Reducing the Carbon Footprint in the Supply Chain
Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption (supply chain). One of the problems is where does the chain end and where does it begin.
Supply chains are critical links that connect an organization's inputs to its outputs. Traditional challenges have included lowering costs, ensuring just-in-time delivery, and shrinking transportation times to allow better reaction to business challenges. However, the increasing environmental costs of these networks and growing consumer pressure for eco-friendly products has led many organizations to look at supply chain sustainability as a new measure of profitable logistics management. Once that is resolved then what aspect do you optimize? In this case, we will consider minimizing the carbon (carbon dioxide) footprint.
A carbon footprint has historically been defined as the total set of greenhouse gas (GHG) emissions caused by an organization, event, product or person. However, calculating a carbon footprint that conforms to this definition is often impractical due to the large amount of data required, which is often costly and time consuming to obtain. A more practical definition has been suggested and is gaining acceptance within the field. This new definition measures a carbon dioxide equivalent (CO2e) for typical greenhouse gases such as Methane and Carbon Dioxide.
The supply chain can be characterized as the production of raw materials, their transfer to and through various processing steps, and finally the final product shipping and receiving. Each step requires a review of combustion/energy emissions, waste disposal emissions, transportation energy costs and emissions, and packaging related emissions. It is similar to a life cycle or analysis for a product but more related to the supplier activities. A product life cycle would have to include any related waste disposal emissions of the product in question.
There are many key questions that will need to be asked such as: "Where do we start to measure in the supply chain?", "Where do we stop?" and "How can we cost-effectively analyze huge volumes of often poor quality carbon emission data?".
In order to effectively manage such a volume of data and then reduce the carbon footprint, one must have the following in place
1. A clearly understood and relatively simple means of measurement
2. Commitment from all suppliers
3. Accurate and timely reporting with real numbers where available
4. A clear picture of what parts of the supply chain are to be measured
5. Small suppliers may have difficulties supplying data and support for them must be considered
6. Quick review of the data collected and discussion with the suppliers as to what it means and what to do.
Once the measurements and reporting have been done, how does one go about reducing emissions, particularly in the transportation and delivery segment? Every chain will have different results but there are some commonalities in terms of potential issues:
1. Logistics Planning (all transportation related activities)
a. Shipment consolidation (full shipments are better than partial)
b. Route lengths
c. Backhauls where possible
d. Lack of desire by suppliers to share shipments as opposed to retaining control
a. Reduce volume and mass of packaging
b. Reusable or recyclable packaging
3. Reconsider some popular business practices
a. "Just in time" puts a premium on fast small deliveries as opposed to bulk and less frequent deliveries
b. Obviously there are other factors involved that must be considered such as storage costs/emissions
Finally a supply chain analysis must issue some sort of review report to the suppliers and initiate discussion. Where there is a choice between suppliers, the better one may be selected.
For further information: http://sustainableindustries.com/articles/2011/10/reducing-carbon-footprints-supply-chain or http://www.epa.vic.gov.au/climate-change/carbon-management/resources.asp or http://www.epa.gov/epawaste/partnerships/wastewise/carboncalc.htm or http://www.epa.gov/climateleaders/documents/resources/managing-supplychain-emis2010.pdf