The Supply Chain Carbon Footprint Reduction Strategy
When I was 11 years old everyone in Grade 6 was required to create and make a speech in front of the class. I wrote a speech on Air Pollution. It was an emerging issue in the news at that time. I talked about statistics on the levels of Air Pollution, the damage it was causing, and what we needed to do to curtail and fix the problem.
I ended up winning the local and regional public speaking competitions with that speech. I didn’t actually end up doing much about Air Pollution beyond helping to promote awareness of the issue with my speech. But it did plant the idea in my mind that we all had a responsibility to create awareness and help protect our environment in whatever manner that we could.
Taking care of the environment is everyone’s responsibility. Whether in your personal lives or your professional lives everyone has either a positive, a neutral, or negative impact on the sustainability of the planet that we share. In this article I’m not going to focus on the things that you can do in your personal lives or in your home. Certainly we should all reduce, reuse and recycle and it applies everywhere!
Supply Chain professionals however are uniquely positioned to make dramatic impacts on the environment. In Supply Chain we are involved in the entire breadth of activities in most any company. As such we have the direct or indirect ability to take actions which can promote environmental sustainability, reduce carbon footprint impacts, and drive the creation of the Green Supply Chain.
The Supply Chain Environmental Model
Any Supply Chain is made up of a combination of nodes, links, and the activities and processes which make it all work. All of these elements of the Supply Chain will drive the consumption of energy, natural resources, raw materials and the creation of waste. This in turn establishes a carbon footprint impact on the environment.
The nodes in the Supply Chain are those facilities that are involved in the end-to-end manufacture, processing, distribution, and consumption of goods. Supplier and Company Manufacturing facilities, Warehouses, Distribution Centres, Retail outlets, Return and Repair operations and Consolidation points are all Supply Chain nodes which use resources to perform their processing activities.
The links between these nodes are the freight, transportation and logistics players who move the goods throughout the Supply Chain. Trucks, Ocean Freighters, Planes, Rail, and Vehicle transportation all consume energy in the provision of their services.
The processes, and the decisions that are made in managing those activities include Component selection, Supplier selection, Network creation, Node location planning, delivery requirements, and inventory levels amongst many other elements. Those decisions will certainly determine levels of carbon footprint creation and environmental impacts in the provision of goods and services.
Supply Chain Carbon Footprint Reduction
Overall there are key overriding factors to be considered in defining and optimizing any end-to-end Supply Chain strategy from an environmental perspective:
Reduce waste and improve efficiencies
Reduce carbon emissions
Reduce energy usage
Conserve natural resources
Reduce – Reuse – Recycle
Promote clean, sustainable resource utilization
Making improvements to a company’s environmental impact needs to be a central part of the management agenda and corporate objective set for it to succeed. The basic Supply Chain Carbon Footprint/Environmental Impact Reduction strategy must thus include:
Executive Support
Any progress requires unequivocal and unwavering Executive support. Only if it is supported from the CEO on down will you be able to get commitment to provide the time, resource, focus and energy necessary to make an environmental program work
Node Supplier Selection/Management Involvement
Your Supply Chain may involve Suppliers physically located all around the world. Low cost sourcing is a predominant reason for this geographically dispersed network. From an environmental standpoint this usually creates the need for intercontinental and transoceanic transportation, which by definition is a driver of carbon emissions. Any opportunity to create a more centralized network will improve the environmental performance of any Supply Chain
The manufacturing and processing operations at your Suppliers also drive energy consumption. Just changing lighting in these facilities, for example, can result in both lower costs and a reduced carbon footprint. A carbon emissions reduction strategy must take all Suppliers into account, not just the impact from your in-house facilities. Further your Supplier selection and management plan must include reporting on environmental emission metrics along with reduction goals and performance tracking.
Supplier, and materials, selection criteria should also include elements of environmental impact. Designers and developers are often choosing raw materials based on optimal suitability for the product they are designing. But are they truly aware of the environmental impact involved in extracting, creating, and processing those goods? Would they make more environmentally friendly resource decisions if they were better informed of the carbon footprint associated with all raw material choices?
It is reasonable that customers should set environmental expectations of their suppliers. Do they have a plan to get all of their energy needs from sustainable and renewable sources? Do they have an energy and water consumption reduction strategy? Do they have packaging reduction plans? Set the expectation and condition of business award contingent on environmental responsibility up front so that you drive good behaviour.
