Posts Tagged ‘Sustainable Supply Chain’

SCMR

This month, Supply Chain Management Review is featuring a 3-part series by Dr. Alan Kosansky and Michael Taus of Profit Point entitled Managing for Catastrophes: Building a Resilient Supply Chain. In this article we discuss the five key elements to building a resilient supply chain and the steps you can take today to improve your preparedness for the next catastrophic disruption.

Once a futuristic ideal, the post-industrial, globally-interconnected economy has arrived. With it have come countless benefits, including unprecedentedly high international trade, lean supply chains that deliver low cost consumer goods and an improved standard of living in many developing countries. Along with these advances, this interdependent global economy has amplified collective exposure to catastrophic events. At the epicenter of the global economy is a series of interconnected supply chains whose core function is to continue to supply the world’s population with essential goods, whether or not a catastrophe strikes.

In the last several years, a number of man-made and natural events have lead to significant disruption within supply chains. Hurricane Sandy closed shipping lanes in the northeastern U.S., triggering the worst fuel shortages since the 1970s and incurring associated costs exceeding $70 billion. The 2011 earthquake and tsunami that struck the coast of Japan, home to the world’s 3rd largest economy representing almost nine percent of global GDP caused nearly $300 billion in damages. The catastrophic impact included significant impairment of country-wide infrastructure and had a ripple effect on global supply chains that were dependent on Japanese manufacturing and transportation lanes. Due to interconnected supply chains across a global economy, persistent disruption has become the new norm.

You can find all three parts on the SCMR website here: Part 1, Part 2 and Part 3.

Are you ready to build a resilient supply chain?
Call us at (866) 347-1130 or contact us here.

What kind of risks are you prepared for?

As a supply chain manager, you have profound control over the operations of your business. However, it is not without limits, and mother nature can quickly and capriciously halt even the smoothest operation. Or other man-made events can seemingly conspire to prevent goods from crossing borders, or navigating traffic, or being produced and delivered on time. How can you predict where and when your supply chain may fall prey to unforeseen black swan events?

Prediction is very difficult, especially about the future. (Niels Bohr, Danish physicist)  But there are likely some future risks that your stockholders are thinking about that you might be expected to have prepare for. The post event second guessing phrase: “You should have known, or at least prepared for” has been heard in many corporate supply chain offices after recent supply chain breaking cataclysmic events: tsunami, hurricane, earthquake, you name it.

  • What will happen to your supply chain if oil reaches $300 / barrel? What lanes will no longer be affordable, or even available?
  • What will happen if sea level rises, causing ports to close, highways to flood, and rails lines to disappear?
  • What will happen if the cost of a ton of CO2 is set to $50?
  • What will happen if another conflict arises in the oil countries?
  • What will happen if China’s economy shrinks substantially?
  • What will happen if China’s economy really takes off?
  • What will happen if China’s economy really slows down?
  • What will happen if the US faces a serious drought in the mid-west?

What will happen if… you name it, it is lurking out there to have a potentially dramatic effect on your supply chain.

As a supply chain manager, your shareholders expect you to look at the effect on supply, transportation, manufacturing, and demand. The effect may be felt in scarcity, cost, availability, capacity, government controls, taxes, customer preference, and other factors.

Do you have a model of your supply chain that would allow you to run the what-if scenario to see how your supply chain and your business would fare in the face of these black swan events?

Driving toward a robust and fault tolerant supply chain  should be the goal of every supply chain manager. And a way to achieve that is to design it with disruption in mind.  Understanding the role (and the cost) of dual sourcing critical components, diversified manufacturing and warehousing, risk mitigating transportation contracting, on-shoring/off-shoring some manufacturing, environmental impacts, and customer preferences, just to begin the list, can be an overwhelming task. Yet, there are tools and processes that can help with this, and if you want to be able to face the difficulties of the future with confidence, do not ignore them.  The tools are about supply chain planning and modelling. The processes are about risk management, and robust supply chain design. Profit Point helps companies all over the world address these and other issues to make some of the of the best running supply chains anywhere.

The future is coming, are you ready for it?

There is nothing like a bit of vacation to help with perspective.

Recently, I read about the San Diego Big Boom fireworks fiasco — when an elaborate Fourth of July fireworks display was spectacularly ruined after all 7,000 fireworks went off at the same time. If you haven’t seen the video, here is a link.

And I was reading an article in the local newspaper on the recent news on the Higgs: Getting from Cape Cod to Higgs boson read it here:

And I was thinking about how hard it is to know something, really know it. The data collected at CERN when they smash those particle streams together must look a lot like the first video. A ton of activity, all in a short time, and a bunch of noise in that Big Data. Imagine having to look at the fireworks video and then determine the list of all the individual type of fireworks that went up… I guess that is similar to what the folks at CERN have to do to find the single firecracker that is the Higgs boson.

