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What are the emerging trends and technologies in cost accounting for green supply chain and logistics?

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Cost accounting is a vital tool for measuring and managing the environmental impact of supply chain and logistics activities. However, traditional cost accounting methods may not capture the full scope and complexity of green supply chain and logistics management. In this article, we will explore some of the emerging trends and technologies that are transforming cost accounting for green supply chain and logistics.

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1 Life cycle costing

Life cycle costing (LCC) is a method of cost accounting that considers the environmental and social costs and benefits of a product or service throughout its life cycle, from raw material extraction to disposal or recycling. LCC helps to identify the most sustainable and cost-effective options for design, production, distribution, and consumption. LCC also helps to evaluate the trade-offs and synergies between different stages of the life cycle and different stakeholders.

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Yankem nguenang Njampoun dief MBA

Highly analytical, result driven accountant skilled at working quickly and accurately under tight deadline. Adapt at all function of accounting, including balancing sheet, processing payments, managing account payables.
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LCC makes good sense regardless of a public authority’s environmental objectives. By applying LCC public purchasers take into account the costs of resource use, maintenance and disposal which are not reflected in the purchase price. Often this will lead to ‘win-win’ situations whereby a greener product, work or service is also cheaper overall. The main potential for savings over the life-cycle of a good and services.?

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2 Carbon accounting

Carbon accounting is a method of cost accounting that measures and reports the greenhouse gas (GHG) emissions associated with a product, process, or organization. Carbon accounting helps to assess the carbon footprint and the climate impact of supply chain and logistics activities. Carbon accounting also helps to identify the sources and opportunities for reducing or offsetting GHG emissions. Carbon accounting can be used to comply with regulatory requirements, to participate in voluntary schemes, or to communicate with customers and investors.

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3 Activity-based costing

Activity-based costing (ABC) is a method of cost accounting that assigns costs to activities rather than products or departments. ABC helps to identify the drivers and overheads of supply chain and logistics processes and to allocate costs more accurately and transparently. ABC also helps to improve efficiency and quality by eliminating waste and non-value-added activities. ABC can be used to support green supply chain and logistics initiatives such as lean management, total quality management, or eco-efficiency.

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Divya Pamnani

Finance Manager at Amazon | 8+ years of experience | Expert in FP&A, Financial Analysis & Reporting | MSF, CMA | Strategic Decision Support & Cost Optimization.
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processes, diverse product lines, or high overhead costs are more likely to use ABC. These industries often have a large number of activities that contribute to the production and delivery of their products or services, and ABC helps them identify the true cost of each activity.

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4 Blockchain technology

Blockchain technology is a digital platform that enables secure and transparent transactions and data sharing among multiple parties in a supply chain or logistics network. Blockchain technology helps to improve cost accounting for green supply chain and logistics by enhancing traceability, accountability, and verification of environmental and social performance. Blockchain technology also helps to reduce transaction costs, fraud, and errors by automating processes and eliminating intermediaries.

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5 Artificial intelligence

Artificial intelligence (AI) is a field of computer science that enables machines to perform tasks that require human intelligence, such as learning, reasoning, and decision making. AI helps to improve cost accounting for green supply chain and logistics by providing insights, predictions, and recommendations based on large and complex data sets. AI also helps to optimize processes, resources, and outcomes by enabling adaptive and responsive solutions. AI can be used to support green supply chain and logistics applications such as demand forecasting, inventory management, routing, or pricing.

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Faraz Saleem, CPA

Vice President Finance @ Plus Company | CPA
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AI-Driven Demand Forecasting AI can analyze large data sets from various sources, such as historical sales data, market trends, and customer behavior, to predict demand with greater accuracy. This enables businesses to optimize their production, purchasing, and distribution strategies, leading to reduced waste, lower emissions, and minimized costs. In addition, AI-driven demand forecasting can help companies identify potential risks and opportunities related to sustainability, enabling them to make more informed, eco-friendly decisions.

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6 Internet of things

Internet of things (IoT) is a network of physical devices, sensors, and software that collect and exchange data over the internet. IoT helps to improve cost accounting for green supply chain and logistics by providing real-time and granular information on the status, location, and condition of products, assets, and environments. IoT also helps to enhance visibility, control, and coordination of supply chain and logistics operations by enabling smart and connected solutions. IoT can be used to support green supply chain and logistics functions such as tracking, monitoring, or reporting.

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Faraz Saleem, CPA

Vice President Finance @ Plus Company | CPA
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Real-Time Tracking and Visibility IoT-enabled tracking systems provide businesses with real-time information on the status, location, and condition of their products and assets. This enhanced visibility allows companies to optimize transportation routes, reduce transit times, and minimize fuel consumption, thereby reducing the environmental impact of their logistics operations. Additionally, IoT-driven tracking solutions can help businesses prevent losses and inefficiencies due to theft, damage, or misplacement, ultimately improving cost accounting.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What are the emerging trends and technologies in cost accounting for green supply chain and logistics?

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1 Life cycle costing

2 Carbon accounting

3 Activity-based costing

4 Blockchain technology

5 Artificial intelligence

6 Internet of things

7 Here’s what else to consider

Accounting

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