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Going Green and the Impact on Supply Chain Efficiency

James Smith's picture

James Smith is an avid prepper with a passion of self protection at all levels. He loves to write articles on environmentalism and green living. Currently he is promoting self sustainability and...

  • Member since 2018
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  • Apr 7, 2016
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A good supply chain operation is the heart of modern business. The current advancement of green technology and environmentally safe fuels is the most important development in all industries.

Certain incentives often push businesses to make huge shifts in their business practices. The same happens with the transportation and logistics businesses. This is especially true when it comes to shifting to green fuels. Having said this, there are other factors which drive businesses to adopt modern methodologies to save money and protect the environment.

Logistic companies and supply chain departments, like any other business in tough business times, are only trying to sustain and make a profit in difficult economic conditions. This means that often the biggest factor involved in adaptation to modern technologies is the cost involved in modernizing fleets and equipment.

Here are some financial incentives that will help logistics businesses and supply chain departments if they go green.

Fuel savings

As fuel prices fluctuate, anything that helps cut down on fuels expenses is much appreciated. To save on fuel, upfront costs involve setting up a workshop and a fleet of green fuel trucks. This can involve either purchasing new trucks or making needed modifications to an existing fleet. If carefully handled to improve fuel economy, companies can cut back a huge amount of money on logistics costs.

For example, by only changing to fuel-efficient tires, companies can shave about 10 percent off overall operation costs. Cutting down on idle time can even cut down on fuel consumption by as much as 20 percent. If supply chain operations can cut down on fuel consumption, their costing will be less vulnerable in the event of gas price fluctuations.

Tax reduction incentives

Cutting down on exhaust and heat emissions allows operators to acquire green certifications and rebates. Some states are also going a step further to push companies to invest in green technologies. These states are offering incentives for companies to adopt practices that create a healthy planet for our generations to come.

For example, Washington State doesn’t charge sales tax on renewable energy equipment sold or purchased in the state. The majority of businesses who provide supply chain solutions, or have their own supply chain departments,tend to operate across several states. It’s therefore important for managers and business owners to keep a lookout for various incentives and opportunities offered by the different states that they operatewithin.

Gradually upgrade along with regulations

Legislators are working hard and making serious decisions to create awareness about the importance of healthy environment. They are setting up incentive plans to attract people to change their patterns.

As of 2014, nineteen states have idle-free legislation on the books requiring trucking companies to eliminate idle time as much as possible. The majority of the states have already set up emission laws as well, and others are following the initiators.

It’s easier to gradually upgrade equipment, instead of changing it all at once. This creates less hindrance to keeping the fleet mobilized when new regulations are set in place.

Cut down on maintenance costs

Upgrading to new fleets, and updating the associated equipment, may first appear to be an optional cost. However, it saves fortunes for operators in the long run. In fact, the more they run their fleets, the sooner they’ll reach their break-even point.

The good news for business owners and supply chain management is that upgrading fleets straight away means lesser maintenance costs.This enables the fleets to be mobilized with more on-road time – which also means more business.

The “green” marketing edge

Any company who has invested in setting up green infrastructure usually also shares it as a matter of pride. They tend to begin participating in creating greater awareness towards greener practices for a healthier environment.

In this modern era the majority of people are encouraging environmentally safe businesses. The marketers call it a “green advantage” and it’s a way of companies to “toot their own horn.”For businesses who want to gain a competitive edge, greening their supply chain is definitely the way forward, in more ways than one.

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Thank James for the Post!
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