How Green is Your Supply Chain?

Going green may be unavoidable, but how fast and how far you go is up to you


For most businesses, the question of reducing their carbon footprint is not a question of when, it's a question of how much and how fast.

The rising cost of energy is a key motivator. A global IBM survey of nearly 1,400 small and midsized businesses identified energy as the biggest cost increase over the past two years, surpassing healthcare, payroll, rent and equipment. Not surprisingly, 58 percent of these companies expressed concern about the environment, and 44 percent have put environmental policies in place.

Another factor behind the drive to make businesses greener is customer demand. Companies that can visibly demonstrate how they are reducing their impact on the environment can gain an advantage over competitors and strengthen their brand image.

For businesses that keep an eye on Capitol Hill, there is an additional reason to begin reducing their carbon footprint today — pending regulatory change. Policies to cap greenhouse gas (GHG) emissions and put a price tag on them are already in place in Europe, and similar schemes are popping up across the United States. Last October, America's Climate Security Act was the latest of nine bills to combat climate change introduced in 2007 alone.

The logical place to start reducing your carbon footprint is within the four walls of your business. But according to Manhattan Associates, an IBM business partner and leading provider of supply chain optimization solutions, you may end up simply transporting the problem to another spot in your supply chain. It's like squeezing a balloon — the carbon reductions you achieve may increase the carbon footprint of your suppliers or customers. For example, you might change your manufacturing process to use more environmentally friendly materials that must be sourced from further afield. The net result is a more eco-friendly product for your company, but more greenhouse gas emissions generated by the trucking company you use to deliver raw materials.

The answer is to take an end-to-end view of your supply chain, but adopt a stepwise approach. Begin with easy-to-implement local improvements and build toward longer-term optimizations that involve your extended supply chain. The following steps provide an evolutionary path:

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