Supply chain network design: its Green powers not exactly new

Supply chain network design software increasingly is touted for its Green capabilities. This class of optimization software has long been able to optimize a supply or outbound logistics network for factors like lower cost or faster delivery, but lately, vendors have been pointing to enhanced ability to optimize around a lower carbon footprint. But according to one vendor executive in this market, the carbon optimization potential of network design tools basically has been there all along.

According to Jeffrey Karrenbauer, president of INSIGHT, a supply chain network design software vendor founded in 1978, optimization packages such as INSIGHT’s SAILS use models and solver algorithms that generally are capable of churning out an answer around any number you plug into the model, including energy or emissions per unit of logistics activity. “Some vendors have made breathless announcements around Green capabilities, but these models can’t tell for numbers,” he says. “It’s all being done by the same software engine.”

Karrenbauer acknowledges that network design vendors have prebuilt some table structures for getting emissions-related numbers into the model, as well as some carbon-related reports for assessing options. Though useful, he adds, these type of features are basically “data prep short cuts” to optimizing for carbon footprint.

INSIGHT’s SAILS package also can optimize for carbon footprint, Karrenbauer says, but the tougher Green feature to build into the software was its ability to optimize around byproducts and coproducts. For instance, SAILS can determine which network design best supports the ability to resell co-products, or which design best supports lower cost disposal of waste materials. The reason this was harder to do than factoring emissions into the model, says Karrenbauer, is that network design models generally haven’t addressed the “one to many” logic that is needed to represent the generation of multiple byproducts or waste streams from a single product. Overcoming this required some “nasty mathematical twists” on the part of INSIGHT’s development team, he adds.

SAILS Version 4.5 shields users from these twists while allowing the optimization of byproduct questions, Karrenbauer says.  “We see a growing need to include [byproduct considerations] as part of a strategic supply chain analysis,” he says.

Other vendors of supply chain network design tools include IBM, which with its acquisition of ILOG gained a supply chain network design solution (the former Logic Tools solution), as well as Llamasoft. While vendors of carbon accounting software typically have reporting tools that can show trends involving the carbon footprint of the established supply network, optimization software packages are different in that they actually model and suggest an optimal network design according to a goal like carbon reduction. To me, it’s a good thing to see the “Green” capabilities of supply chain network design applications being focused on more heavily by vendors, regardless of how many (or how few) R&D twists the vendor had to go through to come up with the Green features. To really cut carbon emissions from a supply chain, it can help to leverage optimization as part of strategic planning.