In the late 90’s and early 2000’s there was a supply chain solutions company was one of the hottest software companies in the world. The CEO at that time used to speak with pride at their user conferences about the good that supply chain software and their customers were doing to make the world a more sustainable place. By intelligently linking supply to demand, for example, companies were making what needed to be made using fewer resources.
Supply chain practitioners realize that supply chain software can help companies attain sustainability goals while providing a good ROI. Transportation management software is a good example. By loading trucks more fully and routing them cleverly, goods are delivered at lower cost and with lower CO2 emissions. Inventory optimization allows inventory to be intelligently located across a network to attain targeted service levels, while reducing the amount of inventory held and the distance it ends up being shipped.
But despite this, there is not quite the same pride in the profession when it comes to sustainability that there used to be. Supply chain practitioners recognize that there is not the same opportunity to fully engage in optimization and consolidation.
The culprit? Ecommerce.
Transportation produces large amounts of greenhouse gases. E-commerce is inherently less green than traditional bricks and mortar retail supply chains; it contributes to larger transportation emissions than traditional retailing. That is because instead of having pallets of goods delivered in truckload size shipments to stores, small parcels are sent directly to consumers. And often one leg of the journey is by Air. Full truckload shipments are greener than van deliveries, and Air is the least sustainable of all transportation modes. Amazon has done more to grow e-commerce than any company in the world.
Eddie Capel, the CEO of Manhattan Associates, spoke to this at their user convention, Manhattan 2019, this week in Phoenix. Manhattan is a leading provider of warehouse management, omnichannel, and other supply chain solutions. Mr. Capel pointed out in the conference keynote that ecommerce creates just in time shipments that affects us all. It reduces the ability of planning systems to efficiently combine loads.
Interestingly, if any supply chain software company has benefited from ecommerce it is Manhattan Associates. They saw the disruption being caused by Amazon very early. Manhattan worked to develop innovative omnichannel solutions to help bricks and mortar retailers better compete with the ecommerce behemoth.
My colleague Clint Reiser and I had an opportunity to speak to Mr. Capel privately later in the conference. He brought up sustainability again. He pointed out that younger folks are more committed to sustainability. And yet this digitally native generation are leading consumers of ecommerce. What if a company like Amazon, “gave consumers choices? You can have this delivered in one day, and this is will be the estimated carbon footprint. Or you could have it delivered in three days, with this lower impact. Or you could have it delivered in seven days, and the opportunities for consolidation would create the lowest impacts. I think Millennials will often choose seven days if they were educated on the consequences and given a choice.”
And if a company like Amazon did this, then Manhattan Associates’ retail customers would also have more consolidation opportunities. It would be an industry wide win.
Mr. Capel did not suggest exactly how Amazon could be induced to offer a strategy that prioritizes consumer convenience over the environment. But I think he believes that there are clear technology solutions and if the supply chain community starts discussing this, that would be a good starting point.
Who knows what could happen if these ideas get into the public arena? We do have presidential primaries coming up. If a candidate started to talk about this, that could be meaningful.