Research Maps a Greener Future for E-Commerce
The 2019 holiday peak buying season is fast approaching, and as has happened in past seasons over recent years, e-commerce volumes will probably reach unprecedented levels. It is also likely that e-commerce will attract criticism for its poor sustainability track record.
Online retailers have attracted the ire of environmental groups for sending huge volumes of cardboard and plastic packaging to landfills. Swarms of package delivery vans pump greenhouse gases into the atmosphere.
Alexis Bateman and Ken Cottrill, MIT Center for Transportation & Logistics
Reports of poor working conditions in warehouses, low pay, and walkouts in European distribution facilities reinforce e-commerce’s reputation as a sustainability villain.
A recent Wall Street Journal investigation into Amazon.com Inc.’s apparel sourcing practices in Bangladesh found that “the online giant runs its platform without many of the constraints that big US companies apply to their products and stores, sometimes in ways that can put customers and workers in danger.”
The flip side
However, e-commerce has the opportunity to adopt more sustainable business models and burnish its sustainability credentials. An example is the development of closed-loop or circular supply chains, widely considered as critical to a sustainable future.
To refashion supply chains into a closed-loop, companies need channels for the return of products. This has always been a challenge for linear, forward-facing supply chains. E-commerce companies are developing multiple return routes for their products, channels that could be used to support circular supply chains. A research collaboration between MIT CTL’s Sustainable Supply Chains initiative and a leading consumer goods manufacturer is exploring ways to harness e-commerce for the return of packaging and end-of-life products.
Accurately forecasting demand and matching it with supply are other time-honored challenges in the supply chain world. From a sustainability standpoint, it is vitally important that companies get this balancing act right to minimize or avoid excess product. The application of machine learning is refining demand forecasts — and e-commerce is playing its part. Online sellers are collecting vast volumes of data on customers’ buying preferences. E-commerce companies armed with highly detailed customer profiles are improving demand forecasts and getting better at answering the all-important question: what and when does a consumer want to buy?
This intimate knowledge of customers’ buying habits can extend to attitudes towards sustainability. Experiments conducted by MIT CTL’s Sustainable Logistics initiative with one of Mexico’s largest retail e-commerce companies show that 70% of surveyed customers claim to be willing to extend delivery windows by four days on average after learning about the environmental impact of their initial buying choice. Importantly, the researchers found that providing information on the effects of their purchase in terms of carbon emissions hardly swayed individuals’ buying decisions. However, tying the number of trees required to offset the environmental impact of, say, choosing fast shipping, did persuade many buyers to select more environmentally friendly delivery options. The implication is that e-commerce companies can encourage sustainable purchasing if they frame the shipping options in a certain way.
The dramatic growth in e-commerce deliveries has spurred research on ways to ease traffic congestion and improve vehicle utilization in urban areas, especially in densely populated cities. For example, the MIT CTL Megacity Logistics Lab is working with leading companies to reconfigure urban distribution networks and introduce more sustainable last-mile delivery models.
A groundbreaking sustainability study
A study launched in October 2019 aims to shed more light on the sustainability of supply chains — including those that support e-commerce.
MIT CTL and the Council of Supply Chain Management Professionals have teamed up to launch the annual State of Sustainable Supply Chains Report to help companies gain a better understanding of the importance of supply chain sustainability to their enterprises, industries, and the planet.
The annual State of Sustainable Supply Chains Report will provide answers to questions such as which actions and projects deliver the most bang for the buck, and how much are companies investing in supply chains that minimize their environmental impact and support favorable social conditions.
Supply chain professionals are asked to complete a 10-minute survey for the report. Practitioners who complete the survey will receive an advance copy of the report once available.
The State of Sustainable Supply Chains Report survey is open now and will remain open until November 12, 2019. The report will be available to respondents and collaborators in early spring 2020 and to the general public by late spring. For more information, contact Dr. Alexis Bateman (hickmana@mit.edu).
The role of e-commerce in supporting closed-loop supply chains will be explored at the MIT CTL Toward Circularity in the Supply Chain roundtable, on December 4, 2019.
image credit: https://www.flickr.com/photos/serafa/