Sometimes we are faced with seemingly overwhelming tasks of finding that needle in the haystack.

In our business, we help companies look among potentially many millions of choices to find the best way of operating their supply chains. Yeah, I know it is not the Higgs boson. But it could be a way to recover from a devastating earthquake and tsunami that disrupted operations literally overnight. It could be the way to restore profitability to an ailing business in a contracting economy. It could be a way to reduce the greenhouse footprint by eliminating unneeded transportation, or decrease water consumption in dry areas. It could be a way to expand in the best way to use assets and capital in the long term. It could be to reduce waste by stocking what the customers want.

These ways of running the business, of running the supply chain, that make a real difference, are made possible by the vast amounts of data being collected by ERP systems all over the world, every day. Big Data like the ‘point-of’sale’ info on each unit that is sold from a retailer. Big Data like actual transportation costs to move a unit from LA to Boston, or from Shanghai to LA. Big Data like the price elasticity of a product, or the number of products that can be in a certain warehouse. These data and many many other data points are being collected every day and can be utilized to improve the operation of the business in nearly real time. In our experience, much of the potential of this vast collection of data is going to waste. The vastness of the Big Data can itself appear to be overwhelming. Too many fireworks at once.

Having the data is only part of the solution. Businesses are adopting systems to organize that data and make it available to their business users in data warehouses and other data cubes. Business users are learning to devour that data with great visualization tools like Tableau and pivot tables. They are looking for the trends or anomalies that will allow them to learn something about their operations. And some businesses adopting more specialized tools to leverage that data into an automated way of looking deeper into the data. Optimization tools like our Profit Network, Profit Planner, or Profit Scheduler can process vast quantities of data to find the best way of configuring or operating the supply chain.
So, while it is not the Higgs boson that we help people find, businesses do rely on us to make sense of a big bang of data and hopefully see some fireworks along the way.

Uncovering the Value Hiding Behind Environmental Improvement Investments

Supply Chain optimization is a topic of increasing interest today, whether the main intention is to maximize the efficiency of one’s global supply chain system or to pro-actively make it greener. There are many changes that can be made to improve the performance of a supply chain, ranging from where materials are purchased, the types of materials purchased, how those materials get to you, how your products are distributed, and many more. An additional question on the mind of some decision makers is: Can I minimize my environmental footprint and improve my profits at the same time?

Many changes you make to your supply chain could either intentionally – or unintentionally – make it greener, so effectively reducing the carbon footprint of the product or material at the point that it arrives at your receiving bay. Under the right circumstances, if the reduced carbon footprint results from a conscious decision you make and involves a change from ‘the way things were’, then there might be an opportunity to capture some financial value from that decision in the form of Greenhouse Gas (GHG) emission credits, even when these emission reductions occur at a facility other than yours (Scope 3 emissions under the Greenhouse Gas Protocol).

As an example, let’s consider the possible implications of changes in the transportation component of the footprint and decisions that might allow for the creation of additional value in the form of GHG emission credits. In simple terms, credits might be earned if overall fuel usage is reduced by making changes to the trucks or their operation, such as the type of lubricant, wheel width, idling elimination (where it is not mandated), minimizing empty trips, switching from trucks to rail or water transport, using only trucks with pre-defined retrofit packages, using only hybrid trucks for local transportation and insisting on ocean going vessels having certain fuel economy improvement strategies installed. These are just some of the ways fuel can be saved. If, as a result of your decisions or choices made, the total amount of fuel and emissions is reduced, then valuable emission credits could be earned. It is worth noting that capturing those credits is dependent on following mandated requirements and gaining approval for the project.)

Global Market for GHG Credits

If your corporate environmental strategy requires that you retain ownership of these reductions, then you keep the credits created and the value of those credits should be placed on the balance sheet as a Capital Asset. Alternatively, if you are able, the credits can be sold on the open market and the cash realized and placed on the balance sheet. Either way, shareholders will not only get the ‘feel good’ benefit of the environmental improvement, but also the financial benefit from improvement to the balance sheet. If preferred, the credits can be sold to directly offset the purchase price of the material involved, effectively reducing that price and so increasing the margin on the sales price of the end-product and again improving the bottom line. If capital investment is required as part of the supply chain optimization, the credit value can also be a way to shorten the payback period and improve the ROI, or to allow an optimization to occur

So, when you consider improving your environmental impact or optimizing your supply chain, consider the possibility that there might be additional value to unlock if you include both environmental and traditional business variables in your supply chain improvement efforts.

Written by: Peter Chant, President, The FReMCo Corporation Inc.

Change is hard.

