Supply Chain Networks and Carbon Reporting

Over the next several months the globalization of carbon reporting will begin to emerge. This will be driven by the entry of the United States into a mode of preparation for carbon reporting which will likely be done based on a coordinated North American initiative.

So what does carbon reporting mean? Well there are many approaches currently being taken today by different companies, countries and entities, from basic spreadsheet approaches all the way through to very sophisticated and integrated supply chain carbon reporting models.

Our Reporting, Taxes and Trading category will provide you with additional insight into the current state of development of global reporting standards. Approaches include cap and trade where caps are set for given company and industry types, carbon footprint measured and then credits issued for tons below cap and company’s having to purchase credits to offset their carbon above cap. Other approaches include taxing specific products or product classes which generate carbon or the equivalent carbon content of every individual product.

However, unless you just do this based on the manufacturing generated carbon content alone, measuring the actual carbon generated by both the manufacture AND distribution combined is a very complex challenge.

For every individual product and I mean even 1 item of the same type, there is both fixed and variable components which must be tracked, measured, accumulated and reported. Meaning each single item will have a different carbon amount depending not only on where/how it was manufactured, based on varying power sources and distances for raw materials/ finished goods shipments, but even more complex is identifying the variable impact based on different points of delivery and consumption once each product is shipped.

As every product could be different depending on which store or consumers home it’s being shipped to, accomplishing this requires serialization of the inventory and then a smart Supply Chain Network to apply the appropriate carbon to each serialized product based on it’s actual movement throughout the Supply Chain Network.

The wonderful thing about this methodology is not only does it collect this important information, in addition it also generates savings for the supply chain based on improved processes and information.

Based on my Supply Chain Network methodology and process requirements this can be facilitated and SCN would be pleased to work with any industries or associations looking to implement such a methodology to get a handle on the specific carbon generated by products moving through their collective supply chains.

As well, in order to do this also requires a major rethink of the way in which freight charges are currently billed and tracked. Right now in almost all cases, freight is charged based on the overall shipment and some arbitrary density or cubing factor or bands assigned by the carrier for that entire shipment.

In order for the above methodology to work requires the accurate allocation of the freight costs down to the individual product level which is a challenge the SCN Process Requirements and systems approach have already been designed to meet.

Jeff Ashcroft

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