Sustainability is high on the list of favorite corporate buzzwords. However, as carbon taxes and emissions reporting requirements continue increasing, supply chain professionals face mounting pressures from inside and outside their organizations to measure and improve performance against new, nebulous sustainability metrics.
Most organizations have public commitments to reduce their carbon footprint, with some of the more aggressive goals promising net zero emissions as early as 2040. Freight transportation makes up over 10% of total global carbon emissions. With rapidly increasing freight demand worldwide, it is expected to become the highest-emitting sector by 2050.1 Reducing emissions from transportation is crucial to achieving organizations’ sustainability goals.
However, logistics managers cannot deliver against today’s goals with yesterday’s TMS systems. To achieve traditional supply chain outcomes–such as reducing costs and managing lead times–TMS systems generate insight and foresight into these metrics during planning and execution processes. Similarly, modern TMS solutions need to proactively quantify sustainability metrics to achieve the multi-faceted goals of today’s supply chains. Unfortunately, users generally lack tools that:
– Give visibility into emissions impacts of day-to-day decisions
– Understand cost, lead time, and carbon trade-offs between mode and carrier options
– Embed carbon performance into planning and decision-making within TMS systems
Let’s explore a few characteristics of the next generation of TMS systems solving for green logistics goals alongside conventional objectives:
Project future carbon emissions impacts of different transportation decisions:
A comprehensive approach to sustainable transportation requires calculating individual shipment level emissions and understanding patterns across broader timeframes. This approach means looking at impacts across:
- Transportation modes: Compare carbon footprints between road, air, ocean, and rail freight
- Equipment types: Analyze hotspots across different vehicles and vessels, such as the impact of reefer vs. non-reefer, or electric vs. diesel-powered vehicles.
- Geographies: Evaluate trends across shipment lanes
- Carriers: Gain insight into which transportation partners enable carbon footprint reduction as well as which ones are underperforming
Data analytics tools embedded in modern TMS systems can provide real-time visibility into these factors, allowing logistics managers to adjust routes, select greener modes, or consolidate shipments in ways that minimize emissions. The ability to drill down into this data at multiple levels ensures that sustainability measures are implemented and optimized for various supply chain segments.
Understand emissions in the context of traditional supply chain KPIs:
Organizations should not silo carbon emissions reduction as a standalone objective; it must be integrated with traditional supply chain KPIs to drive holistic improvements. Companies should evaluate it alongside cost, lead time, on-time delivery, and capacity utilization. The goal is to understand whether emissions are increasing or decreasing and how these shifts correlate with other operational factors.
For example, reduced emissions could result from streamlined routing or fewer trips due to improved demand forecasting. On the other hand, increased reliance on faster but less eco-friendly modes like air freight during peak seasons could explain carbon increases. Supply chain professionals must evaluate these trade-offs to make informed, balanced decisions. Advanced TMS systems should provide tools to visualize these relationships, enabling managers to make strategic choices that comprehensively balance costs, efficiency, and sustainability.
Evolve from a reactive to a proactive approach:
Measuring past emissions is the natural starting point, but a reactive approach can only take an organization so far. A proactive approach to carbon management is essential for companies seeking to reduce their environmental impact while maintaining supply chain efficiency. Just as businesses forecast and project financial spend at the shipment level before executing transportation activities, TMS systems should enable the projection of carbon impacts before choosing transport modes, routes, or carriers.
Ideally, TMS systems should present emissions, costs, lead times, and other principal metrics comparisons side-by-side instead of in silos. This comparison allows decision-makers to evaluate the full scope of trade-offs before selecting a path forward, both at the individual shipment and overall plan level.
Embed carbon costs/penalties in transportation planning by default:
TMS solutions should automatically include carbon costs and penalties in transport planning and fleet optimization by default. Manual intervention is less effective than automated planning, which is why TMS systems are so popular. A modern TMS should allow users to allocate a cost to carbon, enabling users to make sustainable decisions. Since many organizations currently purchase carbon offsets, they can easily define the carbon cost of avoided emissions by translating the price of offsetting.
For example, when implementing air-to-ocean logistics strategies, the solution will weigh ocean freight more favorably than air freight. When strategizing how to increase the utilization of electric vehicles within the context of a broader fleet strategy, a sustainability-inclusive TMS can maximize EV allocation in a way that satisfies both carbon and operational criteria. Manually completing multi-variate analysis to optimize costs, lead times, and emissions is nearly impossible; however, advanced TMS systems can consider these and generate an optimal plan that balances all factors appropriately.
Conclusion:
Incorporating sustainability into transportation management is becoming essential for regulatory compliance and long-term supply chain resilience. Next-generation TMS systems integrating sustainability alongside traditional KPI measurement and performance are critical to achieving supply chain responsibility and resiliency. By embedding carbon considerations directly into transportation planning, organizations can make data-driven decisions that balance cost, efficiency, and environmental impact. As businesses adapt to evolving sustainability standards, investing in robust, future-focused TMS technology will be integral to meeting these challenges and gaining a competitive advantage in an increasingly eco-conscious market.
Ready to unify your complex supply chain processes and priorities and pave the way for sustainable abundance, balancing economic prosperity, environmental protection, and social responsibility? Learn how to create a more sustainable supply chain from supplier to customer.
References:
1. https://climate.mit.edu/explainers/freight-transportation
Tabish (Tab) Dayani:
As the Senior Director of Sustainability Product Development at Blue Yonder, Tab specializes in building solutions to reduce emissions and waste across transportation, procurement, manufacturing, warehousing, and fulfillment processes. These Blue Yonder solutions help drive environmentally friendly programs for our customers. With over a decade of experience in end-to-end supply chain sustainability, he has guided organizations’ transformation journeys across many industries, including retail, consumer goods, technology, manufacturing, and life sciences.