Collapsed Souffle

Collapsed Souffle

So why do it? Why change when you can be the same?  If you have a well-worn recipe to make a great soufflé, you know that the risk of tampering with that recipe can result in the collapse of the soufflé. So why change what is already working?

In the businesses that I help, change comes for several reasons. It may be thrust upon the business from the outside, a change in the competitive landscape for instance, or a new regulation.   It may come from some innovative source within the company, looking for cost savings to increase profitability of productivity, or a new process or product with increased productivity. Change can come from the top down, or from the bottom up. Change can come in a directed way, as part of a larger program, or organically as part of a larger cultural shift.  Change can come that makes your work easier, or harder, and may even eliminate a portion (or all) of the job that you were doing. Change can come to increase the bottom line or the top line. But primarily change comes to continue the adaptation of the company to the business environment.  Change is the response to the Darwinian selector for businesses.  Adapt or decline. Change is necessary.  It is clear to me from my experience that businesses need to change to stay relevant.

This may seem trite or trivial, but accepting that change is not only inevitable, but that it is good, is the shift in attitude that separates the best companies (and best employees) from the others.

So, you say, I see the need to change, it is not the change itself that is so difficult, but rather the way that it is inflicted upon us that makes it hard.  So, why does it have to be so hard?  Good question.

Effective managers know that change is necessary but hard. They are wary of making changes, and rightly so.  Most change projects fail. People generally just don’t like it.  Netflix is a great example.  Recently, Netflix separated their streaming movie service from their DVD rental business. After what I am sure must have been careful planning, they announced the change, and formed Quikster, the DVD rental site, and the response from the customer base was awful. As you likely know, Netflix, faced with the terrible reception from their customer base and stockholders, reversed their decision to separate streaming from DVDs. What was likely planned as a very important change, failed dead. Dead, dead, dead. Change can be risky too.

If change is necessary, but hard and risky… how can you tame this unruly beast?

The secret of change is that it relies on three things: People, Process, and Technology. I name them in the order in which they are important.

People are the most important agents relative to change, since they are the one who decide on the success or failure of the change. People decided that the Netflix change was dead. People decide all the time about whether to adopt change. And people can be capricious and fickle. People are sensitive to the delivery of the change.  They peer into the future to try to understand the affect it will have on them, and if they do not like what they see…  It is the real people in the organization who have to live with the change, who have to make it work, and learn the new, and unlearn the old. It is likely the very same people who have proudly constructed the current situation that will have to let go of their ‘old’ way of doing things to adopt to the new. Barriers to change exist in many directions in the minds of people.  I know this to be true… in making change happen, if you are not sensitive to the people who you are asking to change, and address their fears and concerns, the change will never be accepted.  If you do not give them a clear sense of the future state and where they will be in it, and why it is a better place, they will resist the change and have a very high likely hood of stopping the change, either openly, or more likely passively and quietly, and you may never know why the fabulously planned for change project failed.

Process is the next aspect of a change project that matters.  A better business process is what drives costs down. Avoiding duplication of efforts, and removing extra steps. Looking at alternatives in a ‘what-if’ manner, in order to make better decisions, these are what make businesses smarter, faster, better.  A better business process is like getting a better recipe for the kitchen. Yet, no matter how good a recipe; it still relies on the chef to execute it and the ovens to perform properly. Every business is looking for better business processes, just as every Chef is looking for new recipes.   But putting an expert soufflé recipe, where the soufflé riser higher, in the hands of an inexperienced Chef does not always yield a better soufflé.  People really do matter more than the process.

Technology is the last aspect of the three that effect change. Better technology enables better processes. A better oven does not make a Chef better.  The Chef gets better when they learn to use the new oven in better ways, when they change the way they make the soufflé, since the oven can do it.  A better oven does not do it by itself.  An oven is just an oven. In the same way, better technology is still just technology.  It by itself changes nothing.  New processes can be built that use it, and people can be encouraged to use it in the new process.  Technology changes are the least difficult to implement, and it is likely due to this fact that they are often fixed upon as the simple answer to what are complex business problems requiring a comprehensive approach to changing the business via it people, process, and technology.

Nice Souffle

Nice Souffle

Change is necessary, but hard and risky. Without change businesses will miss opportunities to adapt to the unforgiving business world, and decline. However, change can be tamed if the attitude towards it is changed to be considered a good thing, and is addressed with a focus on people, process and technology, in that order.  Done right, you can implement the change that will increase the bottom line and avoid a collapse of your soufflé.

“Going Green” is becoming a higher priority for companies large and small, as regulatory bodies and consumers around the world push for more readily-available information on corporate carbon footprints and companies’ plans to control / reduce their carbon emissions.  But how do you do this most cost-effectively?  Optimization is a tool that can lead to better “green” decision-making.

