Supply Chain Frontiers issue #22. Read all articles in this issue
Products such as appliances carry labels that show consumers how much energy the units consume during operation, so why not introduce a similar system for the amount of carbon emitted during a product’s manufacture and delivery? It’s an attractive concept that appeals to environmentally-minded buyers – but it is also much more complex than it appears.
That’s one reason why the MIT Center for Transportation & Logistics (MIT-CTL) has launched a carbon-efficient supply chain research program that will, among other things, identify which carbon labeling systems have commercial potential. “This work is important for companies in virtually every industry because these labels are starting to appear and the consequences for supply chain management are far-reaching,” said CTL Research Associate, Dr. Edgar Blanco, who is leading the new research group.
There are two fundamental problems with carbon labels. First, there is no universal standard for what information these tags should carry, or how the details should be conveyed. “This is crucial because studies show that too much information confuses consumers,” Blanco said. The established energy star labeling system is concise and easy to understand; there needs to be a similar standard for the carbon equivalent. A credible authority is also needed to oversee carbon labeling since “the best systems have the seal of approval of an independent party,” said Blanco.
Much more important from a supply chain perspective is the problem of how to account for all the carbon generated during the life cycle of a product. Supply chains engage multiple parties and are dynamic, and when routes and/or modes of transportation change so does the carbon footprint of the product. Each time a distribution network is re-configured, the amount of carbon emitted to deliver it to the shelf changes. How do companies account for such variations?
Delve more deeply into where carbon is emitted in the supply chain and the picture becomes even more complicated. Take, for example, Fiji Water, bottled water produced in Fiji that is shipped to markets in North America and Europe. Transporting the water thousands of miles consumes much energy, and it would seem that local sources of this basic product are much more carbon-efficient. However, Fiji’s geothermal sources of energy generate less carbon than the fossil fuel-based sources that drive many water bottling operations in the U.S. and Europe. When this difference is taken into account, comparing the carbon footprints of respective supply chains is less straightforward. And there are other pieces of the supply chain that alter the carbon equation, such as the manufacturing process of the plastic used to make the bottles that contain the water.
“The danger of rushing into a labeling system for carbon is that all of these variables are not factored in,” said Blanco. Instead of helping consumers to make informed decisions about the products they buy, flawed carbon labeling could achieve the opposite, he added.
The CTL carbon-efficient supply chain research project will look at how the carbon footprint of products can be measured, which labeling options are viable, and the implications for supply chain strategy.
For more information on CTL’s carbon-efficient supply chain research program, contact Dr. Edgar Blanco.