Achieving economic and environmental improvements in organisations through low carbon supply chain resource modelling

Impact Area: Green Economy
Institution: Sheffield University Management School
Leading Academic: Professor Lenny Koh

Introduction

Research within Sheffield University Management School into supply chain management and carbon reduction has delivered economic and environmental impact by helping businesses reduce their carbon footprint through lowercost resource efficiencies.

The Supply Chain Environmental Analysis Tool, SCEnAT, was developed from research and has helped businesses worldwide change their operations to reduce CO2 emissions, make cost savings of up to £250,000 per company, and improve their business performance through – in one case – winning contracts worth £1.75million.

The research has also been used by regional business organisations in developing and implementing growth strategies to support low carbon businesses in Yorkshire and Humber.

Underpinning research

External pressures on organisations has created an imperative for combined low carbon, low-cost operational and organisational solutions. In response a team from Sheffield University Management School, run since 2005 by Professor Lenny Koh, has researched and tested theories and methodologies to develop a supply chain resource modelling system to help organisations maximise efficiency and reduce carbon footprints.

External pressures on organisations has created an imperative for combined low carbon, low-cost operational and organisational solutions. In response a team from Sheffield University Management School, run since 2005 by Professor Lenny Koh, has researched and tested theories and methodologies to develop a supply chain resource modelling system to help organisations maximise efficiency and reduce carbon footprints.

The group advanced theory by advocating a balanced whole supply chain system approach to improve both the understanding of, and decision making for, carbon accounting across global supply chains. This applied methodologies to identify areas of greater risk and uncertainty for carbon reduction in the supply chain.

In 2010 Professor Koh led a two-year collaboration, which developed a decision support tool to help organisations identify areas of high carbon usage and select lowest-cost interventions to address them. This was the crucial point where theory was brought to practice.

The project aimed to design a system that could integrate different techniques and methods of supply chain mapping and carbon accounting, suggesting interventions that would reduce carbon footprint whilst improving efficiency. Our team developed methodologies for mapping supply chains; tracing components, revealing materials and energy usage at each level, and manufacturing processes and logistical operations within and between each company.

The Sheffield team then developed software based on the relationships identified that can be applied to reveal the points of highest carbon consumption and interventions that have the most cost-effective impact on the carbon footprint.

Benefits and impact

Instrumental impact

• Our research into supply chain resource modelling has had economic and environmental impact, helping businesses adapt operations to achieve carbon-reduction targets, whilst reducing costs.

• It has also influenced regional and national business development strategy.

• The team worked with the Sheffield City Region Local Enterprise Partnership and the Sheffield Chamber of Commerce and Industry.

• The major output of the Low Carbon Supply Chain Project, led by our team, was SCEnAT which launched in 2011. It is online (www.scenat.com), making it easy and free to companies to access. Recently, the software has been extended as a demonstration Cloud computing platform, which permits remote usage and use of simulation data.

• The project team has worked with a business advisory group and with regional Chambers of Commerce to disseminate the research findings and SCEnAT to a wide network of SMEs. Six companies have used the tool to date, and our team has worked with one of them to develop a ‘spin off’ carbon calculator specifically aimed at the agricultural sector.

• A key benefit for the organisations has been the ability to identify, assess and trace energy usage and carbon emissions at every step in their product’s production process. Four companies have already implemented organisational changes.

• The businesses that have used SCEnAT have benefitted from a reduction in their carbon footprint and supply chain cost savings due to interventions recommended by the model. For example, Sheffield Forgemasters’ director of operations believes that the work has helped them to introduce initiatives that have contributed to a reduction in their C02 emissions to 38 per cent below the Government’s benchmark. This is helping them to reduce green taxes which cost the company £1.25million per annum.

References:

Koh, S.C.L., Genovese, A., Acquaye, A.A., Barratt, P., Rana, N., Kuylenstierna, J. and Gibbs, D. (2012) Decarbonising Product Supply Chains: Design and development of an integrated evidence-based decision support system – the supply chain environmental analysis tool (SCEnAT), International Journal of Production Research, 51(7), pp. 2092-2109