Episode13Readings - 12 Steps to a Greener Supply Chain...

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12 Steps to a ‘Greener’ Supply Chain Environmental Leader NOVEMBER 30, 2008 Paul Brody and Mondher Ben-Hamida, IBM Global Business Services In the 12-step movement, they say admitting you have a problem is the first step toward recovery. And when it comes to energy usage and waste in supply chains, we have a major problem. The U.S. Department of Energy’s Annual Energy Review shows that industrial and transportation sectors— those that coincide with supply chain activities account for 61 percent of U.S. carbon emissions. This indicates that a careful examination of energy use throughout the supply chain provides substantial opportunities for improvement. Volatile energy costs substantially drain company resources. New government regulations will require companies to cut energy use or pay penalties. And pressure from customers, shareholders, and advocacy groups continues to mount for companies to cut energy usage and reduce their carbon emissions. We offer 12 suggestions for how companies can m ake their supply chains ―greener,‖ more efficient and more cost effective. These apply to virtually any industry electronics, food and beverage, retail, industrial, consumer packaged goods, etc. 1. Redesign the product Even simple changes to a product design from reducing weight to making it easier to disassemble can reduce energy consumption and waste throughout the product life cycle. In some cases, innovation or new technologies may make it possible to eliminate components or ingredients entirely and thereby shorten the supply chain. Dutch food maker Friesland Coberico Dairy Foods reduced its transportation needs by 127,000 miles per year by adjusting recipes and production processes. 2. Reconfigure manufacturing Streamlining production steps, reducing energy use, and limiting use of pollutants and toxic materials can have a big impact on how green the supply chain is. Employing a product lifecycle management process that takes into account green considerations is the key. Canadian pulp and paper company Catalyst Paper Corporation reduced greenhouse gas emission by 70 percent and saved $4.4 million by reusing waste products and heat from its manufacturing processes and switching to natural gas. 3. Shift to green suppliers Although some may have higher costs, green suppliers can have a big effect on the carbon implications of bringing products to market. An analysis of alternative suppliers may uncover potential benefits that justify making a change, such as helping you meet new government regulations or appealing to new categories of consumers. 4. Shorten distances By rationalizing sourcing, assembly and distribution in relation to markets, travel distances and corresponding fuel use can be reduced. For some products, simply working with suppliers who are closer to major markets can significantly reduce energy use. An American
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Episode13Readings - 12 Steps to a Greener Supply Chain...

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