A growing number of companies are documenting their carbon footprint in the annual reports. Here’s an insightful perspective on how technology can be applied as a powerful tool to improve corporate efficiency and sustainability.
PhD, Senior Partner, Chain Connectors, Inc.
Sustainability is one of the hottest current buzzwords in the supply chain community. Reducing a company’s impact on the environment through energy efficiency and reduction of pollutants are two of the benefits of a focus on sustainability. We are now all aware that many firms are proactively trying to make their businesses more sustainable — whether out of a desire to be good corporate citizens or to prepare for anticipated changes in regulations. We see many companies who are making a commitment to listing their carbon footprint in the annual report.
When the request arrives on the supply chain manager’s desk to come up with the carbon footprint of the supply chain, he or she may not know where to start. However, there is help — supply chain software applications can help improve the efficiency of a company’s supply chain operations and therefore improve sustainability of a company.
From a more strategic modeling (six-month to three-year horizon) perspective, network design is a proven technology for helping firms determine the optimal number, location, and size of their warehouses, plants and production lines. These tools are powerful because they allow you to consider the cost across the entire supply chain, as well as to account for such factors as service and risk. Adding carbon modeling to network strategy tools is a natural extension. These types of tools are built to model the entire supply chain—from suppliers to manufacturing sites to warehouses and on to customers.
What questions should executives ask when looking at software to help improve sustainability?
Does the software allow you to model carbon emissions at all steps of the process?
When firms are modeling their supply chain’s carbon footprint, it is important to capture the emissions in each leg of the transportation process, emissions of each stage of the manufacturing process, and the emissions at each of the warehouses. You may also want to consider the amount of emissions you are responsible for if you share transportation with other firms. Like costs, carbon emissions can vary from location to location and can vary with the type of transportation equipment you are using. You need to have the flexibility to capture these differences as well.
• Does the software allow you to model the carbon emissions along with cost and service information?
You do not want to model your carbon emissions in a vacuum. You want to understand how changes in your supply chain impact the carbon emissions, costs, service, and risk.
Does the software come with standard carbon emission databases?
Carbon modeling tools now come with standard databases. Since modeling carbon emissions is relatively new, having standard databases available to you gives you a jump-start on the data collection.
Does the software allow you to optimize using carbon as a parameter?
There are tools that allow you to consider the carbon emissions directly in the optimization. For example, these tools allow you to determine the lowest-cost supply chain structure that delivers a 10% reduction in carbon. This way, you can let the optimization engine do the heavy lifting and figure out the most efficient way to remove emissions from your supply chain.
As sustainability continues to grow in popularity, supply chain executives can be better prepared to improve a company’s environmental impact with current software tools. Through the use of these tools, firms can identify ways to track and reduce their carbon footprint — a responsibility supply chain executives did not have to worry about in the past.