Role of ICT in Sustainable Freight Transport & Logistics

Dr S G DeshmukhDr S G Deshmukh

Director, ABV-Indian Institute of Information Technology & Management Gwaliordeshmukh.sg@gmail.com

International WorkshopNext Generation Sustainable Freight Transportation 8 Aug 2013 at IIT Delhi

Opening quote….

“We do not inherit the earth from our ancestors, we borrow it from our children…

Native American Proverb

Source: Source: http://www.drury.edu/multinl/story.cfm?ID=11595&NLID=259www

Issues

• How do we define sustainability?

• Who are the stakeholders?

• What are the impacts of ICT?

• How to measure impact of ICT?• How to measure impact of ICT?

• Can we develop a score card?

• Action plan?

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Issue 1 : Sustainability

SustainabilityThe possibility that human and other forms of life on earth will flourish forever

-- John Ehrenfeld, Professor Emeritus. MIT

Sustainable Development (SD)Meeting the needs of the present generation without compromising the ability of future without compromising the ability of future generations to meet their own needs-- Brundtland Commission, 1987 –

Core Concepts of Sustainability

Futures Thinking

Intergenerational responsibility, No-harmful effect

Technology

(Eco-)Systems Thinking

Carrying capacity of the planet to absorb waste and Carrying capacity of the planet to absorb waste and

support life without harming anyone

Social Justice

Equity, Basic services, Human values ,

Stakeholder voices, concern for all

Economic, Environmental, Social/Culturalresponsibilities of business/stakeholders

Sustainability

Economic LegGood JobsFair wagesSecurity

Social LegEnabling working conditions Inclusive education Community & CultureEquitable justiceSecurity

InfrastructureFair Trade

Equitable justice

Environmental LegZero Pollution &WasteEnergy ConservationMinimum disturbance to Mother Nature

Source: Willard B, 2009, “The business case for sustainability”, Green innovations conference, www.sustainabiltyadvantage.com

Example : Sustainable Supply Chain Management (SSCM)

• SSCM is all encompassing, strategic set ofactions taken by collaborating partners andstakeholders of an ultimate supply chain toimprove chain’s profitability along withmitigation/elimination of the detrimental impactsof all business activities spanning across thechain on the environment, society, culture,chain on the environment, society, culture,values, health and safety of all stakeholders andthereby ensuring the continuity of operations inthe larger interests of all stakeholders.

Apratul Shukla, 2011, Critical Analysis of Supply Chain Management in Indian Context: A Case of Suitability, Scalability and Sustainability, Ph D Thesis, IIT D

Sustainability in the context of Supply Chain • Deteriorating environmental condition• Role of complex, long and global supply chains in deterioration of the

environment needs investigation.• Growing interest as managers are forced to deal with social and

environmental issues, related to supply chain (Vachon and Klassen,2006).

• Every product generated, transported, used and discarded causes impact on the environment, (Greenen et al., 2006).

• 3Ps and Triple bottom line (Elkington, 1994 )• 3Ps and Triple bottom line (Elkington, 1994 )• Climate change and Supply chains activities are related.

Corporate social responsibility

Sustainable supply network management

Supply chain environmental management

Green purchasing strategies

Environmental purchasing

Green marketing

Environmental marketing management and environmental product differentiation

Reverse logistics

Environmental management

Life-cycle assessment

ISO 14000- Certifications

Sustainable Supply Chain Activities

Primary Industry

Production Finished products distribution

Retailing

Greener forms and factories

Soil, water, air contamination

Health and safety

Fair wages

Inbound distribution

Green fuel based vehicles

Full truck loads

Congestion Vehicular

pollution

Design for sustainability (DfS)

Life cycle cost analysis

Green and clean process

Consolidated loads

Reusable pallets and trays

Recycling of packaging

Sustainable product selection

Sustainability as differentiator

Proper

Responsible Consumer

Recycle and reuse of products and packaging

Judicious use of product

Avoid over

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Fair wages Local

community Waste mgmt. Prevention of

bio-diversity Emissions and

working conditions

Energy efficient processes, technology, lighting and buildings

pollution Cold storage Frozen and

cold vehicles Leaks and

emissions during transport

Avoidance of child labour

Packaging waste

Fare wages Equality for

women workers

process technology

Eco-friendly packaging

Waste management

Energy efficient machines and processes, buildings

Labour welfare Health and safety Wages Lean

manufacturing Material usage Water, soil and

air pollution

packaging material

Green fuel based vehicles

Reverse logistics

Energy efficient warehouses and cold storages andvehicles

Emission and leak control

Safety in material handling

Proper lebelling

Conformance to standards in storing and packaging

Energy efficient storages and buildings

Information sharing with customers

Health and safety

Carrier bags and packaging

Avoid over consumption

Energy saving devices

Use of take back system

Return of packaging material

Waste disposal

Change in habits and attitude

Social responsibility

Issue 2Stakeholders : Sustainability Cloud Model

EmployeesNGOs

Food and Water

Waste and Toxicity

Social Justice

Employees

Customers

Media

Chain Members

Solution Providers

NGOs

Academia

Markets

Governments

Insurers

The Public Investors

BanksNonfinancials /

Reputation

ICT …

• Information and communication technology (ICT) is a set of heterogeneous technologies (hardware and software) that allow for electronic communication, data collection and processing in distributed networks. processing in distributed networks.

• ICT differs in complexity, ranging from simple electronic communication, like e-mail, to interactive and highly intelligent applications in traffic management and control systems, and in value webs.

