March 21, 2008 - Software vendor ILOG has released a new computer application that helps companies create supply chains with smaller carbon footprints. The program, an extension of ILOG's LogicTools suite of supply chain applications, enables companies to model the climate impact of various supply chain configurations and transportation strategies so they can choose the most environmentally - and financially - preferable option.

The business benefits of such a system are significant, according to David Simchi-Levi, professor at MIT and product strategy consultant to ILOG. "The level of a supply chain's carbon footprint reflects not only potential current and future liabilities in taxes and offset costs, but may reflect inherent inefficiencies in their operations," he explains.

For example, as Simchi-Levi told InfoWorld blogger Ted Samson, an office furniture vendor currently operating two distribution sites used the ILOG software to model scenarios in which they added up to five additional facilities. While adding two more sites appeared most cost effective, the data showed that moving to six distribution sites would cost just 1.6% extra while reducing transportation distances by 20% and carbon emissions by 11% - yielding a long-term savings that could offset the additional capital outlay.

Moreover, says Simchi-Levi, "the ability to quantify and reduce carbon dioxide may allow companies to earn credits that can be traded with less-efficient companies, as is evident by the 40 billion Euro world-wide market for carbon emission permits in 2007."

ILOG's new application also allows users to set carbon caps on their logistics networks based on supply chain partners' scorecards or government-imposed frameworks such as the Kyoto Protocol.