Is the term ‘Green Logistics’ an oxymoron? An oxymoron is a term in which contradictory words appear in conjunction with one another such as bitter sweet or a deafening silence. In an attempt to answer this question we must first define what the term ‘Green Logistics’ means. When the term is broken down into its composite parts ‘logistics’ is simply defined by Murphy and Wood (2011) as the part of the supply chain which plans, implements and controls both the forward and reverse flows of goods, services and information between the point of origin and the point of consumption in an efficient and effective manner. However, the term ‘green’ is much more equivocal when defined in a business sense. In 1996 McDonagh and Prothero proposed that there are several dimensions of ‘Green’ which not only cover ecological, sustainability and conservation issues but also political, corporate social responsibility, fair trade and equality matters. Since these topics are very broad it is hard to define ‘Green’ in a logistics sense. As a result of this uncertainty over the definition of ‘green’, it is helpful to look at the definition of ‘Green’ on a consumer product level.
Ottman (2006, p.24), suggested that while all products inevitably have some effect on the environment, ‘Green’ products are those which aim to minimise this impact by conserving energy and resources and limiting pollution and waste. This definition builds on Reinhardt’s (1998, p.46) view that a ‘Green’ business “creates products that provide greater environmental benefits, or that impose smaller environmental costs, than similar products”. When we combine these definitions we can view ‘Green Logistics’ as the activities which facilitate the forward and reverse flows of goods, services and information through a supply chain in a way which is not only efficient and effective in achieving organisational goals but also aims to minimise the environmental impact and promote sustainability.
When we define and consider ‘Green Logistics’ this way, I believe the term is not an oxymoron and when aligned with an appropriate higher level corporate strategy can actually a major competitive advantage for organisations who are able to achieve it. The body of this essay will provide practical examples of organisations who are successfully using the concepts of ‘Green Logistics’ to not only minimise environmental impacts but also create and maintain a competitive advantage against competition. One concept which is becoming more prominent in ‘Green Logistic’ networks is the practice of reverse logistics. Reverse logistics can be simply defined as goods flowing backwards through the supply chain from the consumer to the producers and suppliers. Tompkins (2010) provides multiple ‘Green’ benefits which arise from practicing reverse logistics such as increased sustainability throughout the supply chain and reduced waste products, as well as producing an increased level of customer service through after-sales support.
An example of reverse logistics in practice is the South Australian Government’s policy of paying 10 cents for every glass, plastic and tin container returned to collection depots. By doing this the Government is able to facilitate the recycling of materials which ultimately has a positive benefit on the environment. This provides a clear example of how logistics processes can be ‘Green’ by promoting greater environmental benefit than similar products existing in different logistics chains. An Australian Associated Press article revealed that in 2010, 80 percent or 49,800 tonnes of all containers are recycled in Australia which reveals both obvious environment and financial benefits arising from the practice of green logistics.
Another common and relatively simple way for organisations to ‘Green’ their logistics processes while also reducing financial costs is to redesign their logistics chains with increased considerations for route optimisation and collaboration throughout the supply chain. Blanco and Cotrill (2013) make apparent one example of this through a case study of the agricultural cooperative Ocean Spray (based in New Jersey with a distribution centre in Florida) and competitor Tropicana who is based in Florida with a distribution centre in New Jersey. Tropicana’s third party logistics provider approached Ocean Spray and suggested that instead of Ocean Spray delivering to their distribution centre via road, they make use of Tropicana’s rail links between the two cities and utilise the empty train carriages returning from New Jersey to deliver to their distribution centre in Florida. This agreement allowed Ocean Spray to lower both their logistics costs and environmental emissions and saved Tropicana the cost and emissions associated with returning empty rail carriages to Florida.
Apart from the physical movement of goods, a firm’s logistics operations also incorporates warehousing strategies. The storage of goods may be overlooked when considering the environmental impacts of logistics chains. Figure 8.1 taken from McKinnon et al. (2013) shows the increasing usage of warehousing and its associated impacts. McKinnon et al. (2013) also proposed three ways in which firms can reduce the environmental impact of warehousing practices. Firstly firms should improve the energy efficiency of the lighting and particularly heating methods used in warehouses (as shown in figure 8.4. McKinnon, 2013). Secondly, firms can harness green energy to generate energy from low carbon emitting or renewable sources of energy such as solar, wind and biomass. Finally, and most importantly, firms should design sustainability into their warehouses, meaning that the buildings not only produce green energy more efficiently but also use less of it.
If an organisation is successful in doing this it is able to not only fulfill the logistical goals of operating efficiently and effectively but also minimise impacts on the environment. While reverse logistics, route optimisation and energy efficient warehousing strategies are only a small example of ‘Green Logistic’ practices, which also include environmental packaging considerations, paperless order processing and improvements in vehicle energy efficiency, these practices may be ineffective in achieving ‘Green’ outcomes unless the corporate strategies of the organisation also align. Reinhardt (1998) suggests that for an organisation to establish environmentally friendly practices as a competitive advantage it must first consider whether this strategy is viable in the industry in which it operates. If a firm does consider environmental product differentiation an option it must then ensure customers are willing to pay for environmental quality, establish and convey the environmental benefits of its product and finally these benefits must be defendable against imitation competition. Only then can an organisation enjoy the benefits of a growing green trend in consumption (Peattie, 2010).
If this is strategy alignment is adopted and maintained by an organisation, then ‘Green Logistic’ practices can provide substantial competitive advantages for the organisation while reducing impacts on the environment. Modern organisations can no longer afford to view ‘Green Logistics’ as an oxymoron and perhaps Henry Ford’s (1903) famous oxymoron “A business that makes nothing but money is a poor business” may be more applicable.
Blanco, E & Cotrill, K, 2013, ‘Delivering on the promise of green logistics’, MITSloan Management Review, December 2013.
McDonagh, P & Prothero, A, 1996, Green management: A reader, The Dryden Press, London.
McKinnon, A. Browne, M. Whiteing, A. 2012, Green logistics: Improving the environmental sustainability of logistics, Kogan Page, London.
Murphy Jr PR & Wood, DF 2011, Contemporary Logistics: International Edition, 10th edn, Pearson, Boston.
Ottman, J, 1997, Green marketing: Opportunity for innovation, TC / Contemporary Books, Lincolnwood.
Peattie, K, ‘Green consumption: Behaviour and norms’, Annual Review of Environment and Resources, Vol. 35, Issue 1, pp. 195-228.
Reinhardt, F.L. 1998, “Environmental product differentiation: Implications for corporate strategy”, California management review, vol. 40, no. 4, pp. 43-73. Tompkins, J, 2010, ‘Reverse logistics is not the reverse of logistics’, Material Handling and Logistics, November 2010.
‘Big jump in container recycling in SA’, AAP General News Wire, July 22, 2010.