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Predict, Not Just Respond

Supply Chain Planning for a Green Supply Chain

Green Supply Chain

It is not a surprise that in the past decade or so most companies have been gradually taking strategic decisions to reduce their carbon footprint. However, most of these decisions tend to take effect in the long term. Some examples are changing the energy source from conventional fuel to renewables or building environmentally friendly plants, producing cars with zero emissions or making appliances that are highly efficient. These decisions are all good but they do not address the short-term usage of carbon.  At the tactical level, there is not as much visibility as to how much of an impact the company is making in its day to day activity and production of goods or use of suppliers. Depending where a product is made and what material it uses or which supplier, from which region, is deployed, the carbon footprint of the product can vary.

So why not monitor the “carbon footprint index” of the production in the supply chain every time we plan the production? A supply chain planning system is capable of producing plans for the future. The future can be days, weeks, months or even years. It combines all the possible ways of producing the mix of products at all the different locations and use of different materials and gives a projection of what to expect in terms of sales and inventory of the products. An Attribute-Based supply chain planning system can project how green the product mix is and what the lowest possible emission rate could be, based on demand. This is analogous to producing plans which are of the lowest cost.

The key is the use of attributes and the ability of the planning system to tag the carbon footprint to every method, supplier, component, location and so on. This is more than just tagging carbon footprint just to the finished goods. A finished goods product can be produced in many different ways in more than one location using all kinds of substitute parts having different qualities. Once we have established these attributes, in absolute or relative ways, then an attribute-based planning engine would be capable of projecting the overall carbon index of production every time it plans

The visibility provided by this approach can be extremely helpful to educate not just the employees of the company but also suppliers, customers, equipment manufacturers and end-users on the products’ carbon footprint and the impact that their decision can have on the environment. Thus finding joint incentives to create a much greener supply chain.

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