Part of a series
Our supply chain discussion started with some basic definitions of what is included in a supply chain from a manufacturing perspective, and then added what would be green elements for consideration. Last time I referred to Interface Carpets as a leader in sustainable business development because they have a corporate mission held from top to bottom, they have a set of measures to indicate where they are and what progress they are making toward eliminating waste, excess energy and materials use and intense recycling and reuse - and they track all this diligently. Continuous energy per unit of product reduction - the key ingredient in the equation for reducing impact. As you can tell, I think this company is "walking the walk" and not just "talking the talk."
Last time I also presented an example to illustrate the impact of supply chains and, in particular, energy mix and transportation related to a simple vehicle manufacturing global supply chain. One of the important determinants in the impact of that was that the CO2 emission will be different at each facility in the supply chain due to the different energy mixes associated with the electricity supplier in that location.
This is a serious consideration. Around the world, the energy mix by location can be dramatically different. We had discussed this in an earlier posting but let's look into this in more detail. The figure below with data from a number
of sources shows the variation in the energy conversion factors from a number of countries around the world. The units in the table indicate the carbon intensity of electricity production (gCO2 per kWh of electricity (or 0.001 MTon/MWh). Smaller numbers indicate a lower impact per unit of energy. France is lowest due to the preponderance of nuclear power. Countries with a preponderance of coal-based electricity (such as China or India) will have a larger impact. As seen in the figure, the difference can be as high as 10 to 1 (if comparing India to France). (Data from: Source: MacKay, D., Sustainable Energy - without the hot air, UIT, Cambridge, 2009, pp. 335; China/India: http://www.ghgprotocol.org/calculation-tools/all-tools; accessed 7/9/09)
Let's consider a few manufacturing locations:
- France = 6.30 MTons CO2 (76 MWH x .083 MTon/MWh = 6.30 MTon)
- Japan = 36.70 MTons CO2
- USA = 46.60 MTons CO2
- India = 71.76 Mtons CO2
Same car … same process steps … big difference in impact! That's what was a big differentiator in the supply chain example of last time. If this impact/product at the manufacturing stage must at some future time be accounted for then where you make something will be even more important from the impact aspect and not just labor rates.
Now, these conversion factors are the weighted average for the country. Obviously, specially for large countries with variation in energy supply technology, these can differ within a country as well. Let's look at a prime example of this - the US. The figure below (click on it for detail) is a map of the United States
with the conversion factors superimposed over regions of the country (and here, the conversion factors are 1/100th of the factors in the first figure; US average here is .606 (or would be 606 from the first figure) due to the source of the data). And, the source of the data in this figure is EIA, US DOE, “Updated State-Level Greenhouse Gas Emission Coefficients for Electricity Generation 1990-2000,” April 2002; and map: http://wordpress.org/support/topic/255876, accessed 6/27/09.
The US average CO2 impact to build the car was 46.6 MTons CO2. But, looking at building the same car in different parts of the country we see, again, tremendous differences:
- Washington (0.111) = 8.44 MTons CO2
- California (0.275) = 20.90 MTons CO2
- North Dakota (1.017) = 77.30 MTons CO2
- Kentucky (0.911) = 69.00 MTons CO2
Building our auto in areas with a heavy dependence on coal fired power plants for electricity gives the auto a large carbon footprint. The difference is as large as 3 or 4 to one (California vs North Dakota) or almost 10 to 1 (Washington vs North Dakota.) Of course, we don't build cars in Washington state or North Dakota. But we build them in Kentucky (Prius, for example) and used to build them in California at NUMMI in Fremont. So a comparison of the California vs Kentucky impact is rational - over 3 to 1 difference. So, if you buy an auto made in Kentucky and ship it to California for sale you might be looking at a substantial "impact penalty" compared to making and selling the auto in California.
As they say in the real estate business - location, location, location. Maybe the same advice applies (or will apply) for manufacturing and the supply chain!
If we would do the same sort of analysis, as we did in the example from last time, and consider more of the sustainability elements - social, environmental and economic impacts - the dominance of supply chain and the need to green that chain comes into perspective. We've put together a figure that captures
some of these impacts as shown below.
Companies today get resources from many different places, convert that material in others, acquire and convert the materials from yet other places and, finally, assemble the products from components made them selves in one or more locations along with components from others from other places in the world.
I've tried to capture some of this complexity in the figure below (again, click on it for detail) which attempts to show, relative to many impacts and resources, the developing
This is not at all trivial to keep track of these impacts let alone the source of all of these little bits and pieces. How this is done is still being developed and is of interest by a large number of multinational corporations.
But, to know the challenge is the first step. Then the metrics, software tools, analytical methodologies and, even, simple rules of thumb, can be developed and used to get a better picture of where we are and what progress we are making.