Posted by: Christian Verstraete | January 8, 2010

When Carbon initiates the debate ….

My previous post on Copenhagen and Innovation demonstrated how sensitive the subject is. I strongly believe that human activities have an effect on the environment. I understand not everybody agrees. We however do not have enough information to establish which of the points of view is the correct one. The point I am trying to make is different. On the one hand, if there is the slightest suspicion that the world may become a worse place to live in if we continue doing what we do, I believe we better act responsively. On the other, I am a strong believe this is a great opportunity for us to innovate, recreate local jobs and improve our living. With this entry I want to show some simple ways we can make a difference.

About two months ago, I wrote an entry for this blog, labeled “BOS and BOC, two new acronyms to get used to”. I was actually far from imagining this was going to be the entry that received most feedback, through numerous e-mails, calls etc. This actually demonstrates a couple things, first, that a number of you are reading my entries (thank you for that), and second, that carbon and everything related to the environment is a hot subject. So, let me take a minute to go a little further in my thoughts around the subject.

Yes, I believe many of us agree that something needs to be done, that eating fruit that is imported by plane for example, does no longer makes sense. However, it is often not clear for consumers how much CO2 is actually emitted during the processing or manufacturing of a product. But is it for the manufacturer? I would argue that, in many cases it is not. Carbon labeling has started in the UK, and that seems to change the perspective of a number of companies already. But what is more important, is that it forces companies to understand their supply chains and manufacturing processes. CO2 is actually a measure of the energy consumed. So, reducing CO2 reduces the use of a scarce resource whose price has been going through the roof a year ago.

Now, you may argue that the prices have gone down at this point and that we should not worry. I wouldn’t dare to bet on that. In an initial stage, people have started looking at alternative energies (wind, solar, sea etc.), and although that may help reduce CO2 emissions further, it should not be the only thing people do. The fundamental question is how much energy we really need to manufacture and distribute a product. Starting from that mindset, the fact of looking at how reducing CO2 emissions, helps companies reduce their costs.

The question is obviously, how to do this. And here the understanding of the supply chain comes again. Let me take an example. If I know that a full truckload of products (e.g. 18 pallets) has been shipped from point A to point B and that the truck returned empty, I can calculate reasonably quickly how much CO2 was emitted by unit of product, if I know the distance between A and B, the average consumption of the truck and the number of items per pallet. I can identify the cost of the empty return and review how to address it. It is obviously a little more difficult to find a payload for the returning truck, but now I have a financial and environmental measure of what I could save if this happened. The supply chain visibility we talked about in earlier blog entries, plays an important role here. Receiving the relevant information from the partners becomes critical. In the example above, it is key to obtain the information from the logistics and transportation partners. From a technology perspective, multiple approaches are possible. Let’s discuss those in a next blog entry. Your feedback is, once more, highly appreciated.

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