Sustainability / Reading time: ~ 3 Min.

Green Supply Chain for the Automotive Industry

Automotive

Meeting the climate targets poses major challenges for the entire transport sector and especially for the automobile industry. Logistics services are an effective lever for reducing the environmental footprint of the automotive industry. Targeted measures and intelligent process management can lead the way to a green supply chain.

Sustainability in the Automotive Sector: More than the Car Itself

The leitmotif that moves the automotive industry is “sustainable mobility”. An industry which is a key sector of the German or French economy aims to become more ecological and wants to offer climate-friendly products for the still unbroken demand for mobility. Car buyers of today not only care about the climate-friendly operation of the vehicle itself, but also about the carbon footprint of its production and green supply chains. Because when it comes to the overall life cycle assessment of a new vehicle, it is not just the operation that counts, but also the CO2 emissions of the production and supply chain.

Sustainability is a key condition for tomorrow’s economic success in all branches of industry including the automotive sector. Chief Environmental Officers are developing green concepts for a balanced carbon footprint, and the supply chain is also coming into focus. Potential savings in the area of supply chains and transport logistics are helping to improve the ecological performance of companies in the automotive industry.

Bakers need flour, carpenters need wood – and carmakers need steel. This may be trivial, but it does serve to illustrate one point: In some industries, green business operations demand a much greater effort than in others because of the specific production requirements. A means of production like steel puts a strain on the eco-balance of every industry that relies on it. And in the future, the automotive industry will continue to be a priority customer for steel producers, because even the fully connected smart car of tomorrow will be driven on the road and not in the cloud. It will need a body and an engine.

There is a dilemma: In the corporate carbon footprint of car manufacturers, body and engine production still accounts for the lion’s share, but it is precisely here that the commitment to sustainability comes up against understandable and production-specific limits. It is true that with increased efficiency, innovative technologies in steel production, or optimized material composition, a lot of CO2 can be saved to improve the environmental performance of the automotive sector. However, green steel is not only cumbersome in production and expensive, but also not (yet) sufficiently available.

E-vehicles do not make it easy for manufacturers either, as battery production is responsible for a large amount of greenhouse gas emissions. And in addition, there is the mining of such minerals and metals as lithium, cobalt, nickel, and copper: essential components in battery production. The ecological traffic turnaround in industrial societies makes these minerals and metals globally sought-after raw materials, the extraction of which can be associated with serious environmental impacts and, in some cases, human rights violations.

Green Supply Chain: Great Potential for the Carbon Footprint

Under these circumstances, it is a major challenge to make the production in the automotive sector environmentally friendly in the short term. That is why it is worth exploiting the ecological potential of a green supply chain. In Germany, the largest location for automotive production in Europe, the Association of the Automobile Industry (Verband der Automobilindustrie – VDA) and 14 other members have founded an association to improve the sustainability of their supply chains: the Responsible Supply Chain Initiative (RSCI).

The 15 founding members include almost all German carmakers and major suppliers. Large parts of the industry have thus recognized the supply chain as an effective starting point for a more sustainable business. This determination to achieve environmental success along the supply chain is evident throughout the industry. On top of that, there is the expectation of the public. This affects OEMs (original equipment manufacturers) in particular, as they are simply more visible. But green business is also becoming increasingly relevant for suppliers.

A study on the green transformation in the automotive industry from the fall of 2021 revealed that for 61% of the participating companies, sustainability aspects are a decisive criterion when selecting cooperation partners and suppliers. Compared to previous studies, this figure is significantly higher, and the importance of having a green vision is likely to grow among suppliers.

Implementing Green Supply Chain Management Together

Needless to say, the term supply chain refers to more than just the logistical aspects and includes the entire value chain. For this reason, RSCI has more than logistics in mind. The association is concerned with getting all those involved in value creation to act in a coordinated ecological manner. But when it comes to coordination, logistics is crucial: the individual stages of car production are interconnected via logistics. It is the vital link in economic life – in any branch of industry.

In terms of warehouse and transport logistics, a lot can be achieved very quickly to improve the environmental balance. Many companies in the automotive industry already pursue packaging or recycling strategies together with their suppliers. Nevertheless, there is still further potential for savings here. Since the introduction of a sustainable supply chain in the industry adds to the complexity of collaboration, data exchange, transparency, and flexible logistics processes are the key to success.

Green Supply Chain: What Potential Does It Have?

As the automotive industry changes, so do the associated logistical requirements. Alongside engines, batteries are becoming ever more important. This not only involves adjustments in production, but also special logistics concepts that consider the characteristics of the battery. Green management of supply chains implies less energy and fewer emissions during transport and storage, less packaging, and as few but precisely coordinated work steps as possible. Storage capacities are better utilized and empty runs avoided.

The better the logistical coordination, the greater the ecological added value. Admittedly, energy-intensive production or raw material procurement are dominant factors in the industry’s eco-performance, but the potential of the green supply chain should not be underestimated. And because only customized supply chains can be designed ecologically, a precise understanding of the industry’s needs is necessary. Against this background, it is good to know that the automotive sector is the largest single sector for DHL Freight.

Conclusion

The automotive industry strives to become greener in the short term and climate-neutral in the long term. CO2 can be saved more quickly in logistics than in vehicle production. A green supply chain improves the corporate carbon footprint – a potential that should not be left untapped. A logistics partner experienced in the automotive sector, such as DHL Freight, can support you in implementing a sustainable supply chain.

You Want to Learn More about this Topic?

The authors of our article will be happy to answer your questions. Just send us a message using the contact form and we will go deeper into the topic together.

Related articles

Sustainability

Standing up for forests

[The area covered by forests around the world is constantly receding. But every single new tree can help, as shown by DHL in India.

15. December 2016 / Reading time: ~ 1 Min.