Supply Chain Efficiency ‘Key’ to Cutting Carbon Footprint

by | Aug 8, 2013

UMEngaging commercial industrial and manufacturing players is key to advancing energy efficiency in that sector’s supply chains, according to University of Minnesota Institute researchers.

Companies concerned about their carbon footprint should be at least as concerned – if not more so – about energy use in their supply chain as energy use at their facilities, according to Supply Chain Energy Efficiency: Engaging Small & Medium Entities in Global Production Systems, which was co-authored by University of Minnesota Institute on the Environment’s NorthStar Initiative for Sustainable Enterprise and Environmental Defense Fund.

The potential for cost-effective energy efficiency investments in the US is in the order of $200 billion a year. But, after decades of public and private support, current energy efficiency financing is only one-tenth its potential — about $20 billion per year, the report says.

To increase investment, the report makes a raft of recommendations aimed at cutting energy use in industrial supply chains:

1. Engage leading companies to identify high-quality suppliers for pilot supply chain energy efficiency improvements.

2. Create one or more sector-based collaborations for improving supply chain energy efficiency by assembling groups of peer manufacturers within a supply chain and using benchmarking, process capability analysis and best practice sharing to identify and improve energy efficiency and industry competitiveness.

3. Increase transparency and standardization of energy use, audits and supply chain information.

4. Create finance and credit risk approaches and models for portfolio-level energy efficiency and energy management projects.

The recommendations are based on a two-day workshop that tapped the brains of 31 representatives of energy service companies, financiers, retailers, nongovernmental organi­zations, government and academia from around the world.

HP recently announced that it is using a railroad to ship electronics manufactured in China to European markets, cutting its travel time, costs and supply chain carbon footprint in the process.

The train line, which HP describes as a “modern day silk road,” covers two continents, six countries and more than 6,700 miles from Chongqing, China to distributors and customers in Duisburg, Germany. The three-week journey roughly follows the path of the ancient silk road land trading route.

Despite the distance, the journey is cost-effective and better for the environment than air transport, and it’s faster than ocean shipping, HP says.

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