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IBM Unveils New Carbon Management Analysis Tool to Optimize SupplyChain Efficiencies

Submitted by: IBM

Categories: Environment, Corporate Social Responsibility

Posted: May 22, 2008 – 11:16 AM EST


Offers New Recommendations to Master Supply Chain Efficiency

May 22 /CSRwire/ - ARMONK, NY -- (MARKET WIRE) -- 05/22/08 -- IBM (NYSE: IBM) today
announced the Carbon Tradeoff Modeler, a first-of-a-kind tool that
enables organizations to analyze and manage the climate impact of
their supply chains. The tool allows organizations to understand the
outcome of critical tradeoffs to make smarter energy choices and
better economic decisions by optimizing on service levels, quality,
cost, and carbon dioxide emissions.

Developed by IBM Research and IBM Global Business Services, the
Carbon Tradeoff Modeler models the complex interaction of factors
driving supply chain carbon dioxide (CO2) emissions from both a
manufacturing and distribution perspective. It can also quantify the
tradeoffs between CO2 emissions reductions and other supply chain
metrics such as inventory levels, and on-time delivery. IBM's Carbon
Management Analysis Tool also identifies areas where carbon dioxide
emissions and costs can be reduced simultaneously.

According to the 2008 IBM Global CEO Study and a separate IBM study,
corporate social responsibility (CSR) is at the top of the agenda for
chief executives, and is fast becoming a revenue growth platform for
businesses, as customers increasingly demand transparency and
accountability from organizations they conduct business with. With
the automated Carbon Tradeoff Modeler, organizations can incorporate
carbon reduction into their overall CSR strategy, to reduce their
carbon emissions and potentially strengthen their brand to gain a
competitive advantage. This is an example of IBM's focus on higher
value services and innovative solutions to address client needs.

"To achieve a carbon efficient supply chain, companies need to assess
the CO2 emissions impact of their end-to-end operations," said
Sanjeev Nagrath, Global Leader, Supply Chain Management, IBM Global
Business Services. "By incorporating Research-based tools to model the
cost and carbon impact of key steps in the supply chain,
organizations now can take action to reduce CO2 emissions and
influence suppliers' behavior toward reducing their own greenhouse
gas emissions."

IBM's carbon management analysis tool models the cost and carbon
impact of several key levers and provides insights for balancing cost
and carbon management objectives. Key factors the tool captures
include: packaging options, alternative operational processes,
alternative transportation modes and energy sources, inventory
policies, and sourcing policies. The Carbon Management Analysis Tool
can identify and recommend the most desirable actions to take among
the many that can be used to achieve carbon dioxide emissions

For example, shipment and package consolidation is one of the major
opportunities to reduce CO2 emissions. Quantifying the impact of
shipment frequency on cost and emissions can help establish a more
energy efficient inventory replenishment policy. Some levers such as
better routing can create a win-win case for reducing both CO2
emissions and cost in the supply chain.

Some of the issues that the tool addresses include:

-- The impact on cost and carbon dioxide emissions when changing package
sizes and/or packaging materials
-- The impact of lot sizes on transportation requirements, cost and
carbon dioxide emissions
-- The impact of consolidating orders to reduce the carbon dioxide
emissions in transportation as well as on-time delivery performance
-- How inventory replenishment policies can influence carbon dioxide
-- How to evaluate alternative supply policies in terms of cost and
climate impact in the supply chain

In addition, IBM released today further analysis from the Institute
for Business Value, entitled "Mastering Carbon Management." The paper
emphasizes how carbon management, energy consumption and other
environmental issues should be analysed and approached in an
integrated manner -- evaluating overall performance goals (cost,
service, quality and carbon dioxide emissions) in terms of their
relationship to one another. A trade-off model looks at these areas
and considers relevant factors such as design, packaging and
processes. These options represent the "levers" available to
influence cost, quality and service, as well as greenhouse gas (GHG)

There are specific steps companies can take to limit GHG emissions --
from easy-to-implement local improvements to complex optimizations
that involve an extended supply chain. The further these activities
extend and integrate across the supply chain, the greater leverage
and control they will have over carbon dioxide emissions. IBM
therefore recommends a step-wise

1. Strategy: Diagnose, assess, plan and operationalize
2. Carbon asset (facility) management: Implement asset management
and realize point solutions
3. Functional Optimization: Address emissions in supply chain functions
4. Internal Horizontal Integration: Find the optimum solution for
integrating across functions
5. Collaborative, end-to-end Optimization: Collaborate with supply chain
partners to realize overall potential

For more details on the "five steps to mastering carbon in the
supply chain" and the complete IBM Global Business Services Paper on
Mastering Carbon Management please visit www.ibm.com/gbs/supplychain

About IBM

For more information visit www.ibm.com.

For more information, please contact:

Phone: 917-472-3589
Phone: 917-472-3676

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