What is Green Logistics? A Dive Into Maruti Suzuki's Success

Green Logistics

Green logistics is gaining more momentum globally as businesses recognize the importance of reducing their environmental footprint. “The greatest threat to our planet is the belief that someone else will save it,” remarked Robert Swan, renowned polar explorer and environmentalist. This sentiment is at the core of Maruti Suzuki’s recent milestone: dispatching 2 million vehicles through Indian Railways, underscoring their leadership in sustainable logistics.

1. The Growing Importance of Sustainable Supply Chains

According to the MIT Sloan Management Review, sustainability is considered crucial by 90% of company executives, and 60% of companies now have a sustainability strategy. The International Transport Forum (ITF) estimates that around 30% of transport-related CO2 emissions and 7% of global emissions are from fuel combustion used in global trade-related freight transport. These figures emphasize the urgency for industries to address the environmental impact of their logistics operations.

The reorientation in the Global Supply chain presents opportunities and challenges, especially for countries like India. The demand for environmental and social accountability from multinational companies (MNCs) and conglomerates to their suppliers has been increasing remarkably. According to a 2022 survey, environmental policies have been implemented by 54% of MNCs in Asia, however, only 19% of local and regional companies have shown interest in the same. Indian manufacturers must endorse and embrace global best practices including thorough ESG reporting to attract and retain sustainability-conscious buyers.

2. Maruti Suzuki's Commitment to Green Logistics

Maruti Suzuki India Limited (MSIL) has made significant progress in green logistics by dispatching 2 million automobiles via Indian Railways, they have achieved a milestone. This accomplishment emphasizes the company’s commitment to sustainable practices and positions Maruti Suzuki as a leader in sustainable green logistics.

Maruti Suzuki is the first company in India to obtain the Automobile-Freight-Train-Operator license as over a decade ago, they introduced railways for automobile dispatch. Since then, the company has systematically increased its share of vehicle dispatches using railways, growing from 65,700 units in FY 2014-15 to 447,750 units in FY 2023-24. This shift to rail transportation has resulted in significant environmental benefits, including a cumulative reduction of approximately 10,000 metric tons of CO2 emissions and savings of around 270 million liters of fuel over the past decade.

Mr. Hisashi Takeuchi, Managing Director & CEO of Maruti Suzuki India Limited, emphasized the company's dedication to green logistics: "Through our sustained efforts in green logistics, we have achieved outstanding results. With our production capacity nearly doubling to 4 million units by FY 2030-31, we plan to augment the use of railways in vehicle dispatches to close to 35% over the next 7-8 years. We stand committed to the Government of India’s net zero emissions target by 2070."

3. The Broader Context of Green Logistics

Supply chains are responsible for up to 11.4 times more emissions than direct company operations, making them a critical focus for reducing environmental impact. Green logistics encompasses various practices designed to minimize the ecological footprint of logistics networks and delivery systems. Maruti Suzuki's achievements are part of a larger movement towards sustainable supply chain management.

Governments worldwide are also driving the shift towards sustainable logistics through regulations on emissions, waste management, and fuel efficiency. The green logistics market, valued at USD 1.3 trillion in 2022, is projected to grow to USD 2.47 trillion by 2030, reflecting an annual growth rate of 8.35%. This growth is driven by increased awareness among companies and consumers about carbon emissions, sustainable packaging, and alternative fuels.

4. Applications of Green Logistics

Green logistics encompasses various practices and technologies designed to minimize the environmental impact of logistics networks and delivery operations. Here are a few key applications:

4.1 Optimized Route Planning and Delivery

One of the most significant applications of green logistics is optimizing delivery routes to reduce fuel consumption and carbon emissions. Using advanced route planning software, logistics companies can ensure that vehicles take the most efficient paths, thereby minimizing the distance traveled and maximizing fuel efficiency. This cuts down on greenhouse gas emissions and reduces operational costs.

4.2 Sustainable Packaging Solutions

Packaging is a major contributor to waste and environmental degradation. Green logistics promotes the use of sustainable packaging materials such as recyclable, biodegradable, and reusable options. Companies like Dell have pioneered the use of bamboo and mushroom-based packaging, significantly reducing plastic waste. These eco-friendly packaging solutions not only help in minimizing environmental impact but also resonate well with environmentally conscious consumers.

