Bob Trebilcock

How green is your supply chain?
January 22, 2008

Do you know how green your supply chain is?

I’m not talking about best intentions. I’m asking whether you can measure your carbon footprint and greenhouse gas emissions.

That’s not a question you may have to answer today, especially if the majority of your business is in North America. But it is a question your customers may ask you in the future, according to Andrew S. Winston, founder of Winston Eco-Strategies, a business consulting firm, and the co-author of Green To Gold: How Smart Companies Use Environmental Strategy To Innovate, Create Value, and Build Competitive Advantage. Winston will deliver the keynote address at NA 2008 in Cleveland this April.

We talked about the impact of the Green Wave on the supply chain recently. While Winston says most supply chain managers are only now adding green to their To Do lists, some initiatives are already on the drawing board. “Big retailers like Wal-Mart and Tesco are beginning to ask their CPG suppliers for information about their carbon footprints and the greenhouse gas emissions of the products they’re selling,” says Winston. “The CPG companies realize they don’t have the answers because they don’t know what their supply chains do.”

That creates a potential opportunity for third party logistics providers, or for parts and components suppliers, to differentiate themselves from the competition by collecting and packaging that data. “There are a lot of different ways to create value with green thinking,” says Winston. “In the future, that’s going to include gathering more environmental data that you can package for your business customers. I think the data and information movement in this space is going to be profound.”

The problem, of course, is figuring out where a company can look to get the data that will allow it to measure its environmental impact. That leads me to a conversation I recently had with Toby Brzoznowski, vice president of sales at LLamasoft, a provider of supply chain planning and network design software solutions.

LLamasoft has recently added a module to its signature solution that models your network for carbon emissions. Define your supply chain network, including transportation lanes and modes, along with the size and location of your manufacturing plants and distribution centers, and the system can very quickly come up with your current carbon footprint.

Take that concept one step further, and the solution can simulate the optimal network design to achieve reduced emission targets. The system also has the ability to model ways for you to reach a target emission level using carbon off-sets. “The reality is that not everyone has the ability to make physical changes in their supply chain to reach a target,” says Brzoznowski. “If your target is a 10% reduction in carbon emissions, it can tell you that you might achieve a 5% reduction in a cost-effective way by reconfiguring your network, and the other 5% through offsets.”

Like Winston, Brzoznowski is betting that that ability to measure the greenness of your supply chain is going to be a competitive advantage in the future. “We created this because one of our European clients was required to provide this type of information and didn’t know how else to get it,” he says. “As we talk to our other clients in the CPG industries, they’re telling us that green is on their short list of goals for the year.”

Let us know how important the Green Wave is to your company and the types of initiatives you’re looking at in your supply chain.

Posted by Bob Trebilcock on January 22, 2008 | Comments (0)