First, let’s review of the types of decisions that companies are making today.  Here are some real world examples from recent press reports…

Dole Food Company,  the world’s largest producer of fruits and vegetables, has committed to make its banana and pineapple business in Costa Rica carbon neutral over the next decade.  Dole social responsibility officials Sylvain Cuperlier and Rudy Amador recently highlighted their priorities in achieving this in an interview :

  • measurement of current carbon footprint and activities, such as the use of fertilizers,
  • research into and collaboration on mitigation and sequestration projects, and
  • improved  operations, including increased use of rail transportation on land and more energy-efficient refrigerated containers for maritime shipments.

Tyco Waterworks, a worldwide supplier of water system equipment based in the UK, has documented its consolidation of multiple manufacturing plants into a single Manufacturing Centre of Excellence for meter boxes, plastic injection molding and gunmetal products in Bridgend, South Wales.  Having all its manufacturing under one roof results in a reduction in the company’s overall energy consumption and transport, with a resulting positive impact on its carbon footprint (as well as giving operational efficiency benefits.)

Xerox Corporation, which provides document services and equipment around the world, maintains a fleet of 5,000 vehicles used by its technicians in the United States as they respond to customer requests for service.   Tony Rossi, Xerox’s manager of programs and operational support, said in an interview that his programs, which have reduced fuel consumption over the last several years by 10%, and have a goal of a 25% reduction, can be grouped into four categories:

  • pairing each driver with the best-sized vehicle for his / her needs,
  • improving the fleet’s fuel efficiency as vehicles are replaced,
  • tracking driver routes and distances traveled on a daily basis, and
  • using GPS systems to match available technicians against pending requests as they are dispatched during the day.

The common thread?  These companies have made progress towards their cost and carbon goals by

  • understanding their current situation, and what their options include,
  • implementing more efficient operations over their existing supply chain (thus generally using less energy and lowering their footprint), and
  • making the most effective capital additions to their supply chain systems when justified.

Optimization techniques can allow you to identify the best solutions that are possible in improving efficiency and implementing capital projects.  Thus you can make the best choices for meeting your goals from the options that you have at hand.

In making decisions for a manufacturing-oriented supply chain like the one described for Tyco Waterworks above, a network design tool like Profit Network can help you evaluate the benefits of:

  • keeping or consolidating existing facilities, as well as,
  • opening potential manufacturing sites, taking into account
  • capital costs,
  • shutdown charges,
  • manufacturing rates and costs,
  • freight costs, and
  • and a host of other costs and constraints on operations.

Profit Network uses a combination of linear and mixed integer programming and related optimization techniques to guarantee that you evaluate a range of solutions and identify those that are best for your particular needs.  Potential decisions that can be evaluated include both operational changes and choices among proposed capital projects that will lead to greater efficiency.

Xerox and Dole have scheduling problems that can be solved by both optimization and heuristic means.  The Xerox technician dispatching problem is a variation on the mathematically well-studied Assignment Problem, which can be solved using “greedy” algorithms (which pick off the “low hanging fruit” but are not guaranteed to give the absolute best solution) or more comprehensive methods that can give the best solution, at perhaps a longer solve time.  Transportation scheduling problems again can be solved through these methods. Using the technology of the 21st century will be critical for businesses to meet their “green” objectives.  Optimization technology is one of these new technologies that will help you reach these goals.

This article was written by Dr. Gene Ramsay, Profit Point’s Infrastructure Planning Practice Leader. To learn more about Profit Point’s Supply Chain Sustainability services, please call (866) 347-1130 or contact us here.

Image courtesy of Gavin Schaefer.


Profit Network 4.5 enhances visibility for decision makers and extends modeling capabilities to handle the world’s largest supply chains.

North Brookfield, MA (PRWEB) February 4, 2010 — Profit Point, a leading Supply Chain Optimization company, today announced the introduction of Profit Network 4.5, a major upgrade to their award-winning supply chain network design and modeling software. The software update includes a combination of new features and technical enhancements which combine to support richer scenario testing for larger supply chains over a longer time periods.

“With almost 10 years in the field, Profit Network has been put to the test against some of the world’s largest supply chains,” noted Jim Piermarini, Profit Point’s Chief Technology Officer. “But best practices have expanded over time, so decision makers are looking for more integrated and comprehensive modeling solutions.”

Profit Network 4.5, which is used by many Global 2000 companies to model supply chain plans, has been enhanced to integrate better capital planning, greater control over facilities decisions and improve tracking and modeling of sustainability initiatives. The modeling software now includes improved options for integrated capital spending, facilities decisions, natural resource planning and emissions mitigation.

“Ultimately, the number one priority for our customers remains capital planning and return on investments” said Piermarini. “A company’s infrastructure plan will dictate 80% or more of future costs. So, we added several features that help analysts understand the capital impact of decisions to control costs and maximize the long-term logistics benefits.”

