The Concepts and the Importance of Logistics in Our Global World - Coursework Example

and Section # of The essay will discuss the concepts and the importance of logistics in our global word. It will then move to the recent climate change and its impact on our world with particular reference to logistics and GHG emissions relationship. The write up will follow up with the EPA and other agencies reactions and discuss the impact and the changes in the logistics management by the companies around the world. SUPPLY CHAIN MANAGEMENT Supply Chain Management refers to the flows of processes though which the goods are moved from the customer order to the acquisition of raw materials, supply, production, and distribution of the goods to the relevant customer. It basically refers to the management of the activities for the collections of raw materials to the production at the factories to the distribution of these goods. The manager must coordinate with all of these pieces in a cordial manner for the effective management of the supply chain (Mentzer, 2001). LOGISTICS MANAGEMENT Logistics Management is widely known concept in the global world. All companies rely on the logistics for the efficient flow of the goods and services. For Example: Industrial manufactures rely heavily on these logistics for the transportation of the mass-produced items. At the same time, the consumer goods manufactures want their goods to be delivered to the outlets and warehouses before the customer calls for it. Therefore, Logistics management has now evolved into one of the most important links in the supply chain process (DHL, 2010). Logistics refers to the part of the supply chain management that plans, implements and processes the flow of the goods and services from the source to the end consumer. It includes both thee forward and reverse flow as well as the storage of the goods. The vital elements of this part include all modes of transportation, inventory control and storage, packing and flow of information. Figure 1 shows the costs and investment in different sectors’ logistics departments. Figure 1: Sector Comparison of logistics costs and logistics investments1 The logistics has overall improved the cost, competence and consistency in the supply chain process. RECENT CLIMATE CHANGE Climatic Change takes place over millions to thousands of years. It is a statistical shift of weather and climate that takes place, changing the environment of the earth. When analyzed over hundreds of years, the climatic conditions have patches of climate having similar qualities and properties. The shift from one climate to another climate takes place slowly and gradually in order to maintain the ecological system. The biggest climatic change that is being anticipated these days and is mostly in the news is global warming. It is a shift towards a hotter climate due to the green house gases that are being reduced by the human beings. According to the United Nations Framework Convention on Climatic change, it is defined as being a change in climate that can be linked directly or indirectly to some human activity that ends up changing the composition of the atmosphere. This is in addition to the variability of climate that takes place over a period of time. According to this definition, climatic change can be considered a synonym of global warming (Tim, 2006). There are a number of causes for such a phenomenon to occur; one of the causes, green house gas emissions, carbon dioxide emissions are being reduced by human effort in an attempt to decrease the rate at which global warming is taking place, so that the ecological system on the Earth can sustain. Some of these causes are not in the hands of the humans; these may be changes in the solar radiation that may take place, or the movement of tectonic plates, deviation in the Earth’s orbit, volcanism etc. These factors are usually out of the hand of humans and hence the gradual shift in climatic change is occurring over the past years, escalated by human interventions (Martin, 2002). The repercussions of this shift are tremendous and dangerous; glaciers on the ice caps can be studied to understand the effect of climatic change, the tides as well as the ice-cores can tell a lot about the climatic shift that is taking place. Figure 2 shows us the result of the global climate change in the long run. Figure 2: Climate Change LOGISTICS AND GHG EMISSIONS The most vital part of the logistics management is the transportation of the goods and services from the source point to the destination points through some mode. This part of the logistics plays the worst role in the high numbers of the green house gases emissions. “According to Carbon Budget and Trends Annual Report, 2007, global carbon emissions rose rapidly during 2007 with industrializing nations like China and India producing more than half of mankinds output of carbon dioxide CO2 which happens to be the main cause of global warming2.” The increase in these emissions is the result of the burning of the fossil fuels in high quantity and the transport industry is considered as the main criminal. (Modak, 2010) “In a study of business trips