Carbon-Efficient Supply Chains

1. Introduction

Nowadays due to the global climate change and the environmental legislation developed worldwide, the need for sustainable operations is urgent and has taken significant dimensions. Therefore, it is evident that we go through the era of Sustainability meaning that the current resources used for the various processes are not depleting at the moment, but are also enough to cover future needs. Thus, Sustainable Development includes the activities implemented towards environmental protection and operations optimization. The sign of Kyoto Protocol was the reference point for all the environmentally friendly oriented activities from nations, organizations, companies, and individuals referring to specific targets that need to be reached in certain period of time all over the world. The said protocol includes also guidelines and standards for measuring and reporting the greenhouse gases (GHG) emissions. The Ecological Footprint indicator that was used initially to evaluate the size of the biotical area needed to cover the needs of a specified population proved to be unsuitable for application and at that point carbon footprint indicator was introduced. In a few words, carbon footprint is the total amount of GHG emissions, normalized in mass units of CO₂ emissions, generated by all the activities taking place from a start- to an end-point. In the case of a product, it includes the CO_2-eq emissions generated by all the processes taking place in the supply chain of that product. The greenhouse gases according to the Greenhouse Gas Protocol were the Carbon dioxide (CO₂), the Methane (CH₄), the Nitrous Oxide (N₂O),the Hydro fluorocarbons (HFCs),the Per fluorocarbons (PFCs) and the Sulfur hexafluoride (SF₆). Additionally, there is another categorization of the emissions based on the energy consumption (direct and indirect).The validity and accuracy of GHG emissions measurement lies on large scale in the need to define strictly the boundaries of the system. In few words each and every process of the supply chain including the intermediate ones of has to be clearly defined. Then, for each of these processes data need to be gathered and the method used should be defined since there is an instant impact on the quality and reliability of the data and consequently of the results. For the data processing the most prevalent method used is Life Cycle Analysis and more specifically the Input-Output Analysis. Other models such as the “Supply chain Operations Reference (SCOR)” are used for the calculation of carbon footprint which is actually an aggregation of the measurements from each sub- and basic-process. As mentioned above, in the case of products, carbon footprint refers to product’s whole life cycle, including gathering of raw materials, production, warehousing, distribution and all the sub-processes of the supply chain. Each stage of these is very important throughout the calculating of carbon footprint. Performing a CF calculation can be extremely complex within an organization, where there are interactions between the departments of an organization and all the involved parties in it. It is important though to mention that such a study could also provide information about the efficiency, the cost and the environmental impact of the company’s functional operations, which can prove to be very valuable for reducing the costs, increasing profits and becoming environmentally friendly. Up until now, it isn’t obligatory for all companies to measure their carbon footprint and their products’ footprint as well. However, it is not only the legal framework that puts pressure towards this direction, but also customers’ need for ecological products in low prices. This deepens the competition between companies and in the long run the way that an entity is using carbon footprint called Green Supply Chain Management could be considered as a competitive advantage. Green supply chain management deals also with other issues such as shareholders’ interests, firm’s performance, products pricing and customers decision making. A thorough design of a GSCM is necessary in order to meet the previously mentioned targets. It is generally accepted that GSCM can lead to a more efficiently operating supply chains, in terms of lower energy consumption, less wastes and lower production and distribution costs aiming to better economic performance. Furthermore, from marketing perspective, it can contribute positively in increasing company’s market share, since the provided information – using carbon labels – differentiates the product from the competition. However, opponents of this approach exist, stating that GSCM increases business and operational costs resulting in firm’s financial performance deterioration.