INSIGHT Inc. is preparing its operations to tackle the cap-and-trade restrictions being put in place in the United States as it believes California’s adoption of regulations foreshadow things to come.
INSIGHT, a provider of supply chain planning software, is adding cap-and-trade plans to its C-Suite after the California Air Resources Board (ARB) established a new cap-and-trade program that will go into effect on Jan. 1, 2013. The program puts a cap on aggregate greenhouse gas (GHG) emissions from companies and other entities that are responsible for some 80 percent of the state’s GHG emissions.
The restriction means businesses will need to be more efficient in their operations and supply chains or face higher costs. INSIGHT said it is in a strong position to help companies align operations to be more efficient and model supply chains around energy consumption and emissions.
“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,” said Jeff Karrenbauer, president of INSIGHT. “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.”
Karrenbauer said the first step for companies to address these and other restrictions is to establish a baseline with supply chain data. Companies then need to optimize their operations around that data-set and slowly apply restrictions while running "what-if" scenarios. He suggested looking for energy savings by maximizing shipments and moving away from less-than-truckload shipments to more full-truckload and intermodal moves.
INSIGHT provide tools for companies to adjust supply chains around energy efficiency and monitoring environmental impact to find ways to reduce both cost and emissions. The goal of its platform is to rapidly create and implement “green” solutions through running various scenarios to show different impacts and trade-offs between production, warehousing, transportation, and service levels to find ways to reduce emissions.
California’s Global Warming Solutions Act of 2006 (AB 32) established the goal of reducing greenhouse gas emissions in California to 1990 levels by 2020. The ARB is issuing carbon allowances and businesses can buy and sell them, with an ultimate goal of reducing emissions by slowly reducing allowances. Such programs, also in effect in Europe, are expected to reach other states soon. - Geoff Whiting