Together, Companies and Supply Chains Can Reduce Carbon Footprints

Company leaders are rallying behind sustainability, realizing its importance to overall strategy. According to McKinsey’s global annual sustainability survey, CEOs increasingly see it as a priority. And a large business – one that works with hundreds or thousands of suppliers – can make a greater impact by engaging its supply chain in sustainable practices.

Working with the supply chain doesn’t just reduce carbon footprints; it also makes business sense. Reduce carbon emissions though optimization and greater efficiencies, and you’ll reduce costs, too.

SmartWay, a program of the US Environmental Protection Agency, helps companies improve supply chain efficiency by optimizing freight transportation and reducing greenhouse gas emissions and air pollution. As a result, companies can move more goods farther with less energy.

Using SmartWay, General Motors and its logistics suppliers avoided 116,000 tons of carbon emissions in 2015, equivalent to emissions from more than 13m gallons of gasoline burned. In its Texas facilities, GM moved its stamping plant from the northern part of the country to a more central location in Arlington, Texas, near its Arlington assembly plant to increase cost and carbon savings.

UPS has transformed package pickup and delivery through its On-Road Integrated Optimization and Navigation (Orion) system, which uses fleet telematics and algorithms to leverage customized map data and reduce the number of miles driven. With this technology, UPS is able to see 30,000 route optimizations per minute across the US. This provides drivers with the most efficient routes and helps UPS to determine the optimal way to make deliveries and pickups. Orion is expected to reduce greenhouse gas emissions by 100,000 metric tons every year and cut fuel usage by 10m gallons once it’s fully deployed in 2017.

Besides coordinating with suppliers, companies should also cooperate among themselves – even if they’re rivals. Original equipment manufacturers often use many of the same suppliers as their competitors – so an industrywide approach to supply chain management is critical to maximizing value. If businesses together develop consistent environmentally focused requirements and practices, a supplier won’t be burdened by trying to meet multiple requests. Companies can create partnerships within their industries to drive this.

Taking it a step further, companies should think holistically about not just their direct suppliers, but also about who is supplying those suppliers, and who supplies those businesses in turn. A raw material will travel many paths before reaching its final destination. Working down the supply chain can be a challenge, but ultimately creates a grassroots network of more sustainable practices.

Supply chain optimization extends from logistical concerns to the product itself. GM participates in the Supplier Partnership – a group of car manufacturers, their suppliers and the EPA that aims to protect the environment. In one instance, GM worked alongside Federal Mogul, Heritage Environmental, GDC Inc and Mobile Fluid Recovery to recycle cardboard boxes into parts for the Buick Verano.

Closed-loop supply chains offer a long-term solution to reducing a carbon footprint. Xerox is already championing this practice. The copier maker leases its machines to companies rather than sell them, keeping them in service. When new models are available or a contract expires and Xerox reclaims the machine, it can use customer feedback to improve future models – and old parts to build new products. Keeping old parts in their used phase avoids the carbon emissions that result from creating something brand new.

By thinking creatively, companies can abandon traditional ideas of competition to create a more sustainable supply chain – which is ultimately essential for delivering long-term profitability.

Reposted from TheGuardian.com/General-Motors-Partner-Zone with permission.