The software update also includes several technical enhancements to improve planning for the largest supply chains, over longer periods of time. “We’ve added a new core optimization process into Profit Network 4.5,” stated Piermarini. “Customers will now have 50% more addressable memory capacity, which will yield deeper visibility in to larger networks and the long term tradeoffs that are being modeled.

To learn more about Profit Network and Profit Point’s supply chain software, visit www.profitpt.com.

About Profit Point:
Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point’s has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including Dow, The Coca-Cola Company, General Electric, Logitech, Sealed Air, Bridgestone and Toyota.

Below is a video interview with Ted Schaefer, Profit Point’s Director of Supply Chain Services, discussing supply chain optimization including cost reduction and supply chain sustainability issues for greener decisions with Xpress Optimization Suite.

To learn more about our supply chain network design services, contact us here.

In this video interview with CSCMP’s Supply Chain Quarterly, Ted Schaefer, Supply Chain Practice Leader at Profit Point, offers practical advice on how to make supply chains both “green” and profitable.

Watch the video interview to learn more about the ways leading companies are cutting costs and emissions:

To learn more about Profit Point’s Supply Chain Services, please contact us.

If too little attention is paid to sustainability and green initiatives, profitability and survival can be put at risk.

This month’s issue of Manufacturing Today features an informative article entitled You Can Go Green. The article, which was co-authored by Profit Point’s President, Dr. Alan Kosansky, and the firm’s Director of Supply Chain Services, Ted Schaefer, reviews the trade-offs and consequences of improving financial performance of the supply chain footprint, while also reducing the environmental impact.

You can read the complete article here.

To learn more about Profit Point’s Supply Chain Optimization services, please contact us.

Posted with permission from Manufacturing Today.

The U.S. Department of Transportation (DOT) has issued final guidance for the $1.5 billion in surface transportation grants it will award by next February, and among the top selection criteria will be environmental sustainability, innovation, and partnerships. DOT has included sustainability – improved energy efficiency, lower greenhouse gases, and/or less dependence on foreign oil – as one of five criteria it will consider in evaluating a proposed project’s long-term beneficial outcomes for a metropolitan area, a region, or the country. Long-term outcomes, along with a project’s impact on job creation and near-term economic stimulus, will be DOT’s primary criteria for awarding grants.

DOT will also be considering two secondary criteria – innovation and partnerships. DOT is soliciting projects that use innovative technologies to achieve long-term outcomes or significantly enhance the operational performance of transportation systems, and projects that involve partnerships with non-Federal entities and the use of non-Federal funds. Priority will be given to projects for which a grant will help complete an overall financing package.

Recent estimates from DOT suggest that up to $50 Billion in grant requests may be submitted, making this a highly competitive process. It will be essential for an applicant to thoroughly meet the primary guidelines and to score well on secondary guidelines to win tiebreakers. If your project doesn’t yet adequately address the three considerations of innovation, sustainability and partnership, Profit Point may be able to improve your chances of success:

Sustainability
Profit Point provides mathematics-based solutions that optimize the use of resources for maximal efficiency. Frequently this optimization results in reduced transportation mileage which minimizes greenhouse gas emissions as well as fuel consumption. It might also involve minimizing water use, minimizing output of toxic pollutants or maximizing production of beneficial byproducts.

Some examples include:

  • Scheduling ship berths at ports to minimize ship idle time in a harbor
  • Scheduling port (or canal) maritime traffic
  • Optimizing a port drayage schedule to minimize delays and overland carrier idle times
  • Optimizing local school bus or public transit system routes to minimize greenhouse gas emissions while providing optimal service
  • Routing your deliveries or pickups using the fewest miles traveled
  • Providing the algorithm to trigger variable speed limits on traffic leading to a congested area such as a city center or bridge
  • Optimizing deliveries for the elderly, such as “Meal on Wheels,” to minimize vehicle costs and emissions
  • Conducting infrastructure studies to evaluate the full impact of a project, such as a port expansion with intermodal considerations

If you need to address the sustainability criterion in DOT’s guidance or if you can benefit from including an optimization study as part of your application, we may be able to help you. Profit Point was recently awarded the Supply & Demand Chain Executive Green Supply Chain Award for its Green Network product. Profit Green Network can be used along with our Profit Vehicle Planner and Router Applications to create better plans and improve sustainability.

Innovation
While innovation is not a primary criterion for selection, it will be used to rank similar projects in order to break a tie. Adding leading edge technology such as mathematics-based optimization to your grant application provides one way of strengthening its innovative appeal.

Optimization is one of the hottest topics in industry today because it not only ensures operations are maximizing their current objectives, but also allows ‘what if’ modeling for future scenarios. “What if modeling” helps ensure continued achievement of your objectives, no matter what set of circumstances may occur.

