Picture this: The glow of your computer screen illuminates your face as you scroll through the endless array of products. With a few swift clicks, you add your heart's desires to your shopping cart, knowing that in just a few days, the goods will magically appear at your doorstep. It's a shopper's paradise! But beneath the surface of this digital consumer utopia lies a sinister truth — according to a 2022 BCG report retailers are responsible for more than 25% of global emissions and mainly through ESG scope 3 (also referred to as “supply chain emissions”).
Putting your ESG reporting in order is a big hot topic of its own, and I will cover it more thoroughly in another blog post since we have a market leader tool, Envizi, for it in our portfolio at Solteq. In this post, let’s assume you already have the foundation established and you are already obtaining financial-grade data to build your strategy. Now is the time to time to focus on operationalizing sustainability and reducing the emissions.
As we delve into the realm of supply chain emissions, we inevitably encounter a series of challenges. Enter the "yes, but it's impossible because" excuses: not being able to compel your courier service provider to use biodiesel or electricity in their trucks, customers ordering multiple sizes of the same clothing item and subsequently returning all but the one that fits, resulting in significant waste in the order fulfillment process, and so on. While it's true that you may have limited direct control over these factors, optimizing your Inventory and Order Management processes can still make a significant difference. The beauty of a sustainability-driven supply chain and fulfillment strategy lies in its symbiotic relationship with traditional business benefits. It aligns perfectly with cost savings, higher customer satisfaction, supply chain resiliency, and overall improved efficiency!
I'm a simple man, and I love simple solutions to complex problems. So, let's focus on three categories that you can easily impact with a proper order management solution: waste reduction, excess shipping, and fossil fuels burned in transit. These categories provide actionable ideas for optimizing your fulfillment and supply chain:
1. Use intelligent order sourcing methods and route optimization:
Find the shortest route to the customer among all your locations, resulting in fewer kilometers in transit, less fuel consumption, lower shipping costs, and reduced individual parcels packaged and transported.
2. Provide greener shipping methods to customers:
A good order management solution enables you to overcome possible restrictions in the ecommerce platform and/or third-party logistics services, allowing you to easily connect to multiple services and further reduce kilometers in transit and fuel consumption.
3. Offer store pickup and ship-from-store options:
If your store is closer to the customer than the distribution center, shipping from the store becomes the most viable option. Additionally, providing pickup and return options at the store reduces the number of excess shipments and returns, while creating opportunities for up-selling and cross-selling. Reduced returns lead to immediate savings in return freight costs, decreased write-downs of returned items, and lower restocking and repackaging expenses.
4. Optimize inventory:
Instead of relying on a centralized distribution center for order fulfillment, leverage your store network to reduce safety stocks and improve the efficiency of last-mile deliveries.
5. Improve the pick and pack process:
It is estimated that 15% of all transport capacity is wasted due to inefficient packaging (essentially filled with air). As a retailer with online sales, that 15% of your yearly transportation services is likely a significant amount of money. Not to mention the costs associated with consumed void fill materials in packaging.
By implementing these strategies, you can make significant strides in reducing waste, cutting down on excess shipping, and minimizing the environmental impact. The beauty of these examples lies in their simplicity and the tangible benefits they bring to your business and the planet. By prioritizing sustainability in order management and fulfillment, you can actively reduce emissions and Solteq's Cloud Order Management provides the essential features to support these initiatives.