MANASSAS, VA--(Marketwire - Aug 28, 2012) - INSIGHT, Inc., a top international provider of supply chain planning solutions for the world's foremost companies, believes that Cap & Trade Restrictions are growing in importance to the C-Suite due to recently adopted regulations in California. The California Air Resources Board (ARB) established a new "cap-and-trade" program that launches on January 1, 2013; it places a "cap" on the aggregate greenhouse gases (GHG) emissions from entities responsible for roughly 80% of the state's GHG emissions. In light of these restrictions, businesses need to be more efficient in their supply chains by modeling energy consumption and carbon emissions.
The Global Warming Solutions Act of 2006 (AB 32) established the goal of reducing greenhouse gas emissions in California to 1990 levels by 2020. In order to help achieve this goal, ARB will issue carbon allowances that businesses will, in turn, be able to "trade" (buy and sell) on the open market. Called "Cap and Trade," it is a method for regulating and ultimately reducing the amount of pollution emitted into the atmosphere. If they exceed this cap, a penalty is ensued, so companies buy carbon offsets from other companies who are more efficient and willing to sell their credits. Currently, this restriction is in effect in Europe and soon California, but other states and countries will establish these restrictions soon.
"Cap and Trade is similar to a capacity constraint in your supply chain network where companies only have, for example, certain capacity on their production lines," says Jeff Karrenbauer, president of INSIGHT, Inc. "You can add an additional shift and pay overtime, or buy more warehouse space, or add another production line. These additional capacity constraints must be designed into your supply chain. This requires companies to think holistically across all facility types and activities."
"To design for these restrictions, you have to first establish a baseline with your supply chain data. Then try to optimize the supply chain and apply these restrictions doing what-if scenarios. If you are trying to make your supply chain more efficient, then you will have to design your supply chain for less energy usage. You can do this by maximizing shipments, such as getting away from less than truckload (LTL) and going more towards truckload (TL) and intermodal," adds Karrenbauer.
INSIGHT provides tools that allow companies to design their supply chains with energy efficiency and to understand the environmental impact of their supply chains so they can make forward-looking decisions to reduce both costs and harmful emissions. INSIGHT's solutions help companies rapidly create and implement green supply chain initiatives. This software contains a carbon emissions database that allows businesses to assess their carbon footprint, then model "what if" scenarios to make better environmental decisions. INSIGHT models and analyzes trade-offs between production, warehousing, transportation costs, and service level requirements to find ways to reduce emissions.
Being more efficient and being green are not mutually exclusive. You can try to optimize your supply chain, which traditionally has been done in terms of cost minimization or profit maximization. Another very different approach is to design the energy or carbon emission minimized supply chain. The mathematics are essentially identical to doing cost minimization, but the perspective is different.
ABOUT INSIGHT, INC.
INSIGHT provides optimization-based supply chain analytics and consulting services to meet the dynamic business challenges prevalent today. Founded by supply chain and operations research experts in 1978 with the goal of using world-class technology to add intelligence to decision making, INSIGHT solves the supply chain management issues of the world's foremost companies, including Abbott Laboratories, BASF, Clorox, ExxonMobil, Goodyear, GE, Kellogg, Nestle, PepsiCo, Pfizer, Procter & Gamble, Toyota, Unilever, and many others.
ISCO, INSIGHT's award-winning flagship product, can accurately represent a company's current supply chain business practices, from raw materials sourcing to capacity planning through delivery to the end customer. Insight Enterprise Optimizer (IEO) is the first and only product, which combines full supply chain design capabilities with the cost and demand impact of marketing initiatives, thereby generating profit-maximized corporate strategies. The X-System®, a proprietary optimization engine, powers a family of powerful analytical tools, including the design of global supply chains, shipment planning and dispatching, production planning and scheduling and transportation procurement. In addition, INSIGHT provides optimization components, partnering with third party software providers to deliver best-of-breed solutions. Our software and services help firms minimize costs, maximize profits, free up capital, streamline operations, and increase customer service levels. For more information, please visit us on the Web at http://www.insightoutsmart.com.