Supply Chain Frontiers Issue #29. Read all articles in this issue
Even though companies are devoting more resources to developing green supply chains, some form of government support is needed to address environmental issues that are simply too big for enterprises to tackle alone. The problem is that such private/public partnerships often falter after the initial goals are met. The MIT Center for Transportation & Logistics’ (MIT CTL) Carbon-Efficient Supply Chains research program is looking at ways to make these partnerships more enduring, using the U.S. Environmental Protection Agency’s highly successful SmartWay program as a model.
EPA launched SmartWay in early 2004 to address the environmental and economic challenges surrounding growth in the freight industry. Through SmartWay, EPA is now working with over 1,000 businesses to improve both their bottom line and the environment. SmartWay offers tools for evaluating opportunities to lower fuel use and emissions and help in locating financing for the purchase of environmental and fuel-saving technology.
“We are deconstructing the program and looking at how and why it has been successful, and identifying the key drivers of success in the way it has been implemented by EPA,” said Dr. Edgar Blanco, head of MIT CTL’s Carbon-Efficient Supply Chains research program. The insights gleaned by the team will not only help EPA to make SmartWay more sustainable, but will provide guidelines for similar government programs anywhere in the world.
A problem that policymakers often face is maintaining funding levels after recording early successes. As programs expand, agencies have to decide whether to spread existing resources more thinly over a larger membership base, or try to secure more government funding and continue to recruit new members. If service levels go down due to a lack of resources, it can be more difficult to persuade existing members to stay in the program, particularly when they have met their initial objectives. Also, agencies have to continue to develop new and improved services to maintain the program’s momentum. “They can easily become victims of their own success if they don’t strike the right balance between service levels and resource requirements: these are the sorts of issues we are modeling,” said Blanco.
The research has identified a number of other issues. For instance, the structuring of the SmartWay program to include shippers has contributed greatly to its rapid growth. While shippers are not in direct control of carbon dioxide emissions, they have leverage over the carriers that they hire. They are able to put pressure on these carriers to join the SmartWay program and implement strategies to improve fuel efficiency. In addition, while program staff members had very close contact with each of the partner companies during the initial stages of the program, this is becoming extremely resource-intensive as the number of participants increases. It is recommended that program staff reduce their direct involvement in partnership management, and focus instead on program services. Other scenarios that the research has looked at include implementing a stronger drop out system and concentrating resources on larger companies.
The results of the MIT CTL research are scheduled to be presented at the EPA International SmartWay Summit, December 2, 2008, Ann Arbor, MI. The EPA will present the next version of SmartWay at the event.
For more information on the research and MIT CTL’s Carbon-Efficient Supply Chains program, contact Dr. Edgar Blanco.