to realize how important it is to expand trade and delivery relations and to have more than one mainstay: in other words, they have to diversify.

When planning becomes too complex…

Establishing resilient supply chains by diversifying means that companies have to make very extensive, if not disruptive changes. Expert knowledge and experience are simply not enough anymore.Traditional planning approaches have reached their limit.

Intelligent planning provides a vital headstart in competition during times of crisis!

Planning software as the key to optimal decisions

Striking a balance between supposedly competitve goals – cost-effectiveness on the one hand and resilient supply chain concepts on the other –  is indispensable for diversification. If other strategic targets are to be considered, such as the reduction of emissions in the supply chain to create Green Logistics, then planning optimization becomes highly complex.

Planning software such as OPTANO enables companies to plan their logistic processes intelligently in view of very different strategic targets. If companies want to have both resilient and green supply chains, they need to take the following aspects into consideration:

  • Searching and making use of alternative sources of procurement
  • Establishing alternative supply chains
  • Constructing or expanding local production facilities.
  • Reducing CO2 along the entire supply chain.

Recognizing the opportunities with scenarios

What-if scenarios are a useful planning tool for considering and questioning these relevant aspects. They simulate the effects of uncertainty and disruption in the supply chain at an early stage. They show how effective possible measures can be.

By weighing up the pros and cons by comparing different solution strategies, you can ensure that you have several courses of action. What- if scenarios are, among others, the basis for further procedures to develop suitable solutions and strategies.

What-if analyses create transparency

With what-if analyses, OPTANO allows you to run through different kinds of planning alternatives and measures. Uncertainty and disruptions but also changes made to certain measures are reflected in the system. The effects are calculated and thus made transparent. In this way the consequences of disruptive events such as delivery failure, but also the effects of changes to individual parameters -e.g. increasing warehouse capacity – can be predicted.

What-if scenarios create transparency, enable predictions and guarantee courses of action.

Get the best decision with OPTANO

Logistic planning optimization with the aid of OPTANO allows you to organize structures and processes efficiently and flexibly. Sound recommendations for action with regard to facility locations and optimal material flows take the company’s strategic goals into consideration. What-if analyses create transparency and are an additional guarantee for courses of action.

To sum up…

Even if the Corona crisis is currently dominating our lives and we cannot foreee its duration nor future pandemics, appropriate measures need to be in place in the medium term to ensure supply chain resilience.

In the long term, however, the consequences of climate change will have a larger influence on the structure of supply chain networks than the Corona pandemic. The consequences of climate change are irreversible and require our immediate attention -even or especially in logistics!

Even more Green Logistics:

Green Logistics has so much more to offer. Want to know more? Then why not read part 1 of our three-part series on Green Logistics? Part three will be out soon so it’s worth taking a look at our homepage every now and then.

Are you interested in OPTANO and Green Logistics? You can find more information about OPTANO in our brochure which can be downloaded free of charge.