And one of the fundamental objectives in any Lean program is the need to reduce waste. This fits perfectly with any program for reducing environmental impacts and carbon emissions reduction. Ensuring that a well-functioning Lean program is in place at all facilities across your end-to-end supply chain will by definition work to ensure a reduction in resource consumption, energy usage and sustainability. It is valuable to explicitly delineate a Carbon/Environmental improvement objective as a required outcome and focus in these Lean programs.
Logistics/Link Supplier Selection/Management
Statistics show that as much as one third of carbon emissions in the U.S. are generated by transportation
Reducing the environmental impact here certainly involves network location optimization everywhere possible. For instance having Distribution Centres geographically dispersed can reduce the amount of transportation, but then again operating additional facilities will also consume more energy.
Additionally there should be aggressive management of freight modes. Ocean freight or Rail travel are better environmentally than planes for instance.
In this age of E-Commerce customers want fast, and frequent, delivery. Depending on what your Distribution Centre network design is you may have an opportunity to have customers consider less environmentally impactful options such as pick-up-in-store for instance.
I wonder as well as to whether there is an opportunity to inform Online customers better. If someone is ordering online what would happen if companies showed not only the cost for different delivery options but the carbon/environmental impact as well. I bet that some people would opt for more environmentally responsible options if they had that information. By way of analogy a lot of governments are mandating that restaurants show the calories for each meal for instance. They are informing people with the expectation that this will change the choices they make.
Selecting carriers that are environmentally conscious should also be preeminent in your Logistics strategy. Carriers who are using speed limiters, focusing on reducing dead haul or under-utilized loads, and reducing engine idling for instance are working to reduce environmental impacts as well as cost.
And the “Don’t Touch” Supply Chain strategy which we’ve discussed in A “Don’t Touch” Strategy will Dramatically Lean out your Supply Chain! is also relevant. If you can reduce the amount of touching, movement and transportation of goods then by definition you are reducing your environmental impact. Strategies such as Drop Shipping, Cross Docking, and Direct to Consumer Shipping all reduce transit times and energy consumption.
Reverse Logistics/Repair Operations
Reduce, Reuse and Recycle is a common phrase that we’ve all heard. Therein is a requirement for businesses to look at all ways to look to recycle and repair, and repurpose their products everywhere possible.
My first summer job during University was working in a warehouse dismantling and reclaiming the parts off of old keypunch machines. We salvaged everything so that the components and raw materials could be reused, reclaimed, or recovered.
The number of cell phones that are manufactured, bought, and returned every year is staggering. Consider that 45% of people will accidentally damage their phones on average 10 weeks from when they got the phone. Millions of phones need to repaired every year. The industry must ensure that all damaged phones are recovered, repairs are made everywhere possible, and components are reclaimed and reused to the greatest possible degree.
No matter what your product is there is most likely an opportunity to reclaim or repair or salvage some aspect of that product. To do otherwise is not responsible.
Technology
Technology has a role to play throughout the Supply Chain. Technology can be used to create renewable energy sources designed to reduce consumption and ensure sustainability. Applications such as 3D Printing hold the promise of the consumption of materials only as required
Self-driving vehicles could be more energy efficient both in the management of speed and fuel consumption as well as following energy optimized routing algorithms.
But the application of technology must not be undertaken blindly. Automating bad processes just results in the more efficient operation of bad processes. Leaning out operations, reducing waste and handling, and streamline activity in consideration of carbon footprint reduction must be engineered before any new systems design is finalized.
Conclusion
As an individual and as a Supply Chain professional you can not help but to have an impact of some kind on the environment. And it is generally accepted that if we can reduce our impact on the environment, and if we can reduce our carbon footprint, then we are helping to leave the world in a better place for generations to come.
While I am not an environmental activist in retrospect my life and career have touched on the environment at many turns. From my early days of giving that speech on Air Pollution to reclaiming parts during a summer job to improving operations, through to introducing Lean programs and managing Repair/Refurbishment facilities environmental responsibility has been an underlying theme in my journey.
Take the time to recognize that you touch and impact the environment in many different ways. Then think about what you can do to reduce your carbon footprint and create the life and Supply Chain strategies to improve our world!
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