Developing resource efficient logistics at DHL
As a global logistics company, DHL is able to move itself and help its customers towards being more resource efficient.
Whether it is working with customers such as British Airways (BA) or lighting manufacturer Iris Ohyama, DHL is committed to helping businesses think differently about their supply chains and the opportunity to extract value and sustainable benefits from something that was previously seen as a cost.
Clients such as BA are investigating ways in which they can be sustainable and resource efficient and DHL has partnered the airline to help it identify ways to improve its supply chain.
“BA is at the vanguard of this,” says DHL Supply Chain Envirosolutions vice president Chris Jackson (pictured above). “The company generates food waste on its flights, but also wanted a zero waste to landfill concept. We worked for three to four years with BA to reduce food waste and have achieved a 70 per cent reduction.
“This was done using waste to energy kits that dry the food waste into a powder that is then used to create energy.
“But BA wanted to do this without additional cost initially, and we scratched our heads about how we could do this. But if you have a logisticians mind-set, you will find a solution, and this is what we did with it. In fact, we ended up reducing cost with BA as a result of this approach.”
While with Iris Ohyama, DHL developed a reverse logistics operation that allows the manufacturer to have its lamps (light bulbs) actively recycled and then components can be used in new projects. This is an example of the circular economy in action.
“DHL has had the Envirosolutions business for a few years now,” says Jackson. “Over the last few years, customer feedback has evolved. For example, five years ago, sustainability was seen as a cost on the bottom line, but now sustainability is seen as both an economic tool and a social tool.
“In the air logistics side of things, a lot of product goes from A to B to C when A to C is the real destination,” he adds. “But economic and sustainability savings can be made if B can be taken out, and so by working out how we can reduce vehicle journeys is where we can be more effective and efficient.”
The Envirosolutions division wanted to better understand the drivers in the supply chain along with the major companies it was working with and how savings could be made.
It therefore commissioned research from lharrington group that makes the case for businesses to think differently. The whitepaper, Closing the Loop: Building the Environmental Supply Chain notes for example that P&G recently reported nearly $1 billion (£650 million) in cost savings from its environmental supply chain.
The research found that there is escalating consumer pressure, the need to improve efficiency and reduce costs, compliance issues enforced by legislators and rising expectations of corporate responsibility that are driving the need for more resource efficient supply chains.
Leading companies are therefore creating value by responding to this and modifying supply chains to manage key inputs and outputs such as energy, carbon, water, materials and waste in a way that can reduce the environmental footprint of a business and generate new sources of revenue.
“There is an opportunity to reduce supply chain costs and develop revenue streams from recycled materials for example,” says lharrington president Lisa Harrington (pictured left). “The more effective and efficient a business is, the more it benefits the business and this is leading to change.
“Supply chains were built in a linear way where we manufactured, bought and threw away a product and supported this flow. But as this becomes untenable, supply chains will make the circular economy possible and this will lead to further opportunities for businesses to not only save cost, but generate revenue.”
She notes that the recipe for success will be following the four principles of: reduce, reuse, recycle and recapture. More and more companies are seeking to reduce and eliminate waste by injecting efficiency into operations and products.
While other businesses are reusing or recycling materials to generate opportunity.
Businesses are also recapturing materials by breaking down products at the end of their lives to harvest residual value from items such as precious metals.
But to generate efficiencies, the white paper suggests that a Lead Environmental Partner (LEP) fulfils a control tower role by monitoring the forward and reverse flows of the supply chain to identify opportunities that make environmental and economic sense.
The LEP also helps to develop closed loop or circular supply chains that integrate extracting value of recycling or reuse resource streams and manages compliance.
Finally, the LEP provides visibility through detailed carbon reporting.
“We have developed the LEP principle in DHL Envirosolutions,” says Jackson. “We have a dedicated staff of supply chain experts that can work with companies in the supply chain to develop these economic and sustainability benefits.
“In the UK and Australia we have developed the LEP as the control tower that deals with the waste streams and orchestrates the flow of materials in a more closed loop or circular fashion.
“We also have experts that protect customers from differing global legislation. If you have customers in Japan, Vietnam, Brazil or Europe, they all have different environmental legislation and we help customers to ensure they meet these requirements.”
DHL Envirosolutions recognises that there is still a long way to go before all companies are treating their supply chains as a way of not only saving cost, but generating sustainable revenue and business practices, and it is positioning itself to help companies achieve this.