requiring air travel taken by employees in Japan, Europe and North America, these emissions totaled approximately 88,000 tons in fiscal year 20083”. This analysis was performed by Sony to help it reduce its carbon footprint in the global world. At the same time, HP believed that each year the transportation of its products through air, road and sea produces around 2 million tons of carbon dioxide (HP, 2010). EPA and IPCC believe that the supply chain processes have the greatest impact on the emissions of the green house gases. The analysis has shown that this part produces around 60% of the total emissions in the global world. Therefore, the corporations have the highest leverage on the reduction of GHG emissions through the logistics; even the selection of the appropriate mode from road, air and sea will greatly impact the emissions into the atmosphere (GLD, 2010). EPA ON LOGISTICS MANAGEMENT The environmental protection agency has been very strict and requires adherence to its laws related to efficient logistics. Logistics involves the movement of goods from one place to another by using up fuel and other resources. If the resource allocation is not efficient, then with the extra usage of fuel, it may add to the cost for the organization as well as unwanted carbon dioxide in the environment. An example to explain further; usually in an year, 15 percent of more of annual truck miles are a waste as they do not move any resources or material back and forward. In such a scenario, it may mean around 15000 miles of unproductive usage of resources and consuming 2400 gallons of diesel fuel. Such an inefficient truck routing can be a problem for the earth as well as the organization. Hence, effective logistics management is what the EPA desires from all corporations. The efforts of EPA towards efficient logistics management have been going on since a long time and they are bearing fruit, as flexible loading and receiving schedules, load matching and using efficient routing and scheduling software is saving 100 gallons of fuel and reducing carbon emission accordingly (US EPA, 2004). IMPACT ON LOGISTICS MANAGEMENT The recent change in the climate has forced many of the companies around the globe to consider their logistics management and to reduce their carbon footprints. At the same time, the consumers have become aware of these environmental shifts and are concerned about the green processes through the products are developed. These corporations have been greatly impacted by this scenario and therefore, have reconsidered the concept of ‘Green Logistics’. The transport and logistics industry around the globe have been compelled to lead into more practical solution that will greatly reduce the carbon imprint. The Accenture in collaboration with the World Economic Forum’s Logistics and Transport group has published a report that provides ways to improve their carbon footprint through practical means. The report is known as the Supply Chain Decarbonization Report (Lacy, 2010). Green Logistics The term ‘Green Logistics’ refers to the form of the transportation that is environmentally and socially friendly as well as is economically viable. It also refers to the greenness in the mode of transport. At times, the greenness reduces the cost but at other moments, it increases the overall costs and hence, is in sharp contrast to the traditional logistics. The government interventions and the world environmental organizations have forced the corporations consider their logistics management over the increasing concerns of environment and health. At the same time, the logistics firm has found a strong connection between the greenness in logistics and profitability. WLL A leading shipping as well as logistics company, Wallenius Wilhelmsen Logistics (WLL), has reduced its carbon footprint on global world by reducing the GHG emissions by 32% in 2009 as compared to 2008. The company believes that the supply chain is the best possible way to reduce costs as well as reduce its part in environmental degradation (WLL, 2010). The company also expects to reduce further deterioration from the installation of the waste recovery system. This will convert the waste material on the ship into electricity. This will eliminate the fuel consumption by 6% and will help reduce carbon emissions by 37,000 tons a year and sulphur dioxide by 150 tons a year (Energy and Environmental News for Business, 2010) Figure 3: WLL Carbon Emissions4 Sony Sony has also started taking measures to reduce its imprint on the global world. It is trying to increase the teleconferencing between the employees in different nations to reduce the number of business trip miles. Sony, in USA, has already taken the initiative to reduce the international air travel by 80% and domestic travel by 50%. At the same time, Sony has implemented the plan to reduce the emissions by supporting the concept of carpooling (Sony, 2010). HP The climate change has heavily impacted the HP Corporation. The company is planning to use more efficient modes of transport and optimize the usage of the containers and trucks so that they are able to reduce the GHG emissions. HP transports