In many ways, a company is only as green as its supply chain. But how in the world do you control that? Not an easy question to answer, but a good place to start would be measuring the footprint of your supply chain as it currently stands. After all, what gets measured can be managed.
Anyone who has looked at life cycle analysis (LCA) knows that the interconnections and interdependencies between companies and the many entities that they, their suppliers, and their employees interact with ultimately extend to the vanishing point. This infinity factor makes it virtually impossible to compute the footprint exactly, though “reasonable approximations” can certainly be made.
We have previously described efforts in this space by Walmart to set up a sustainability index that attempts to look at the entire supply chain’s impact. P&G is another company that has set up an ambitious effort to understand the size of the shadow it casts through its Supply Chain Scorecard project.
As a few companies at the head of the pack begin to work out their approach, these ideas are starting to coalesce in broader standards with the help of various NGO’s.
For example, just last week the World Resources Institute announced the launch of two new supply chain carbon emission standards they partnered with the Greenhouse Gas Protocol to release. These include the GHG Protocol Corporate Value Chain (Scope 3) and Product Lifecycle Standards. The preamble to the Value Chain Standard states that, “global carbon dioxide emissions must be cut by as much as 85 percent below 2000 levels by 2050 to limit global mean temperature increase to 2 degrees Celsius above pre-industrial levels.” This is serious business. GHG Protocol provides the foundation for sustainable climate strategies and more efficient, resilient and profitable organizations, based on the most widely used accounting tools to measure, manage and report greenhouse gas emissions.
The Scope 3 standard, which was developed as the result of a three-year multi-stakeholder process, includes both requirements and guidance for the expanded scope that goes well beyond a company’s direct emissions from facilities and vehicles (Scope 1), and purchased energy for their infrastructure (Scope 2 ), to include purchased goods and services, transportation and distribution, use of sold products, end of life product management, business travel, waste, investments, and other areas, for a total of fifteen, encompassing both upstream and downstream activities. Scope 3 will likely be the area where most companies will find both the largest opportunities for emissions reductions and the biggest tracking challenges. The standard includes emission of the six major greenhouse gases: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulphur hexafluoride.
Once the measurements have been done, how does one go about reducing emissions, particularly in the transportation and delivery segment?
GSC Motion breaks down the supply chain footprint into three areas: Movement, Space and Material.
Movement includes total inbound shipment of raw materials and parts, movement of material from work-in-progress to finished goods. It also includes total outbound shipments into the distribution network as well as reverse logistics for any product returns from customers.
In the areas of transportation, they make the following recommendations:
- Consolidate less-than-truckload shipments both inbound and outbound
- Use environmentally friendly logistics providers
- Reroute fleet vehicles
- Optimize truckloads
- Utilize rail or intermodal
- Utilize backhaul for return shipments
Logistics planning can certainly make a huge difference. According to a model-based joint study by several universities in the US and Hong Kong, “determining how frequently supply deliveries are made could be as important in mitigating carbon emissions as the energy efficiency of the vehicles used to make these deliveries.”
This study argues that certain popular business practices including just-in-time and lean production, with their frequent delivery requirement could be increasing carbon emission. The study concludes that operational decisions can, in some cases, have more of an impact on carbon footprint than the choice of equipment, particularly if collaboration and coordination is used between supply chain partners.
A number of companies are in the business of helping companies work through these issues. UPS has started up a new business with their New Logistics operation, a step reminiscent of IBM, which has their own with their transportation efficiency initiative, in the way that they are now offering their specific know-how as a service for sale. The use of information technology in this domain is really only just beginning to take off. Just as the Smart Grid is working to use information to move electrons more efficiently around the country, this type of logistics can do the same kind of thing with freight.
Other solutions are provided by companies that include things like fleet management software such as Roadnet, telogis, and others, to RFID providers like Zetes Visidot, Intermec and others which provides enhanced traceability of products on the move.
So, it would seem that the greener supply chain is going to be the one that is smarter and better connected to its partners.
[Image credit: Sirwiseowl: Flicker Creative Commons]
RP Siegel is the co-author of the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water. Like airplanes, we all leave behind a vapor trail. And though we can easily see others’, we rarely see our own.
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