Software that tracks your carbon (so you can cut it)

Although the future of "cap and trade" legislation in the United States remains cloudy, the carbon management software market has seen a flurry of activity in the past year. A number of vendors have introduced applications that help companies measure their emissions of carbon dioxide, the gas often blamed for global warming. And it's not just established players like IBM that have jumped into this market; the entrants also include startup ventures formed just for that purpose.

The software vendors are betting that companies in the next few years will want—or be required by law—to reduce their carbon footprints. Since the key processes for bringing products to market—manufacturing and distribution—depend heavily on fossil fuel, most of these new carbon mapping applications target the supply chain. Basically, the pitch is that they'll help corporations cut down on the carbon dioxide coming out of their factories' smokestacks or the exhaust pipes of their delivery trucks.

Most applications start by establishing a baseline figure for the amount of carbon dioxide generated by a company's supply chain. They typically do this by taking data like shipment mileage (which can often be drawn from applications like the company's enterprise resource planning system) and multiplying the total by a specific factor. Some applications can even drill down to different types of shipments. For example, IBM says its carbon calculator software—Supply Chain Network Optimization Workbench, or SNOW—can analyze CO₂ emissions by mode of transportation and shipment size.

Once the software establishes a baseline for emissions, the tool analyzes the supply chain's operations and recommends more carbon-friendly alternatives—for example, switching certain shipments from truck to rail. One of the newer solutions on the market, the Rapid Carbon Modeling application from startup Planet Metrics, also lets companies look at different scenarios to see what effect various actions—say, substituting materials or manufacturing in different regions—would have on their greenhouse gas emissions.

Although switching suppliers or transportation modes can bring measurable reductions in emissions, these steps may not go far enough for some companies. To achieve truly significant carbon reductions, these companies might find they have to step back and take a holistic look at their overall distribution network. Yogurt maker Stonyfield Farm, for example, is currently evaluating the locations of its plants and distribution centers with an eye toward minimizing shipping distances.

Given the close relationship between carbon emissions and distribution network configuration, it's no surprise that vendors of supply chain network design software have also gotten into the carbon mapping act. For instance, Llamasoft recently added a tool to its Supply Chain Guru network design solution that lets companies model and calculate their carbon footprints. Infor, another vendor that offers a supply chain design application, has added carbon calculations to its offering as well. And a spokesperson for Insight says that the next version of the company's Sails package will include carbon mapping capabilities.

These vendors could provide serious competition for makers of carbon mapping software. Because supply chain network applications are designed to analyze the ramifications of network design changes for inventory holdings, customer service, and freight costs, they have a built-in advantage over software that merely tracks carbon. When it comes to evaluating proposed carbon-reduction initiatives, they can not only show the likely effect on a specific function or activity, but also the big-picture impact on the overall supply chain.

It will be interesting to see whether developers of carbon calculator software fight back by adding supply chain-related features to their own packages. But in the meantime, this much is certain: Companies seeking to measure and reduce their greenhouse gas emissions will have no shortage of applications to choose from.