its manufactured goods through air and ocean as well as roads. But now there is modal shift at HP. The company is moving from using air transport to using more efficient ocean transports. “Each tone of freight transported by ocean produces only about 1/50th of the CO2e from air freight5”. They also started using the rail routes to optimize the loading capacity. It is estimated that this change has “reduced emissions by 3,500 tones of CO2 emissions in 20076” HP has also worked hard on the reduction on the carbon imprint by designing an efficient loading plan. One of examples of this scenario is that they reduced the weight and size of the HP notebook packaging which indirectly increased the loading capacity (HP, 2010). “8 percent decrease in weight and size increases the loading capacity by 25 percent in a pallet.” Wal-Mart The climate change has forced Wal-Mart to reconsider their supply chain strategies to develop positive perceptions in the minds of their consumers and media. “Wal-Mart plans to reduce packaging by 5% by 2013 as part of its Sustainability 360 campaign7.” This packaging will reduce the size and weight of the product and hence, more products can be shipped in a single pallet. The climate change has indirectly enhanced the logistics management efficiency (Wal-Mart, 2010). Europe 3PLs The leaders of the green initiatives in the logistics and transport industry have been the Europe’s 3PLs. They have developed new products and services through which they are able to provide the companies with more sustainable transport. Damco has developed a carbon dashboard that allows its consumers to measure the impact of the carbon footprint within its supply chain process. This dashboard provides the information regarding the carbon emissions based in the number of miles, the form of transportation and type of product (Trepins, 2009). “Using this tool, Damco says it reduced carbon and costs by 10 percent on inbound ocean movements for Macys department stores8.” CONCLUSION The recent shift in the climate temperatures due to the emissions of the greenhouse gases in high quantity has greatly impacted the logistics management around the globe. The transport and logistics contribute a major part to the GHG emissions and therefore, a small change will significantly reduced the carbon footprint. The Big Names around the world such as HP, Wal-Mart, Sony, Europe 3PLs and many others have implemented plans and systems that lead to the way to the green logistics and the future of the logistics management. They believe that as a part of the community, it is their job to take the initiatives and help save the world from the drastic climate change. BIBLIOGRAPHY Beniston, M. (2002) Climatic Change: implications for the hydrological cycle and for water management. Springer Emmet, S. Sood, V. (2010) Green Supply Chains: An action manifesto. Wiley Mentzer, J. T. (2001) Supply Chain Management. Sage Publications Flannery, T. (2006) The Weather Makers: How man is changing the climate and what it means for life on Earth. Atlantic Monthly Press Briggs, A. (2007) Wal-Mart addresses the climate change and supply chain. Business Assurance. Accesses on May 2nd 2010 from http://businessassurance.com/wal-mart-addresses-climate-change-and-supply-chain/ DHL (2010) Logistics in the grips of cost and market pressure. DHL. Accessed on May 2nd 2010 from http://www.dhl-discoverlogistics.com/cms/en/course/trends/microeconomics.jsp Environment Leader (2010) WWL Cuts GHG Emissions by 32%. Environment Leader. Accessed on May 2nd 2010 from http://www.environmentalleader.com/2010/04/27/wwl-cuts-ghg-emissions-by-32/ GLD. (2010) Green Logistics Requirements. GLD. Accessed on May 2nd 2010 from http://www.gldsolutions.com/gldhome/SupplyChain/LogisticswithGreenBenifits/tabid/91/Default.aspx HP (2010) Logistics. HP Accessed on May 2nd 2010 from http://www.hp.com/hpinfo/globalcitizenship/07gcreport/energy/logistics.html Lacy, P. (2010) Davos: Climate Change, Transport and Logistics – The Road Ahead. Bloomberg Business Week. Accessed on May 2nd 2010 from http://www.businessweek.com/careers/managementiq/archives/2010/01/from_davos_clim.html Modak, S. K. (2010) Green Logistics, Urban Air Quality Management And Biofuels Use. Accesses on May 1st 2010 from http://www.oecdrccseoul.org/article/green-logistics-urban-air-quality-management-and-biofuels-use-by-dr-s-k-modak/ Rodrigue, J. P. Slack, B. Comtois, C. (2001) Green Logistics. Accessed on MAY 1ST 2010 FROM http://people.hofstra.edu/jean-paul_rodrigue/downloads/Green%20Logistics.pdf Sony (2010) Greenhouse Gas Emissions from Employee Business Trips. Sony. Accesses on May 2nd 2010 from http://www.sony.net/SonyInfo/csr/environment/climate/ghg/logistics/index.html Trepins, D. (2009) European Logistics: Meeting the challenge of climate change. All Business. Accessed on May 1st 2010 from http://www.allbusiness.com/science-technology/earth-atmospheric-science/13407271-1.html US EPA (SmartWay transport partnership. (2004) A Glance at Clean Freight Strategies Improved Logistics Management. Accessed on May 2nd 2010 from http://pubweb.epa.gov/smartway/transport/documents/tech/loadmatching.pdf Read More