Mastering Carbon Management

Balancing tradeoffs to optimize supply chain efficiencies



An estimated 4,100 tons of carbon emissions were avoided by importing "new world" wins in bulk and bottling them in lightweight glass in the UK. Improving product design not only produced savings for the glass manufacturer, but reduced the carbon emission through the entire lifecycle of a glass bottle.

Coordinating inventory and transportation among supply chain partners to reduce carbon impact can dramatically reduce mileage. Combining these efforts with low-emitting transportation options can further lower carbon output. Following this approach, Unilever, together with first- and second-tier suppliers and supermarkets, identified possible avoidance of 2.7 million miles per year.

Another example of collaboration among supply chain partners is returnable packaging, which unlike disposable packaging is intended for repeated use and can significantly reduce the impact of packaging-related carbon. This has proven effective for material supply in automotive and fresh-produce retailing supply chains.

Based on a defined environmental strategy, common ground should be cultivated with partners — especially in the areas of product design, packaging and logistics. Once the opportunities for improvements in carbon management are clear, collaboration and end-to-end supply chain optimization — based on balancing the desired outcomes in cost, service, quality and now the environment — can create a winning situation for all parties.

Conclusion

As you begin to tackle the issue of carbon management in your supply chain, there are several key questions to think about:

  • What is the "model" of your current carbon footprint? What processes within the enterprise and the extended enterprise are carbon-intensive? There are "componentized" modeling techniques that can help you to answer these questions.
  • What are the key green indicators that you should be measuring? What are the current targets and thresholds for improving and/or meeting regulatory requirements?
  • What are the critical tradeoffs, and the constraints and considerations, regarding the reduction of carbon in your supply chain — all the while maintaining service and quality and easing the cost impact? (Remember, the goal is not to reduce carbon at the cost of meeting your traditional supply chain objectives; rather, it is to make carbon reduction a means for achieving those objectives.)
  • If pursuing a collaborative approach for carbon management, how do you get partners on board, and how will you share risk, responsibility and value?

Fortunately, these are questions that companies do not have to ponder in the abstract. There are now modeling tools available that help companies come to grips with multiple and mutually-reinforcing challenges like packing options, alternate operational processes and transportation modes, and inventory and sourcing policies. These tools not only evaluate the problems, but make innovative recommendations as to the best ways to solve them.

In any event, the companies that turn the tables on the carbon conundrum could well be the leaders in the 21st century global economy.

About the Authors: Jim Bramante is managing partner, Americas, IBM Global Business Services; Sanjeev Nagrath is global leader, Supply Chain Management, IBM Global Business Services; and Karen Butner is global supply chain management leader, IBM Institute for Business Value. Jim Bramante can be reached at james.p.bramante@us.ibm.com, Sanjeev Nagrath can be reached at sanjeev.nagrath@us.ibm.com and Karen Butner can be reached at kbutner@us.ibm.com.


What does "Going Green" really mean? Supply and Demand Chain Executive here


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