1. business and industrial
2. energy
3. renewable energy
4. biofuel

Implications of Carbon Management on
Supply Chain Design Issues
Funding Sources: SPSP and Blum Center
Carbon Emission Trade-offs in Logistics
■  The transportation is usually the focus of company to
reduce their carbon emission because it is implementable
in a short period.
Ac#on to Reduce Carbon Emission
Related Issues
Reduce shipment frequency
Increase the lot size so that the products can be shipped by larger trucks and the carbon emission per product will be reduced
■  Honda use marine or railway transportation to save energy,
change the import seaport in Japan to reduce mileage on land.
■  Toyota worked with their partner to restructure routes and increase
load density
Change to a low-­‐carbon transportaBon mode
To maintain the service level, the inventory level has to be increased. è Need larger warehouse and keep a single product longer in warehouse
The lead Bme may be longer due to slower shipment
■  Norris et al. (2002) and Weber et al. (2007) suggested that
carbon emission from international transportation and
wholesaling/retailing are significant.
■  A long-term strategy may make more impact on the
whole supply chain.
Source: Butner et al. (2008) Research Questions
3-Tier Supply Chain Structure
■  What are the trade-offs between reducing transportation
emission and other supply chain activities?
Where to locate the warehouse? In what size? Minimize Cost? Or Minimize Carbon Emission? ■  Some actions that reduce the emission from transportation will
increase the inventory level in the warehouse.
■  Is bigger warehouse better as traditional supply chain
literature review suggested?
■  How the relationship between cost and carbon emission
affects the optimal supply chain design?
A study that consider the cost and carbon emission of
inventory and transportation is needed to understand the
above questions
How many to ship in each shipment? What transportaBon mode to use? Carbon Emission from Supply Chain Activities
Transportation
Transporta#on Warehouse Opera#on Warehouse Construc#on Which warehouse should this store be assigned to? Major Fuel Consump#on of Warehouse Opera#on Factors of Carbon Emission and Energy Consump#on Assump#on on Es#ma#on fuel efficiency: Speed Weight TransportaBon mode (Air freight, rail, truck, or ocean freight) Outbound logis#cs: (carbon emission factors) * (travel distance) * (total weight of loading products) Inbound logis#cs: Fixed carbon emission per shipment + variable carbon emission per unit product per distance construcBon material, equipments in the warehouse, size of the warehouse, inventory level, and so on The inventory in a non-­‐refrigerated warehouse has small effect on energy consumpBon and is assumed can be ignored. The warehouse operaBon energy consumpBon is assumed an exponen#al func#on in warehouse size based on regression analysis on data from CBECS 2003. Other Computer 11% Office 1% Equipment < 1% HeaBng 43% RefrigeraBon 8% Data source: US EIA CBECS 2003 LighBng 29% Water HeaBng 1% Cooling 3% VenBlaBon 4% Warehouse Energy Intensity for Sum of Major Fuels (thousand Btu/square foot) 80 70 60 50 Warehouse Energy Intensity for Sum of Major Fuels (thousand Btu/square foot) 40 30 20 construcBon technology, The energy consumpBon of construcBon phase construcBon material, size of is assumed as concave funcBon of building size. the warehouse 10 0 1,001 to 10,001 to Over 100,000 10,000 100,000 Square Feet Square Feet Square Feet Data Source: US EIA CBECS 20030 Conclusion and Future Work
■  Two models that minimize cost and minimize carbon emission are constructed.
■  Results from numerical analysis
■  Improvement in carbon emission rate on transportation, warehouse operation affects the optimal
supply chain design.
■  The Min-Carbon solution can reduce 31% carbon emission comparing with the Min-Cost solution.
However, it also increases the total cost.
Total Carbon (tons of CO2) Total Cost (US $) Number of Warehouses Min-­‐Cost Solu#on Min-­‐Carbon Solu#on 1068.91 732.103 (31% reducBon) 1,346,530 8 1,967,670 3 700,000 7 600,000 6 500,000 5 400,000 4 300,000 3 200,000 2 100,000 1 0 0 1 2 3 4 5 6 7 8 9 10 Number of DCs Op#mal Number of DCs and Total Capacity in Min-­‐Carbon Problem Total Capacity Yi-Fen. Chen © 2011 LMAS
contact email: [email protected]
Green Supply Chain Focus in Practice
Total capacity (large DC carbon) Total capacity (small DC carbon) Number of DC (large DC carbon) Number of DC (small DC carbon) •  Analyze the Pareto fronBer from the mulB-­‐objecBve problem to find a balance between cost and carbon emission. • Extend the model to include mulBple trucks during the batch shipment. •  Extend the model to upper stream and lower stream of supply chains. Factor of outbound transporta#on carbon emission Berkeley
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UNIVERSITY OF CALIFORNIA