Partnerships
After DOT considers primary criteria, priority will be given to innovative projects and those that involve State and local governments or private or nonprofit entities.

While there are certainly many partners available, adding a private, small business partner such as Profit Point, Inc. to the application may strengthen its overall appeal. Building on Profit Point’s extensive sustainable logistics and mathematical optimization experience can help make your project application unique.

Presenting the Proposal
Should you need assistance preparing your application or prefer advice from a transportation expert, you may wish to work with an experienced consultant on surface transportation issues. Phillips Strategic Services, a Northern Virginia firm with strong ties to both industry and government, is one firm available to assist you. Phillips Strategic Services experience includes:

  • Policy leadership at the Federal Highway Administration;
  • Policy development and lobbying for American Trucking Associations;
  • Senior staff to a Senate Committee handling surface transportation issues; and
  • Various government affairs, marketing, and strategic planning positions with Union Pacific Railroad, Conrail and CSX

In conclusion, nearly any type of surface transportation project is eligible for funding under the discretionary program, which was authorized by the American Recovery and Reinvestment Act (ARRA) of 2009. DOT has named the program “Grants for Transportation Investment Generating Economic Recovery” or TIGER Discretionary Grants, and applications are due by September 15, 2009 with all grants to be awarded by February 17, 2010.

If you’d like to improve your chances of success by strengthening the sustainability and innovative appeal, or if you need a partner to help you present your application most effectively, please contact us:

Profit Point, Inc.
No. Brookfield, MA
Cindy Engers: (925) 736-6800, cengers@profitpt.com
Richard Guy: (435) 487-9141, rguy@profitpt.com

Phillips Strategic Services Ltd.
Alexandria, VA
Mary Phillips: (703) 360-3560, mphillips@phillipsstrategicservices.com

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 move towards a green supply chain, 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/.

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

Green Supply Chain AwardGreen Network software is recognized for its role in helping to build environmentally sustainable businesses.

Supply & Demand Chain Executive magazine honored Profit Point, a leading supply chain optimization company , with a 2008 Green Supply Chain Award. The company and its Green Network supply chain design software was recognized as a Green Supply Chain Enabler. Profit Point is showcased with other award winners in the latest issue of Supply & Demand Chain Executive.

Profit Point has been delivering supply chain optimization services and software to Fortune 500 companies for more than a decade. Earlier this year, the company introduced Green Network when it recognized that its clients needed a robust tool to account for and optimize away manufacturing waste, such as industrial pollutants and green house gas emissions.

“Profit Network software has been helping large companies around the world build more robust and profitable supply chains for more than 10 years,” said Jim Piermarini, Profit Point’s CTO. “From our clients’ perspective it makes sense to incorporate environmental byproducts in to the network design to evaluate opportunities and costs and conduct scenario testing in advance of these critical infrastructure decisions.”

The company’s software products are now used to help companies manage the tradeoffs associated with environmental resource constraints, such as limited water supplies in developing countries. Profit Point’s transportation and distribution clients achieve more efficient territory planning and vehicle routes, which mitigates unnecessary fuel consumption and carbon dioxide emissions.

The Green Supply Chain Awards recognize small, midsize and large organizations that are taking steps to realize eco-efficiency goals. Submissions were judged based on the clarity and content of each program’s goals and strategy, the extent of the steps being taken, the impact of the results to date and projected results, and the form and presentation of the information submitted.

“We are honored to be recognized by Supply & Demand Chain Executive for our focus on sustainability and we’re delighted to play a role in helping business managers define and reach environmental sustainability objectives across their supply chain,” said Alan Kosansky, President of Profit Point. “We look forward to any opportunity to help create a more sustainable business environment.”

To learn more about Profit Point’s supply chain software and services, visit www.profitpt.com.

About Profit Point:
Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point’s has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including The Coca-Cola Company, General Electric, Logitech, Rohm and Haas and Toyota.

Supply Chain QuarterlyThis month’s cover story in the CSCMP’s Supply Chain Quarterly magazine feature’s an excellent article written by Profit Point’s Green Optimization Practice Leader, Ted Schaefer, and the firm’s President, Dr. Alan Kosansky.

The article, Can you be green and profitable?, deals with two competing, yet critical issues that face supply chain managers across the globe. As the authors point out, “profitability and sustainability don’t have to be mutually exclusive. By considering environmental issues when setting financial objectives for a supply chain network analysis, companies can successfully balance the trade-offs between them.”

You can read the complete article here.

If you would like to learn more about our Green Supply Chain Optimization services please contact us.

