Companies are feeling the pressure to not only cut costs, but also to be more eco-friendly by reducing waste and cutting carbon emissions. Fortunately, these goals can be synergistic. For example, by streamlining the supply chain and eliminating redundancy, a company can save money on operations, fuel, and other expenses while reducing its overall environmental impact.
That appears to be the underlying philosophy to a new consulting offering from IBM called SNOW (Supply Chain Network Optimization Workbench). The tool uses advanced mathematics "to provide a smarter, deeper understanding of overall supply chain logistics," according to Big Blue, allowing "clients to optimize decisions for costs, service levels, and lower CO2 emissions."
SNOW's aim is to help clients set high-level, strategic objectives, such as determining how many distribution centers they need or whether to do manufacturing in-house or through a vendor.
"Making your operations 'greener' and making them more economical are complementary, not contradictory," said Eric Riddleberger, global leader for IBM's business strategy consulting practice, in a written statement. "When you improve the overall efficiency of a system, you can almost automatically lower cost, waste, and environmental impact."
Built on an SOA foundation, SNOW uses WebSphere and other IBM software products. The tool is designed to look across five major logistic areas:
- Product - SNOW evaluates the CO2 emissions impact of materials to aid in identifying greener alternatives
- Sourcing - The tool considers the impacts of CO2 emissions in selection suppliers
- Production - SNOW determines CO2 emissions associated with manufacturing processes
- Warehousing - SNOW considers storage requirements and their associated environmental impacts
- Transportation and distribution - The tool analyzes CO2 emissions to transportation modes, shipments sizes, and service levels
According to IBM, Chinese shipping and logistics giant COSCO was able to use SNOW to reduce the number of its distribution centers from 100 to 40, thereby lowering logistics costs by 23 percent and reducing CO2 emissions by 15 percent. This allowed the company to avoid 100,000 tons per year of CO2 emissions while maintaining service levels for clients and incurring no additional costs.
Notably, IBM offers a complementary consulting offering called Carbon Tradeoff Modeler. It concentrates on operational details, such as which fuels to use, which supply routes are the most efficient, and how to consolidate individual shipments for efficiency.
Big Blue isn't the only company out there helping companies make their supply chains more efficient. A company called Oco offers business-intelligence software as a service that provides customers such as Welch's with deeper insights into their supply-chain operations.
ILOG, meanwhile, offers a Carbon Footprint extension to its LogicNet Plus XE supply-chain application. It can estimate the carbon impact of changes to the supply-chain network by computing the total carbon emissions associated with the new distribution facilities, plants, and modes of transportation used between various points.