As IBM sees it, the further these activities extend and integrate across the supply chain, the greater leverage and control companies will have over carbon emissions.
Diagnosis and assessment. Using a carbon diagnostic that evaluates each high-level supply chain component according to a simple set of carbon statements and key performance indicators, a company can begin to define its own maturity level, identify gaps and set target levels.
Carbon asset management. Much of the potential for directly reducing carbon emissions lies in a supply chain's facilities and assets. Warehousing, machinery, vehicle fleets and data centers, for instance, can consume huge amounts of energy. Investing in facilities with a low carbon footprint and energy-saving equipment offers an effective first step with a defined return on investment. Implementing carbon-based asset management helps ensure that the most direct savings potential concerning emission and cost can be realized.
Functional optimization. Each supply chain function can make a specific contribution to help reduce greenhouse gas emissions. Generally speaking -- and depending on the carbon diagnostic results and "green" SCM strategy -- the ability to reduce CO2 emissions is typically greater when measures are taken early in the process. Considerations in product design, customer fulfillment and even reverse logistics offer a range of functional optimization opportunities.
Internal horizontal integration. Depending on the type of supply chain, the most pertinent areas for carbon reduction vary, as do their complexity. With today's globally distributed supply chains and customized products, that complexity has often increased to the point where specific functional improvements have a very limited reach. In contrast, a horizontally integrated approach across functions permits much greater leverage.
Collaborative, end-to-end optimization. While internal horizontal integration may increase leverage, the full potential for reducing emissions can be attained only if all players in the supply chain pull at the same string and collaborate on end-to-end optimization.