EPA Sets the Stage for a Green Supply Chain Mandate

Climate change – or global warming – and the effort to curb the impact of human activities thought to contribute to it – are continuously becoming a higher priority on the agendas of governments, commercial and non-governmental organizations and individuals around the world. In the United States of America the Environmental Protection Agency, the main federal government environmental watchdog and regulator, recently issued a report finding that projected future levels of greenhouse gases (GHGs) "endanger the public health and welfare of current and future generations", setting the stage for a more intense GHG regulatory regime in the future in a country that has lagged behind imposing the regulatory restraints now in place in many other parts of the world.

A combination of internal and external factors have motivated many companies to work towards better measurement, and control, of their impact on the environment, whether in the areas generation of greenhouse gasses, emission of waste water and other effluents or consumption of renewable and non-renewable resources. But as always, companies need to ensure that they make changes in their activities in a cost-effective, as well as environmentally-effective, manner. We at Profit Point recognize the need to do this, and are working with our clients to help them make the best decisions in this regard.

Our Profit Network supply chain planning software has helped various clients make such decisions as:

• how do we consolidate separate distribution systems after a merger of two organizations, or
• where to produce and how to ship new products coming into the marketplace?

However, Profit Network is capable of taking into account not only the cost of such plans, but also the environmental impact. We recently worked with a client who had significant environmental constraints at both the entrance to and exit from their factories – they had significant limits on the amount of source water (a key raw material required for their manufacturing) that they could draw from surface and underground sources, and also had constraints at many facilities regarding the amount for waste water they could dispose of. Both of these constraints varied over the course of the year and geographically over the service territory. Using Profit Network they were able to see the cost and production location impact of the environmental constraints, and make choices regarding how to respond to their situation.

Another major concern of companies is their levels of emissions of greenhouse gasses. A major corporation in the United States of America recently announced that it was working to reduce its GHG impact through

• Retiring less efficient and higher-emitting production facilities;
• Reducing leakage of GHGs from its production and distribution systems;
• Increasing energy efficiency in its buildings;
• Increasing the fuel efficiency of its vehicle fleet.

Profit Network will allow you to evaluate the effectiveness of these types of activities. You can define the environmental impact of your own activities (such as your production and distribution, and fleet delivery to customers), and those of your suppliers (such as when you purchase electricity). For instance, you could use Profit Network to determine the impact on your carbon footprint (and cost) of switching to a source of electricity that had a lower GHG emissions rate (such as company-produced solar, or purchased nuclear), or moving towards a transportation fleet that had lower emissions per unit of distance traveled.

Profit Point is here to help our clients make better decisions – this includes making better decisions regarding the many environmental choices that companies have in today’s increasingly regulated environment.

This article was written by Dr. Gene Ramsay, Profit Point's Infrastructure Planning Practice Leader. To learn more about designing a sustainable supply, contact us here.

Author's Notes:
1. Reference for the company mentioned in the text above: http://www.eponline.com/articles/71680/.

2. Reference for the EPA announcement: http://www.mercurynews.com/politics/ci_12168524.