4.3 Adopt Electric Vehicles (EVs)

Adopting electric vehicles (EVs) and vehicles powered by alternative fuels is another critical application of green logistics. By transitioning to EVs, companies can drastically cut down on emissions from fuel combustion. Intelligent fleet management systems can prioritize the dispatch of eco-friendly vehicles, further enhancing the sustainability of logistics operations. Maruti Suzuki's initiative to use Indian Railways for vehicle dispatches is a notable example of reducing reliance on traditional road transport.

5. Strategies for Implementing Green Logistics

To effectively implement green logistics, companies need to adopt a comprehensive approach that integrates various sustainable practices. Here are some measures that should be taken:

5.1 Incentivize Sustainable Delivery Options

Companies can encourage customers to choose more sustainable delivery options by offering incentives at checkout. For instance, promoting longer delivery times can help optimize dispatching and routing, reducing the number of trips and emissions. Offering discounts or rewards for selecting eco-friendly delivery options can significantly increase customer participation in green initiatives.

5.2 Automate and Optimize Logistics Operations

Automation plays a crucial role in enhancing the efficiency of logistics operations. Implementing automated route optimization, order batching, and intelligent fleet management can reduce the environmental impact of logistics activities. These technologies help minimize fuel consumption and maximize vehicle efficiency by ensuring that deliveries are carried out in the most efficient manner possible.

5.3 Embrace Digital Transformation

Digitizing logistics operations is essential for reducing paper waste and improving efficiency. Companies should adopt digital solutions for tracking shipments, managing inventory, and processing delivery proofs. This not only cuts down on the environmental impact but also streamlines operations and enhances data accuracy.

5.4 Adopt Eco-Friendly Packaging

Transitioning to sustainable packaging materials is a vital step towards green logistics. Companies should invest in research and development to find innovative packaging solutions that are both eco-friendly and cost-effective. Collaborating with suppliers of recyclable and biodegradable packaging materials can significantly reduce the environmental footprint of logistics operations.

5.5 Prioritize Local and Hyperlocal Deliveries

Performing deliveries from local stores rather than regional warehouses can cut down on transportation costs and emissions. Hyperlocal fulfillment enables faster and more efficient deliveries, reducing the need for long-distance transport. Using bikes or other low-emission vehicles for urban deliveries can further minimize the environmental impact.

6. Conclusion

Maruti Suzuki's milestone of dispatching 2 million vehicles via Indian Railways highlights the company's leadership in green logistics. This achievement is a testament to the broader shift towards sustainable supply chain management, driven by regulatory frameworks, consumer demand, and innovative practices. As businesses worldwide prioritize sustainability, Maruti Suzuki's commitment to reducing its environmental impact sets a powerful example for other companies. Maruti Suzuki’s proactive approach to green logistics is a step towards ensuring that businesses meet their needs sustainably without compromising the well-being of the planet.

At 4PL Consultancy, we are dedicated to promoting and supporting green initiatives. As a service provider, we manage all research and document reporting digitally, ensuring a sustainable approach to our operations. Our services include comprehensive e-waste pick-up and disposal, helping businesses comply with regulatory authorities and manage their electronic waste responsibly. We also provide guidance on obtaining the EPR Certificate for e-waste management and navigating and reporting the complexities of the Carbon Border Adjustment Mechanisms (CBAM), ensuring compliance and minimizing financial impacts. Additionally, specialize in assisting companies with BIS registration and licenses, offering personalized support tailored to your product’s unique needs.

Green logistics is not just a trend but a necessary evolution in the way businesses manage their supply chains. Companies that adopt sustainable logistics practices stand to benefit from reduced operational costs, enhanced brand reputation, and increased customer loyalty. By focusing on optimized route planning, sustainable packaging, the use of electric vehicles, and embracing digital transformation, businesses can significantly reduce their environmental impact and contribute to a more sustainable future.

4PL Consultancy has a team of experts in Tariff classifications of wide variety of Product lines – Medical spares, Aerospace, Radiation Oncology machines & spares etc.