The Better Process Podcast, an industry show that discusses lean manufacturing news, today featured Ted Schaefer, Profit Point’s Director of Logistics and Supply Chain Services. The show is hosted by Ken Rayment, a manufacturing engineer and Six Sigma Black Belt.

The interview covered a range of topics addressing the challenges that small and mid-size manufacturing firms are facing today, including rising energy costs and increasing competition overseas. The show also highlighted several manufacturing paradigm shifts such as rising wages in China and India and greening supply chains, which are causing manufacturers to reconsider various aspects of their production and distribution processes.

The discussion included a number of recommendations that manufacturers ought to consider, including approaches toward making quantitative trade-offs and the application of optimization techniques to find the lowest total cost for manufacturing.

Listen to the interview here

To learn more about how Profit Point’s supply chain consultants can help optimize your supply chain, contact us here:

(866) 347-1130 or
(435) 487-9141

Send us an Email

Dwight Collins, Profit Point’s Green Supply Chain expert, attended the Sustainable Energy Conference at Cornell University and was interviewed by the Cornell Chronicle for his work on sustainable operations research. The conference, entitled “Sustainable Energy Systems: Investing in Our Future,” provided a full slate of talks that outlined the relationship between energy and climate challenge and considered the viability of an array of solutions ranging from conservation, petroleum and coal to nuclear, solar, wind, geothermal, hydroelectric and biofuels sources.

Collins, who teaches sustainable operations management at the Presidio School of Management, noted that the “the OR profession is missing out on some major opportunities for leadership in the field of sustainable business.”

Profit Point, a leading supply chain optimization firm, announces the introduction of Green Network, a green supply chain network design application.

North Brookfield, MA (PRWEB) April 4, 2008 — Profit Point, Inc., a leading supply chain optimization consultant, today announced the release of Green Network, a supply chain network design application that empowers a supply chain manager to gain visibility in to the trade-offs they will face when designing a green supply chain. Built upon proven technology, Green Network extends the company’s Profit Network application by enabling supply chain managers to include any number of environmental byproducts, including carbon dioxide, nitrogen oxide, particulates, and wastewater, in to the analysis process. The user can also manage total energy consumption or the type of energy consumed (coal, natural gas, hydroelectric, thermal, wind, etc.) in the design of the supply chain.

“Many of our clients have expressed a strong interest in greening their supply chains to meet the growing demand by consumers,” said Alan Kosansky, Profit Point’s President. “Designing a sustainable supply chain is becoming a significant priority for our clients, but not at any cost. The key to building a sustainable supply chain comes in truly understanding the trade-offs that are faced by decision makers.”

Green Network was designed as an out-growth of Profit Network, an industry-leading supply chain network design software system. Profit Network is a robust, yet cost-effective tool that helps companies of all sizes optimize their supply chain for maximum profitability.

“Profit Network software has been helping Fortune 500 companies around the world build more robust and profitable supply chains for more than 10 years,” said Jim Piermarini, Profit Point’s CTO. “By leveraging our work in Profit Network, we were able to build a powerful tool that accounts for environmental impact and profitability.”

In addition to Profit Network and Green Network, Profit Point’s line of supply chain software also includes Profit Vehicle Router, a system for optimizing transportation routing, Profit Distribution Scheduler for easy production and distribution scheduling and Profit Meeting Scheduler, a sophisticated conference scheduler used by major trade organizations.

For additional information about Profit Point’s supply chain design and optimization software and consulting services, contact Richard Guy or visit www.ProfitPt.com.

About Profit Point:

Profit Point Inc. is a supply chain consulting firm founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operation, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point’s has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including The Coca-Cola Company, General Electric, Rohm and Haas and Toyota.

Contact:

Richard Guy
Profit Point
(866) 347-1130

“Green” Supply Chain Optimization

February 22nd, 2008 9:55 pm Category: Supply Chain Improvement, Sustainability, by: Ted Schaefer


Adding Sustainability into the Equation

Hardly a day goes by anymore when we don’t see sustainability issues making headlines in our newspapers, magazines or on TV. Terms like, “global warming”, “greenhouse gases”, “watershed impact” and “energy reduction” are all becoming more important in both the news media and in the supply chains of large and small companies around the world. The US EPA’s Smartway Transport Partnership, the EU’s “Climate action and renewable energy package” and the UN’s “Water for Life Decade” are but three of the many programs that are already underway or are under consideration by major government bodies around the world. Clearly, the case for improved sustainability has been made and will be a major driver of change in the coming years.

So, how do you, as a supply chain manager, integrate your company’s sustainability goals into your supply chain without burdening it with unnecessary costs or adding additional steps that slow it down or impact customer service? Is it possible that you can implement changes that both improve sustainability and your profits at the same time? I’ll try to answer both of those questions in this article.

