The Logistics Industry-Literature Review

The Logistics Industry-Literature Review

The Logistics Industry-Literature Review

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Operating Costs and Going Green in the Logistics Industry:Literature Review

The logistics industry is an integral element of supply chain management (SCM). According to Aziz, Jaafar, and Tajuddin (2016), the logistics industry promotes trade and business efficiency necessary for economic growth. Consequently, contemporary logistics service providers must develop internal capacities and external mechanisms needed to attain sustainable performance. For example, logistics companies should incorporate green strategies, including environmental conservation, in their business processes to ensure efficient operations across the globe. In addition, going green is critical to improving competitiveness in the logistics industry (Gauthier & Gilomen, 2016). The current research project focuses on the increasing operation costs linked to the mitigation of negative environmental effects through green logistics. The examination of literature relating to rising operation costs in green logistics is crucial to determine the strategies needed for a sustainable logistics industry.

The study by Seroka (2014) indicates that green logistics is linked to the increasing concerns on the need for organizations to implement environmentally responsible operations. Although the term logistics was initially used to refer to the minimization of costs while maximizing profits, it has evolved into green logistics to cover the strategies used to address the energy and environmental footprint linked to supply chain management activities. As a result, green logistics focuses on implementing environmentally friendly practices in freight distribution, with the critical focus on waste management, transport, and material handling. In addition, green logistics encompasses the activities necessary to achieve eco-efficiency in the management of products and services between the points of origin and consumption. It entails the assessment of the environmental impacts associated with various distribution practices with the objective of eliminating wastes and addressing emerging social and environmental factors. Consequently, contemporary firms must remain committed to the natural environment as an essential variable influencing their performance. Green practices are especially crucial in the logistics industry based on its role as a key source of pollution. Such knowledge provides the basis for extensive study on the relationship between operating costs and organizational capacity to go green.

Besides, Shan and Wang (2018) explore green supply chains as a concept linked to the idea of green purchasing, which first emerged in 1994. Such concept covers the integration of environmental issues into different supply chain management aspects, including logistics, product development, and manufacturing operations. It allows companies to implement relevant environmental management principles throughout the customer order cycle, which encompasses the design, development, packaging, and distribution of products. Similarly, Zhu and Sarkis (2007) consider green supply chain management (GSCM) as an essential requirement for companies focused on improving their environmental image and profitability. For instance, through green practices, firms can lower their environmental effects, leading to better levels of ecological efficiency. Consequently, the rationale for green logistics involves the incorporation of environmental considerations into SCM practices.

Moreover, a study conducted by Diabat and Govindan (2011) indicates that modern-day organizations are approaching environmental management as a strategic area with significant impacts on their overall performance. Such observation draws from Zhu and Sarkis (2006)’s findings, which indicate that at least 40,000 companies across the world have adopted the ISO14001 system of environmental management. The majority of such corporations are manufacturing organizations, which have recognized their responsibility to monitor the environmental dimensions linked to their operations. For example, the firms must adopt environmental conservation philosophies to minimize the environmental effects attributed to their products, practices, and services. Nonetheless, the issue of green logistics continues to raise key concerns for contemporary organizations based on different challenges. For instance, besides the rising operation costs, modern companies are concerned about the development of environmental awareness necessary to attain efficient and sustainable logistics activities.

Furthermore, in their examination of the concepts of green SCM practices, Carter and Rogers (2008) indicate the need for organizations to implement sustainable operations geared toward meeting the needs of the current population without undermining the future generations’ capacity to meet their needs. The critical issues relating to sustainability include the development of adequate understanding of the environmental effects associated with economic activities in industrialized and developing nations. For instance, besides distributing high quality products to meet the needs of the market, companies must execute green strategies to enhance the effective conservation of non-renewable resources. However, contemporary organizations face challenges in the application of the macro-economic definition of sustainability based on their inability to balance the current and future population needs (Gauthier & Gilomen, 2016). In addition, companies face difficulties in identifying the resources, including technology tools, required to address such needs. Consequently, organizations must engage their different stakeholders, including employees, shareholders, and other entities in the development of green supply chains to ensure sustainability. The effective implementation of green logistics is crucial for firms to attain long-term efficiency in the mitigation of risks related to fluctuations in the costs of energy, pollution, product liabilities, resource exploitation, and waste management.

Additionally, the study by Meade, Sarkis, and Presley (2007) explores the concept of reverse logistics and its influence on the capacity of organizations to go green. The study indicates that reverse logistics has become popular based on the introduction of environmental protection laws. Reverse logistics covers the activities necessary to eliminate the distribution of defective products in the market. Conventionally, its adoption in organizations allows consumers to return defective products to suppliers. Nonetheless, contemporary organizations consider reverse logistics as an essential requirement for them to attain a competitive advantage. Besides addressing the environmental issues linked to product distribution, reverse logistics promotes the organizational capacity to engage in good and ethical business practices (Rodrigue, Comtois, & Slack, 2016). Consequently, the idea of reverse logistics is critical to going green as it improves the firms’ capacity to ensure the production and distribution of high-quality, environmentally friendly products. For example, currently, organizations can promote reverse logistics by ensuring efficient processing, transportation, and handling of products. Therefore, the integration of reverse logistics in contemporary companies’ SCM operations is important toward enhancing their capacity to go green. This indicates the need for firms to invest adequately in their logistics to ensure sustainability in their product life cycles.

