As consumers become increasingly environmentally selective, companies are recognising that they need to optimize their supply chains not only in terms of the traditional levers of cost and service level, but also in terms of carbon emissions. Aggressive carbon targets are being set at board level and logistics managers need to ensure that their supply chains are able to achieve them. Unfortunately for most companies, simple operational changes alone will not be enough and before companies start making sweeping changes to their supply chains, it is critical that they plan and understand these changes properly.
Obviously the supply chain is an important area where companies can reduce their carbon footprint, but the bottom line is that over 80% of this target is only achievable at the design stage, was recently stated by a leader in this emerging field. We have worked with a number of companies on projects designed to analyse and reduce carbon emissions and our software solutions can calculate the carbon footprint of any supply chain together with optimal designs based on cost and service levels.
Indeed, one of the key challenges for any company bent on reducing their carbon footprint is how to measure it in the first place. There is currently no industry or global standard. However these software models take into account transport and warehousing operations as well as temperature control and intermodal solutions. This comprehensive approach, at the design stage, enables companies to look at a range of supply chain strategies and configurations for minimising carbon emissions.
Changing patterns in global trade mean companies need to look regularly at their supply chain structure to ensure optimum efficiency. These modular tools now provide the added functionality for organisations to consider carbon emissions during the network planning process, understand the cost of reducing emissions and make informed choices as to whether reductions in emissions can be made at a reasonable cost.
Indeed, sea transport is not only the most cost-effective transport method, but is also the least expensive in terms of carbon emissions. While organisations obviously utilize sea transportation from the Far East to Europe, for example, they may not be taking advantage of sea connections that can position goods even closer to their destination. Effective modeling therefore allows companies to evaluate supply chain design configurations and transport options that can reduce costs and carbon emissions at the same time.
One recently completed project for a global organisation saw a significant switch from road transport to sea transport. The result was a 9% reduction in supply chain costs and a 28% reduction in carbon emissions.
Sourcing goods from across the globe does not appear to sit well with ambitious targets for cutting carbon emissions. However by analysing the entire supply chain in terms of cost, service and carbon, companies can achieve a win-win-win situation.
To learn more about how your firm can calculate the carbon emmissions load of your supply chain and then develop optimized models to begin reducing this load just ASK and we’ll be happy to help you start down the road to increased corporate social responsibility with a more environmentally friendly supply chain.