Integrating Sustainability Goals into Your Supply Chain

Green Optimization is Profit Point’s next generation of supply chain design. Here are 7 steps we can take to integrate your sustainability goals into your supply chain:

1. “Sustainability” is a term that is used very broadly throughout industry, regulatory agencies, communities, and the news media. We need to determine what, precisely, we are trying to accomplish with respect to sustainability. Are we trying to reduce our impact on the watersheds in which we operate? Are we trying to reduce packaging waste? Are we involved in a regional plan to cut certain types of emissions or reduce peak energy consumption? Are we trying to reduce our carbon dioxide (CO2) footprint? And, for any of these questions, is there a certain targeted reduction that we have in mind? Without answers to these questions, it is very difficult to analyze your alternatives and develop a plan to meet your goals.

2. We need to determine the boundaries of the supply chain we are trying to improve. Are we looking at our entire global supply chain, or are focusing on our distribution operations in a single region of the world? Are we bounding our analysis within assets and processes that are totally controlled by our company, or are we including our suppliers and/or customers in the analysis? Are we trying to achieve our sustainability goals within our existing supply chain infrastructure, or do we need to factor in potential expansions or contractions of the supply chain?

3. Once we have unambiguously defined our goal and have clear boundaries around the supply chain we must improve, we need to collect and understand the information that is available to analyze and model our supply chain. This will be information will include things like production capacity, plant operating costs, grams of CO2 produced per kg of finished goods, transportation costs, and product pricing. We may want to include the sources of electricity used by our manufacturing facilities or raw material suppliers to favor those sites using renewable sources of electricity over those that use coal-based electricity. Likewise, we may want to include our transportation suppliers so that we favor carriers with more fuel-efficient fleets. This step is usually the most time-consuming step in the process but is critical to the generation and implementation of the changes you will make to meet your goals.

4. With this collection of information, we need to model the supply chain to generate options that both meet our sustainability goals and maximize our profitability. In this step, the “art and science” of green optimization comes to bear. It is here that we may need to make trade-offs between sustainability goals and profitability or cost goals. For example, we may be able to make a very significant reduction in our CO2 footprint with a very slight increase in cost or reduce peak energy consumption by carrying more inventory. Where these trade-offs can be accurately quantified, the “science” is used. However, where the sustainability improvements cannot be quantified, then we use the “art” to bracket the value and the cost of the improvement.

5. Now that we have selected the top options, we need to discuss them with the key stakeholders and decision-makers to get buy-in for a single option so that a successful implementation can follow. This discussion is especially important when future-based assumptions have been made in the analysis. For example, if we’ve assumed a 5% growth in demand and assumed the price of crude at $85/bbl to choose the best solution, will our choice still be the best one if our demand only grows by 2% and the price of crude moves to $100/bbl? If there is a lot of uncertainty in these key parameters, it is important that all stakeholders have a good understanding of the risks associated with each of the options presented. In fact, it may well be time for a more robust type of optimization analysis, but that will be the subject of a future blog article.

6. With all stakeholders on board, it is time to implement our new plan to achieve our sustainability goals. In addition to the communication, selling and training/education facets of our change management plan, we need to include a measurement system ensure we are getting the improvements we anticipated and to check for unintended consequences of our change. This measurement system will also directly feed the last step in this process…

7. … which is to periodically recheck our assumptions and refine our analysis and plan as external events like new customers or unanticipated costs present themselves, or as we find that a key assumption does not hold true for our sustainability gains.

Can Sustainability and Profitability Go Hand in Hand?

As in many broad-based business questions, it depends. Many companies are finding that their search for sustainability is also leading to reductions in cost, particularly in the area of greenhouse gas reduction. In these companies, the addition of the carbon footprint to the optimization equation further strengthens the case to improve transportation efficiency or improve production planning and scheduling to produce only what is needed by a customer and only when it’s needed.

In other companies, for example those that are looking to reduce watershed impact, they may find that a small increase in cost will result in a very large reduction in watershed impact. Although this may show up as a short term “hit” to the P&L, it can be a large source of goodwill that will translate into greater customer loyalty for years to come. It is important to remember that from our neighborhoods to national governments and international organizations like the UN, we all receive a “license to operate,” both from the regulatory and the public opinion perspective. Our customers want to know what we’re doing about sustainability and so do our communities and governments. We need to be able to show them tangible results.
In the end, adding sustainability into your supply ch
ain goals is simply another tradeoff in an existing decision making process based on tradeoffs. However, considering sustainability from the beginning of the process allows you to influence your corporate culture and processes to be more responsive to an ever growing set of business objectives.

If you’re interested in learning more about Supply Chain Sustainability, please contact us or take a visit our website at ProfitPt.com.

This article was written by Ted Schaefer, Director of Logistics and Supply Chain Services at Profit Point.

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