The Sustainability Accounting Standards Board revealed four forces driving sustainability in transportation. Although the SASB didn’t discuss how companies could use this information, the implications were clear; particularly when viewed through the prism of transportation automation and optimization solutions. A TMS solution can harness these four drivers, achieving impressive sustainability for user organizations. Follow over the fold for the “how”.
The SASB, whose industry-specific standards are used as benchmarks by public and private companies alike, identified the following four drivers for sustainability in transportation:
- Large energy consumption, rising fuel prices and emissions regulation necessitating energy efficiency and the management of greenhouse gas emissions
- Safety is an issue from various angles — including worker safety involved in manufacture and operation (includes driver safety during in- and outbound logistics)
- Unstable fuel prices, large fixed assets and fixed labor costs leading to unique competitive industry structures with corresponding governance issues
- hanging energy regulation creating opportunities for innovation
We’re willing to bet most supply chain practitioners never really thought of transportation management systems (TMS) as “green” tools or key elements of a sustainability initiative. But perhaps they should begin to regard them as such. Because even a casual look at each of these four drivers reveals that a TMS is central to achieving the goals put forth in each of these areas. To boil it down:
1) TMS and optimization tools are well known for their ability to reduce empty miles, derive the most efficient routing plans, select the most appropriate shipping mode and build the most efficient loads. All these things help to reduce the amount of emissions generated in the transport of freight.
2) TMS automation ensures that hours of service rules are being enforced, helping ensure fewer accidents are caused by over-tired drivers. Moreover, the scheduling functions of a TMS help reduce the haste that often leads to waste (or even injury) as drivers try to beat the clock and avoid late or detention fees. Knowing exactly when their delivery windows are means less hasty activity leading to accidents and damage.
3) According to an article on the SASB’s ‘4 Forces’ at the www.GreenBiz.com blog, the “unique competitive industry structures” referred to are illustrated by alleged price collusion among the large companies that dominate the US rail industry. The SASB identifies price collusion as a higher-risk sustainability issue. One of the manifold benefits of a TMS is the flexibility it affords shippers in selecting modes and carriers from an array of competitive providers which works as a hedge against price collusion and promotes competition.
4) Flexing to adapt to sudden changes in energy regulations is much more easily accomplished with a TMS solution in place. A couple of quick configuration changes and business carries on as usual. Plus, there is an audit trail available to prove compliance should regulators come knocking. Try getting dozens of plants, DCs and other locations to make a uniform change without the standardization provided by a TMS. It won’t be easy.