Principles of Sustainable Logistics

*Baha M. Mohsen*

## **Abstract**

Effective logistics largely contributes to the success of business through quick deliveries in minimum time and cost. Logistics is the process of getting material, product, and service where and when they are needed. When addressing the concept of sustainable logistics, it is important to consider the three dimensions of sustainability: economic, social, and environmental. Sustainable logistics is beyond going green and being environmentally friendly, it has an influence on manufacturing processes, starting from where raw materials are obtained, processes involved, use, and potential recycling of the product or service. In analyzing the problem of evaluating logistic operation performance, sustainability will be one among other criteria for evaluation. Selecting a logistics partner who cares about sustainability will help in achieving company's strategy. The chapter discusses the concept of sustainability applied to logistics. From the main definition of the logistics system, which includes the flow of materials and information, to the goal of sustainable logistics, which includes increasing profitability and reducing the environmental impact. Sustainable development involves coordination between environment and economics to reach social, economic, and environmental sustainability. The chapter aims to help managers, practitioners, scholars, and students to understand the key attributes of sustainable logistics and supply chain in general.

**Keywords:** logistics, sustainable logistics, green logistics, sustainable development, multi-criteria decision making, environmental sustainability, economic sustainability, social sustainability

### **1. Introduction**

Every aspect of our lives includes some form of supply chain and logistics, so the impact of these activities on the environment is of significant importance. The objective of this chapter is to introduce principles and practices that facilitate sustainable logistics operations in a holistic manner and consider factors of logistics affecting the natural environment beyond the usual factors of distance traveled, fuel use, and carbon dioxide (CO2) emissions that have been well discussed in freight transportation literature. Global business is more dominant these days, for example, many manufacturers produce their goods in lesser-developed countries, and then shipped all around the world. This requires global logistics to ensure timely and efficient global distribution of goods from producers to consumers. Logistics and supply chain management

(SCM) activities have a significant economic impact on countries and their societies. Grant et al. [1] reported these activities accounted for 8.3 percent of US gross domestic product (GDP) or US \$1.45 trillion in 2014 and 6.8 percent of GDP (€876 billion) across the European Union's (EU) 27 countries in 2012.

This chapter covers sustainable logistics. It starts by presenting an overview of logistics in the second section. The third section discusses the basics of sustainable development and sustainability. The fourth section introduces the basic concept of sustainable business as minimizing costs, which covers the three aspects of business: environmental, financial, and human. The fifth section discusses sustainable supply chain and logistics. As business is becoming more challenging these days, companies need to be aware of and practice sustainable supply chain management to stay competitive. Sustainable supply chain management is about environment protection, social responsibilities, economic growth, and profitability in the long term. It wraps up with a brief section on the evaluation of logistic operations. In addition to cost and speed criteria, sustainability should be introduced in the evaluation criteria.

## **2. Logistics**

Effective logistics largely contributes to the success of business through quick deliveries in minimum time and cost. Logistics is the process of getting material, product, and service where and when they are needed. It works to determine the temporal and spatial positioning of raw materials, work in progress, and finished inventories where they are needed and when they are required. Logistics can be categorized into subsistence logistics, operation logistics, and system logistics. Subsistence logistics is concerned with the basic human needs of food, clothing, and shelter within any given conditions, and it provides the foundation of operations logistics. Operations logistics goes beyond subsistence to systems involved in producing luxuries; it incorporates the raw material required by the enterprise in the production. System logistics includes all resources required in keeping a system in operating condition. These resources include personnel, test and support equipment, spare parts for maintenance, technical publication, and facilities. Thus, logistics systems consist of four main activities: purchasing management, inventory management, warehousing management, and transportation management.

Logistics is defined by the Council of Logistics Management (CLM) as "the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements" [2].

Effective logistics minimizes the cost of transportation, inventory, material handling, and other distribution-related activities. In light of the new trends in business, logistics have gained great importance. New trends include high production efficiency, change in inventory philosophy, high transportation cost, production lines replication, propagation of computers and technology, retails fast-growing, globalization, and reduction in economic regulations. Efficient logistics systems throughout the world business are a basis for trade and a better economy. It allows a geographical region to exploit its inherent advantage by focusing its productive efforts on those products in which it has been an advantage, which will result in competitive production cost, logistics cost, and quality compared to other regions.

Global logistics is growing and playing a vital role in international business. It ensures timely and efficient global distribution of goods from producers to consumers

#### *Principles of Sustainable Logistics DOI: http://dx.doi.org/10.5772/intechopen.103018*

through a connection of critical components of the supply chain from a product's point of origin to its point of consumption. It was reported that global container trade has increased on average 5 percent per year over the last 20 years and at its peak in the mid-2000s comprised 350 million 20-foot equivalent units (TEU) a year [1].

Advancements in information technology and communication, transportation and material handling, and high volume data processing and transmission are revolutionizing logistics control systems. The use of big data tools in logistics and supply chain management gives great advantages as it provides better decision making, improved efficiency, cost reduction, better risk management, and better visibility and competition [3]. Communication technology enables better, faster, and reliable supply chains, communications take place between any firm, suppliers, customers, and other members involved in the chain.
