Back in November, I commented on how I was feeling a bit “greened out,” how there were fewer and fewer new developments to discuss or analyze, and how all the case studies presented at conferences were sounding the same to me (“All Greened Out (Until the Asteroid Comes)“). I was ready for the next phase of innovation, and I highlighted a couple of hypothetical case studies that I was still waiting to hear, including: “A company that redesigned and optimized its supply chain network using carbon minimization as a constraint or a key objective.” As I said in the posting, most companies are just measuring (estimating) their carbon footprint and comparing the footprint of one scenario versus another. But I haven’t come across a company yet that has decided to incur higher supply chain network costs (however small) in exchange for a lower carbon footprint.
Maybe the folks at IBM have-or will at some point in the future. The company announced this past Friday a new consulting offering that can help companies “reduce carbon dioxide emissions, fuel usage and costs by providing a detailed analysis of their supply chain logistics and suggesting improvements.” The service leverages a tool called Supply Chain Network Optimization Workbench (SNOW) developed by IBM’s China Research Laboratory. The tool looks at CO2 emissions across five major logistics areas: product, sourcing, production, warehousing, and transportation. I haven’t seen a demo of SNOW (other than what’s on IBM’s website), so I can’t comment at this time about its features and functions. But at a high level, the capabilities sound similar to what other software vendors, such as Llamasoft and Infor, provide.
The press release highlights how COSCO (the Chinese shipping company), by using IBM’s SNOW consulting offering, “reduced the number of distribution centers it uses from 100 to 40, lowering logistics costs by 23 percent and reducing CO2 emissions by 15 percent.” This certainly sounds like a great “supply chain network redesign” case study, but what makes it fundamentally different from other network redesign projects conducted five or ten years ago (aside from the more advanced technology available today)?
I haven’t talked to IBM about this case study, but I spoke to some of their consultants at a Boston event late last year, and they confirmed my observation at the time-i.e., that companies are creating a baseline supply chain carbon footprint and comparing it against several network design alternatives, but they’re not using carbon minimization as a constraint or the objective in the optimization runs. In short, network optimizations almost always result in lower carbon emissions; what’s different today is that companies are starting to measure and report these CO2 reductions.
Nonetheless, as the saying goes, you have to learn how to crawl before you can walk and run. When it comes to designing “green” supply chains, I think we’re still in the crawling phase, but we’re making good progress. Software vendors continue to add more “green” capabilities to their solutions, and consulting firms like IBM continue to expand their knowledge and services in this area. The demand for these solutions and services will likely grow in the months and years ahead, especially if new government regulations are passed.
I’m not feeling “greened out” anymore, partly because I believe there are many important developments on the horizon related to “green” technologies, services, regulations, and standards. You’ll read about them here as they occur. In the meantime, let me know if you come across a company that accepted higher supply chain network costs (however small) in exchange for a lower carbon footprint.