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Various ICT Solutions

Sn Solutions

1 Continuous communication (satellite, web based)2 Goods monitoring3 Information systems for inland navigation 3 Information systems for inland navigation 4 Information systems for intermodal transport 5 Intelligent cargo information system6 Traffic management of individual vehicle/fleet7 Integrated Custom information system 8 Route Planning & Optimization System

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Issue 3:Impact of ICT solution - Information systemsfor Intermodal Transport

Sn Impact

1 Reduced GHG , ozone depletion Reduced GHG , ozone depletion 2 Promotion of green corridors3 Return & recycle of empties4 Efficient load factor 5 Paperless operations

Effective monitoring8/10/2013 13

ICT Benefits

1 Mapping the location of vehicle on e-map2 Control of engine parameters 3 Allowance for fuel consumption 4 Temperature & other parameter control4 Temperature & other parameter control

5 Online tracking of Cargo 6 Calculation of optimal routes7 Electronic Documentation Management 8 Reporting of abnormalities

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Key logistics activities indicators (KPI)

Sn KPI

1 Total Logistics cost 2 Quality of logistics services 3 Lead time in logistics cycle 4 Productivity (Infrastructure, personnel)5 Investment in logistics infrastructure6 Wastages

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Issue 4Scorecard: Pyramid of “Value”

TangiblesFinancials

Intangibles - NonfinancialReputation – GoodwillBrand ImageStakeholder RelationshipsSocietal Impression

Source: Willard, 2009, “The business case for sustainability”, Green innovations conference, www.sustainabiltyadvantage.com

Issue 4:Scorecard - Sustainable Pyramid

TangiblesFinancials

20%

IntangiblesNonfinancials

Reputation80%

Scorecard in terms of ..

• Environmental performance

• Economic performance

• Health & Safety performance

• Societal performance• Societal performance

• Cultural & Ethnic performance

Each of the above to be evaluated for• Customer perspective, Internal perspective• Learning perspective, Financial perspective

8/10/2013

Sustainability Scorecard

Environmental performance

Economic PerformanceVision and strategy for

Health and Safety Performance

Customer perspective- Increase in product safety

Internal perspective- No. of accidents/

incidences/ year Learning and growth

Customer perspective-Customer query time

Internal perspectiveInventory turn over ratio

Customer perspective- Reduced packaging in %

Internal perspective- Reduction in material usage

Learning and growth perspective- EMS implementation

Financial Perspectives- % recycled material used

Social Performance

Economic Performance strategy for sustainability

Cultural and ethnic Performance

Health and Safety Performance

Customer perspective- Code of conduct and ethical guidelines

Internal perspective- Use of child labour

Learning and growth perspective-Social auditing

Financial Perspective- Fare wage scheme

Customer perspective- Increased pride

Internal perspective- Employment to minorities

Learning and growth perspective- No of events arranged

Financial perspective- Cost of culture conscious

initiatives

Learning and growth perspective

- Information transparency Financial perspective

- % of revenue allocated to H &S

ratio Learning and growth

perspectiveEmployee training yearly

Financial PerspectivesReturn on Investment

Issue 5: Action Agenda..

1. Improve the accounting in order to highlight the costsassociated with ICT operations

2 Develop a comprehensive methodology forassessing the impact of ICT solutions on totalassessing the impact of ICT solutions on totallogistical costs.

3 Develop a methodology for evaluating the use ofinvestments in logistics infrastructure

4. Evolve a multi-stakeholders’ perspective

Implications..

• Interpretation of sustainability – Addressing key business issues in logistics

• Role of IT – As an enabler, as a catalyst for reduction of waste and as an integrator reduction of waste and as an integrator

• Engage and partner with stakeholders

• Make connections & integrate sustainability within and across our business

• Huge challenge – policy integration and intergenerational equity

Challenges..

• Interoperability

• Sharing between Public and Private

• Security issues

• Standardization of protocols • Standardization of protocols

Industry & Academia collaboration isa “must “ for the above.

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Observations..

• Sustainability using ICT offers a challenge : As a change driver, as a stimulus for innovation

• Addressing social issues by creating shared value will lead to self-sustaining ICT solutions that do not depend on private or government subsidies. depend on private or government subsidies.

• A balanced scorecard need to be evolved

• “When a well-knit business applies its vast resources, expertise, and management talent to sustainability problems , it can have a greater impact on social good”…*

• *“The Link Between Competitive Advantage and CSR” Michael E. Porter and Mark R. Kramer, Harvard Business Review, December 2006

Closing remarks..

• We can start now & We must start now !

• Think of sustainability as a strategy and not as an initiative

• Focus on long term picture not just ROI • Focus on long term picture not just ROI

Useful resources

www.tomorrowscompany.com

www.sustainability.com

www.sustainabilityresearch.org (Research Network for Business Sustainability)

• Shukla, A.C., Deshmukh, S.G. and Kanda, A. (2009),” Environmentally Responsive Supply Chains: Learnings from Indian Auto Sector” Journal of Advances in Management Research, Vol. 6, No. 2, pp. 154-171.

• Shukla, A.C., Deshmukh, S.G. and Kanda, A. (2010), “Flexibility and Sustainability of Supply Chains: Are They Together?” Global Journal of Flexible Systems Management, Vol.11, Nos.1 & 2, pp 25-38.

Thank you very much !deshmukh.sg@gmail.com