Source: adapted from Böge, S. (1995) “The well-travelled yogurt pot: lessons for new freight transport policies and regional production”, World Transport Policy & Practice, Vol. 1, pp. 7-11.
One dimension of green logistics concerns food supply chains and the growing awareness that supplying food products to consumers concerns large distances. The term food-miles has been brought forward to try to capture the distances involved in all the stages and processes of food production, from the farm up to the consumer. It is assumed that more food-miles are related to less environmentally efficient supply chains.
A classic example concerns a yogurt supply chain in south Germany. Although a simple product, a yogurt pot involves a wide variety of components ranging from milk, sugar, and jam (product) to labels, jars, and boxes (packaging). The above map shows direct, first-order relations between the manufacturer with its suppliers and customers (second tier relations, such as for the supplier of a supplier, are not depicted). It may indicate that the supply chain is environmentally damaging because of the distances involved and that these distances should be shorted to achieve greener logistics. However, statements in the line that supply chains should be more locally and regionally focused can be misleading. The following nuances should be considered:
- Input weight factor (material index). Location theory has underlined that the weighting of the industrial inputs often influences a location. The higher the material index of input, the more important it is as a location factor. A yogurt pot can be considered a bulky product with more than 85% of its weight (milk and sugar) and 90% of the package (glass jars) being sourced regionally. Other inputs play a small, if not negligible role. From an input weight factor perspective, the concerned food supply chain appears much more optimal.
- Different location factors. Suppliers within a supply chain may have different location factors that may appear to be far from optimal in relation to their customers. Still, they can be optimal in relation to their suppliers. Changing their location to optimize one supply chain (or simply one segment) could lead at the aggregate level to diseconomies for other supply chains.
- Economies of scale and regional specialization. The extension of food miles is, in part, reflective of emerging regional specializations in food production, many in developing countries where agribusiness is a growing source of employment and income. The benefits derived in terms of lower input costs and economies of scale may out weight higher transport costs.
Consequently, the example of the yogurt pot as an environmentally damaging supply chain is mostly inaccurate and misleading. Striving to shorten supply chains may appear at first glance to be imminently desirable. Still, they must be considered within a broader context, namely the nature of the inputs and the location factors of the suppliers.