Moreover, Beske-Janssen, Johnson, and Schaltegger (2015) indicate that the sustainability strategies required for green operations must cover economic, social, and environmental aspects. However, according to a prior study by Golicic and Smith (2013), it is difficult to quantify the social and environmental components of sustainability. Similarly, corporations may face major challenges in their effort to demonstrate a cause-and-effect relationship between economic outcomes and sustainability. Nonetheless, firms should adopt relevant tools to measure their sustainability management practices.

Schaltegger, Windolph, Harms, and Hörisch, (2014) indicate that sustainability measurement tools may be approached as a concept, instrument, or system. For example, a sustainability audit is a measurement instrument that focuses on the attainment of a specific performance objective. Sustainability audits in supply chain management include labeling, benchmarking, and reporting. Conversely, sustainability measurement concepts encompass broader approaches, which integrate several instruments to explore the objectives linked to multiple business operations in SCM (Gold & Seuring, 2011). Similarly, systems may include several instruments, such as the Plan-Do-Check-Act, which firms coordinate and implement sequentially. In addition, sustainability measurement tools may be classified depending on the sustainability areas they address. For instance, tools may fall under the ecological, economic, or social measures (Lehtonen, 2004). Nonetheless, integrative tools cover social and environmental aspects. Lastly, measurements may be based on international standards, such as the ISO 14001, which addresses environmental management. Consequently, for logistic firms to go green, they must measure the sustainability of their operations based on the identified tools.

Therefore, the explored literature review has covered the concept of green logistics in supply chain management practices to identify the strategies needed in contemporary organizations to mitigate negative environmental effects. Although several studies have examined the growing environmental concerns in the context of supply chain management, they have failed to explore the link between operating costs and organizational capacity to go green. Consequently, the current study aims at addressing the research gap emerging in firms’ operational costs and green logistics. The study focuses on indicating that the rising operating costs are worth the green logistics activities necessary to minimize environmental effects. As a result, the study focuses on recommending the need for contemporary organizations to invest significantly in green activities as a means of achieving sustainability. Sustainable organizations have a higher potential of remaining competitive in the changing global market environment.

 

 

 

References

Aziz, T., Jaafar, H. S., & Tajuddin, R. M. (2016). Green supply chain: Awareness of logistics industry in Malaysia. Procedia-Social and Behavioral Sciences, 219, 121-125.

Beske-Janssen, P., Johnson, M. P., & Schaltegger, S. (2015). 20 years of performance measurement in sustainable supply chain management–What has been achieved? Supply chain management: An international Journal, 20(6), 664-680.

Carter, C. R., & Rogers, D. S. (2008). A framework of sustainable supply chain management: Moving toward new theory. International Journal of Physical Distribution & Logistics Management, 38(5), 360-387

Diabat, A., & Govindan, K. (2011). An analysis of the drivers affecting the implementation of green supply chain management. Resources, Conservation and Recycling, 55(6), 659-667.

Gauthier, C., & Gilomen, B. (2016). Business models for sustainability: energy efficiency in urban districts. Organization & Environment, 29(1), 124-144.

Gold, S., & Seuring, S. (2011). Supply chain and logistics issues of bio-energy production. Journal of Cleaner Production, 19(1), 32-42.

Golicic, S. L., & Smith, C. D. (2013). A meta-analysis of environmentally sustainable supply chain management practices and firm performance. Journal of Supply Chain Management, 49(2), 78-95.

Lehtonen, M. (2004). The environmental/social interface of sustainable development: Capabilities, social capital, institutions. Ecological Economics, 2(2), 112-119.

Meade, L., Sarkis, J., & Presley, A. (2007). The theory and practice of reverse logistics. International Journal of Logistics Systems and Management, 3(1), 56.

Rodrigue, J. P., Comtois, C., & Slack, B. (2016). The geography of transport systems. Abingdon, United Kingdom: Routledge.

Schaltegger, S., Windolph, S. E., Harms, D., & Hörisch, J. (2014). Corporate Sustainability in International Comparison: State of Practice, Opportunities and Challenges. New York City, NY: Springer.

Seroka, O. (2014). The development of green logistics for implementation sustainable development strategy in companies. Procedia-Social and Behavioral Sciences, 151, 302-309.

Shan, W., & Wang, J. (2018). Mapping the landscape and evolutions of green supply chain management. Sustainability, 10(3), 597.

Zhu Q., & Sarkis, J. (2006). An inter-sectoral comparison of green supply chain management in China: drivers and practices. Journal of Cleaner Production, 14(5), 472–86.

Zhu, Q.H., & Sarkis, J. (2007). The moderating effects of institutional pressures on emergent green supply chain practices and performance. International Journal of Production Research, 45, 4333–43