The carbon-adjusted supply chain

22.11.2006

Economists have a wonderful euphemism for environmental impacts. They call them "externalities," and we can blithely ignore them until Rhode Island-size chunks of Antarctic sea ice start to vanish. Then we start to realize that, in a closed ecosystem, there are no externalities.

In order for Amazon to be able to measure and report its externalities, of course, Amazon's suppliers would themselves have to be able to measure and report theirs. That would be a major challenge, to be sure. But it's exactly the kind of challenge that SOA-enabled supply chain optimization prepares us to tackle.

Governments could someday require the Amazons and Wal-Marts of the world to adopt this regime. But enlightened self-interest would be the better motivator, and we can already see its effect. For example, companies are finding it in their own best interest to take the environmental lead voluntarily, if for no other short-term benefit than excellent PR.

Back in June Site Controls, an innovative company that's enabling retail franchises to be smarter consumers of electric power. In my with Site Controls' CEO Mike Frost, he told me that when Petco dims its lights and throttles back its air conditioning in order to shed load during a rolling brownout, customers don't complain. Instead, they're impressed that Petco is using its IT chops adroitly to become part of the solution rather than part of the problem. Retailers that could report carbon-adjusted prices would be much more impressive.