Environmental KPIs for Supply Chain Sustainability

Supply chains face increasing pressure to reduce their environmental footprint while maintaining operational efficiency. Understanding and tracking your environmental impact is no longer optional—it's a business imperative driven by legislation, consumer demand, and bottom-line cost savings.

In this blog post, we'll explore why environmental KPIs matter for your supply chain, how legislation is shaping requirements, and how monitoring these metrics can lower costs and enhance your brand.

KPIs or Key Performance Indicators help monitor the performance and progress of your operations. Environmental KPIs monitor the impact upon the environment from the supply chain by reporting on:

• Emissions to air
• Emissions to water
• Emissions to land
• Resource use

By monitoring CO2 emission levels and reporting on in-house procedures, you can gain a better understanding of the impact your operations may be having and further tailor it to reduce effects on the environment. By setting, monitoring, and measuring environmental KPIs, you gain a detailed view of how you are performing, how to improve said performance, and can decide upon new processes in an effort to become a more eco-friendly business.

The Green Transportation Act and logistics

In May of 2021, legislation was introduced to lawmakers, which could dramatically affect supply chains.

The bill, known as the Green Transportation Act, would focus on creating blueprints of carbon dioxide emitters within their cities. The EPA and several MOPs backed the act. But what does this mean for your logistics operations? While they aimed the bill at all methods of transportation, it is predicted that the act will cause logistic companies to have better reporting of their environmental imprint, especially in larger cities where the DOT will have to maintain higher standards.

You must be ahead of the legislature in knowing how your fleets affect the environment. If emissions standards tighten, businesses that did not prepare accordingly may feel some blowback.

Lower costs for fleet operations

Legislation and a general understanding of the environmental impact aside, you should be happy to know that environmental KPIs are also helpful in lowering the overall cost of running your fleets, or at the very least, getting better quality for the expense.

This is done through your Lag KPIs. Lagging KPIs measure what is happening in your supply chain currently. This could monitor and document:

• Spills
• Fuel consumption (from carriers)
• Clean-up methods
• Waste disposal
• Volume of waste

When the Lag KPIs are in place, the leading KPIs can be used more accurately while those that are falling below standard can be worked on. All of these issues are a headache for the company that has to clean it up and shell out even more money in the process.

By being able to monitor what exactly happened and how it can be avoided in the future, not only do you increase your environmental awareness, but you may end up saving money with the insights you gain.

Overall brand enhancement

The world is changing and so are consumer demands. Currently, there is a massive push toward all things eco-friendly and a sizeable drive to reach zero emissions sooner rather than later. Now, more than ever before, logistic companies must alter the stereotype that all fleets are comprised of large, carbon-emitting, gas-guzzling vehicles.

With KPIs set in place to monitor, document, and then relate information to the public, the overall perception of your business will change. This shift to identifying you as an eco-friendly company will substantially change the branding of your company and put it in front of a crowd of consumers and competitors alike that grows larger every year.

Final Thoughts

Environmental KPIs are important as they establish the basis for which your supply chain operates in regard to its impact on the world around us.

It is the essential factor that drives how you perform your operations. Setting and monitoring these sorts of performance indicators helps to:

• Meet standards
• Avoid having to change your operations
• Lower the overall cost of operations
• Increase your branding
• Potentially draw in a new customer base

Environmental KPIs are essential for lowering air, water, and land emissions as well as reducing waste, such as:

• Overstocking inventory
• Spills
• Routes not optimized for quick delivery

Monitor those environmental KPIs, compare your stats, make changes, and cater to your consumers in the most sustainable and green way possible. A more eco-friendly supply chain equals a more consumer-friendly supply chain.