Planning for Environmental Sustainability
By brian.vazquez on Sep 08, 2008
To those of you familiar with the Strategic Network Optimization application it will come as no surprise that SNO is able to help in managing green house gas emissions. In fact, the flexibility of the application can assist in balancing a wide array of green supply chain objectives.
Over the past several years, the importance of environment sustainability in manufacturing has grown considerably. Pressure is increasing on both consumer and business-to-business channels, as retailers implement sustainability programs and customers seek environmentally responsible brands. From 2006 to 2007 the carbon market for green house gas (GHG) emissions worldwide grew from $33 billion to $60 billion USD.
Legislation to limit emissions is also growing throughout the world with Canada unleashing the first carbon tax in North America and both candidates for the United States presidency supporting a cap-and-trade system. On August 19th, 2008 Japan announced that the country will soon be labeling their products with carbon footprint information. Meanwhile, on October 6th Massachusetts will become the first state in the US to limit CO2 emissions and adopt a greenhouse gas offset banking system for credits.
The move to clean up our environment is undeniably gaining momentum and will have broad implications for business. For those companies operating in a cap-and-trade environment determining the best carbon reduction strategy for achieving profitability objectives is key. Should you relocate your distribution centers or manufacturing facilities to reduce your carbon footprint? How do these decisions affect your customer service levels and overall profitability? Are you able to calculate the need for carbon credits to take appropriate carbon market positions?
The ability to define your carbon footprint is the first step in managing your company’s GHG emissions. From a manufacturing perspective, having the ability to determine the ideal production and distribution plans for a given a set of carbon footprint restrictions is critical. These plans should take into account not only transportation lead times, modes of transportation, production costs and constraints, but also emissions restrictions, carbon credits, environmental taxes and carbon offsets.
Those of you looking for a solution to these problems should seriously consider the capabilities of SNO for addressing green supply chain planning requirements. From supply chain network design to production planning and distribution, SNO provides the ability to balance strategic business objectives, such as new market introductions, contractual obligations and new product introductions, against environmental goals and obligations. Using SNO can help ensure that all resources are optimally located and sized to meet your strategic objectives. Both internal and external GHG footprints can be analyzed and complex financial trade-offs evaluated.
What approach does your organization use to incorporate environmental objectives into manufacturing operations? Does software play a role in your solution?