How to Create Energy Efficient Supply Chains

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Decreasing energy use at a main office or manufacturing plant may help the bottom line and reduce a companys carbon footprint. But companies often dont...

Decreasing energy use at a main office or manufacturing plant may help the bottom line and reduce a company’s carbon footprint. But companies often don’t pay attention to the supply chain, which is one of the least energy efficient aspects of a business.

Huge companies with massive supply chains such as Dell, Ford, Unilever, Pepsi, Best Buy and Walmart, often in conjunction with non-government organizations, have put in place reduction targets and initiatives focused on upstream and downstream supply chain impacts. Reducing the carbon footprint of all sectors of businesses small and large is now expected.

To help companies figure out how to increase energy efficiency in their supply chain, the University of Minnesota Institute on the Environment’s NorthStar Initiative for Sustainable Enterprise, along with the Environmental Defense Fund, provide valuable suggestions on why and how to do so in a new report, “Supply Chain Energy Efficiency: Engaging Small & Medium Entities in Global Production Systems.”

To realize these opportunities we must manage energy across organizations, industry sectors, supply chains and regions, which will require significant new and increasingly more transparent data, common metrics and analytics, writes Monica Michaan of the Environmental Defense Fund.

Public and private collaboration will be crucial to reduce the transaction costs of implementing supply chain energy efficiency, particularly with regard to credit enhancement, technology provider accreditation and governmental policies, she writes.

The report highlights four recommendations to save energy:

  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.
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