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Home > By DEPARTMENTS > Management > Business Performance Management > Green Monitoring Toolkits for Management Effectiveness

Carbon Tradeoff Modeler to Optimize Supply Chain Efficiency - IBM

IBM's Carbon Tradeoff Modeler monitors and analyzes supply chain emissions profiles how changes to packaging, transportation and inventory policies can affect their CO2 emissions.

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Carbon Tradeoff Modeler

IBM's tool for monitoring and analyzing supply chain emissions is designed to go above and beyond simply calculating carbon emissions.

Plan Packaging, Transportation and Inventory Policies' affect on CO2 emissions

Carbon Tradeoff Modeler allows companies to tweak their operations and see how changes to packaging, transportation and inventory policies can affect their CO2 emissions.

Strategic Planning Tradeoffs in Supply chains

The Carbon Tradeoff Modeler looks at the tradeoffs, good and bad, when trying to cut CO2, improve packaging and change shipping routes. Developed by IBM Research and IBM Global Business Services, the tool looks at emissions from manufacturing and distribution, and it quantifies the trade-offs between carbon reductions and other factors such as on-time delivery.

Options include packaging, alternative operational processes, alternative transportation modes and energy sources, inventory policies, and sourcing

Key factors the tool captures include: packaging options, alternative operational processes, alternative transportation modes and energy sources, inventory policies, and sourcing policies. The Carbon Management Analysis Tool can identify and recommend the most desirable actions to take among the many that can be used to achieve carbon dioxide emissions reduction.

Some of the issues that the tool addresses include:

  • The impact on cost and carbon dioxide emissions when changing package sizes and/or packaging materials
  • The impact of lot sizes on transportation requirements, cost and carbon dioxide emissions
  • The impact of consolidating orders to reduce the carbon dioxide emissions in transportation as well as on-time delivery performance
  • How inventory replenishment policies can influence carbon dioxide emissions.
  • How to evaluate alternative supply policies in terms of cost and climate impact in the supply chain

Corporate Social Responsibility (CSR) Tops the Agenda for Chief Executives

According to the 2008 IBM Global CEO Study and a separate IBM study, corporate social responsibility (CSR) is at the top of the agenda for chief executives, and is fast becoming a revenue growth platform for businesses, as customers increasingly demand transparency and accountability from organizations they conduct business with. With the automated Carbon Tradeoff Modeler, organizations can incorporate carbon reduction into their overall CSR strategy, to reduce their carbon emissions and potentially strengthen their brand to gain a competitive advantage. This is an example of IBM's focus on higher value services and innovative solutions to address client needs.

"To achieve a carbon efficient supply chain, companies need to assess the CO2 emissions impact of their end-to-end operations," said Sanjeev Nagrath, Global Leader, Supply Chain Management, IBM Global Business Services.

Supply Chain Carbon Dioxide (CO2) Emissions from both Manufacturing and Distribution

Developed by IBM Research and IBM Global Business Services, the Carbon Tradeoff Modeler models the complex interaction of factors driving supply chain carbon dioxide (CO2) emissions from both a manufacturing and distribution perspective. It can also quantify the tradeoffs between CO2 emissions reductions and other supply chain metrics such as inventory levels, and on-time delivery. IBM's Carbon Management Analysis Tool also identifies areas where carbon dioxide emissions and costs can be reduced simultaneously.

Shipping less frequently, according to IBM Research, typically reduces transportation costs and carbon emissions, but increases inventory costs and carbon related to warehousing.

Working with IBM, companies can plug in data on their operations, then model different variables to see the results of different actions. The Carbon Tradeoff Modeler uses information on packaging options, alternative operational processes, alternative transportation modes and energy sources, inventory policies, and sourcing policies to identify what actions can be taken to reduce emissions.

Cost and CO2 Emissions Calculations

Issues within those areas that the Modeler looks at include the impact on cost and CO2 emissions from changing packaging size and materials, the impact of consolidating orders and what affect inventory replenishment policies have on emissions.

There are specific steps companies can take to limit GHG emissions -- from easy-to-implement local improvements to complex optimizations that involve an extended supply chain. The further these activities extend and integrate across the supply chain, the greater leverage and control they will have over carbon dioxide emissions. IBM therefore recommends a step-wise approach:

  1. Strategy: Diagnose, assess, plan and operationalize
  2. Carbon asset (facility) management: Implement asset management and realize point solutions
  3. Functional Optimization: Address emissions in supply chain functions
  4. Internal Horizontal Integration: Find the optimum solution for integrating across functions
  5. Collaborative, end-to-end Optimization: Collaborate with supply chain partners to realize overall potential

For more details on the "five steps to mastering carbon in the supply chain" and the complete IBM Global Business Services Paper on Mastering Carbon Management please visit www.ibm.com/gbs/supplychain

Read the IBM White Paper: Supply Chain Risk Management: A Delicate Balancing Act (PDF, 1,327KB)



Edited by Carolyn Allen, owner/editor of California Green Solutions
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