Admittedly, saying that everyone but planning helps the climate is a harsh statement. But it is closer to reality than the claim of some providers of APS or planning systems who convey the impression that their specific planning algorithms contribute significantly to reducing CO2 emissions.
Most companies today are trying to reduce their carbon footprint, if not out of conviction, then at least for marketing reasons. Every department is called upon to make its contribution. Understandably, system providers of APS and planning systems are also trying to show that they are helping their customers to reduce their CO2 emissions. Looking at the publications of the system providers, pretty much every system function is presented as a contribution to CO2 reduction. Concrete figures are hardly found at all.
The three true levers to lower the carbon footprint
In order to reduce the CO2 footprint and harmful environmental impacts of a value chain, there are three main levers which cannot always be neatly separated from each other:
- Material efficiency
- Transport efficiency
- Energy efficiency
APS or planning systems can only contribute to reducing a company’s CO2 consumption to the extent that they act on these levers.
How far do planning systems really help to operate these three levers?
A detailed analysis quickly shows that many planning and scheduling measures cannot influence material, transport and energy efficiency. Where planning and scheduling do have an influence, the effects are sometimes contrary and sometimes the success depends on external conditions which can hardly be influenced.
For example, higher inventories can lead to improved delivery readiness and thus fewer extra transport trips (higher transport efficiency). On the other hand, higher stocks can lead to more ageing, wear and tear, loss and breakage (lower material efficiency).
Using suppliers in the vicinity may increase transport efficiency. If, however, the closer supplier procures his goods from afar, the world has gained nothing; you have only made yourself look good through clever accounting.
Do planning and scheduling therefore contribute nothing at all to reducing the carbon footprint?
If the same supply readiness can be achieved with less inventory, each percent of inventory reduction brings 55 to 90 per mille of CO2 reduction. That doesn’t sound like much, but it adds up to 1.1% to 1.8% if you achieve 20% inventory reduction. How we arrive at this value is explained in another blog post.
At present, however, many companies are hoarding stocks without being able to maintain their former readiness to deliver, because one or the other input material is missing anyway and thus goods cannot be finished and delivered on time. Planning and scheduling decisions therefore do not contribute to improving the carbon footprint in most companies, but rather worsen it. Other priorities are currently in the foreground in many companies and modern, more efficient APS or planning systems can contribute more substantially to these priorities than to CO2 reduction.