Shipping: Six Steps to Achieving Retail's Holy Green Grail
The urgency to "go green" has permeated the retail industry on everything from store lighting to packaging.
For instance, Tesco and other retailers are already working on carbon labeling that will record the amount of carbon dioxide emitted during the production, transport and consumption of the 70,000 products it sells.
But while the focus has been on energy conservation and recycling, retail's elusive Holy Green Grail remains shipping. In the world of just-in-time delivery, the idea of offering green shipping options may seem to be anathema to a retailer's traditional view of customer service. And it may even scare the wits out of inventory and transportation managers given the charge to make it happen.
But what if -- instead of just offering overnight, 2-day or ground shipping -- a retailer could offer green shipping that saves dozens or even hundreds of pounds of carbon emissions that won't be released into the air? In today's "Inconvenient Truth" world, can you imagine the impact on the eco-friendly shopper buying products online who gets a message that says:
"Your order is scheduled to arrive on Tuesday. However, if you want to reduce greenhouse gas emissions by 100 pounds of CO2, click here and your package will arrive on Thursday instead."
There are a lot of shoppers out there who would click on that option in a heartbeat. This is a great way for a retailer to integrate customers and partners into its green decision making. And it doesn't only have to be for online shoppers -- it can also be used for special orders done in-store.
In an ultra-competitive market like retail, the ability to leverage green shipping can help to not only gain the trust and loyalty of green-focused customers and partners -- it can also significantly impact the P&L ledger. However, it also presents uncharted waters for inventory and transportation managers at companies that decide to take on a green shipping initiative.
The reality is that most customers and businesses have some flexibility when it comes to receiving shipments, such as First Thing in the Morning, 10 a.m., and 2nd-day deliver options. However, there also is a rapidly growing awareness of the need to minimize the environmental impact of shipping.
The first retailers who can incorporate environmentally conscious shipping choices -- both to consumers, and upstream to their supplier base -- will not only reduce the costs of bringing a product to market. They will differentiate themselves to consumers, strategic partners, and yes, even investors, in a way that could provide a significant competitive advantage in the marketplace.
So what should retailers do to shape an effective green shipping strategy? Here are six key factors that can make the difference in the success or failure of green shipping:
1. Metrics rule Both consumers and partners will want to understand the environmental impact of all available shipping options at the time an order is placed. That means that retailers will need to clearly calculate the carbon impact in the order entry process. Will a shipment save 90 pounds or 190 pounds of carbon using the green shipping option?
CEOs and CFOs are focused on metrics, and so the person responsible for driving a green shipping strategy will need to provide rigorous measurements for the carbon emissions. This data will also put a retailer far ahead of other companies who do not track carbon emissions by shipment.
2. Disciplined load planning Because green shipping options require a disciplined approach to load planning, retailers can significantly reduce capacity excess throughout your business. One of the biggest challenges facing retailers and their supply chain partners is getting the most out of their truckloads. That's why an industry-wide goal has been to minimize or even eliminate un-utilized space within shipping containers.
The norm today is for trucks to hit the road with 50 percent or more capacity to meet projected delivery timeframes. In some cases, these half-full trucks are sent out because of customer or business delivery demands. But many times, those factors don't come into play in the customer's mind.
A balance needs to be struck on meeting service levels and on-time orders, but there is still room for order flexibility for environmentally conscious buyers. Sure, many businesses could not afford to run with broad delivery timeframes. But many other businesses would probably consider alternatives that extend delivery options by as little as several hours if presented with the cost benefits of doing so.
3. Visibility into idle waste Government regulations that aim to reduce engine idle time during the pickup and delivery process are all the rage across the country. One of the side benefits of taking a green approach that tracks carbon emissions throughout the entire shipping process is that retailers and their supply chain partners will have a better view of idling time.
Our research has found that companies that implement some form of anti-idling software, such as that found in fleet management software, can reduce idling time by up to 30 percent.
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