Insights & Publications

Article|McKinsey Quarterly

Increasing the energy efficiency of supply chains

The supply chains of many manufacturing sectors went global when oil was cheap; today, improving energy efficiency is a top concern for executives. This interactive shows numerous opportunities to dramatically reduce energy costs in supply chains.

August 2009 | byTobias A. Meyer

Supply chains have become increasingly global over the latter half of the century, as the globalization of trade was fueled by cheap oil. Today, the transportation of goods consumes 15 million barrels of oil a day—roughly one-fifth of total production.


Interactive

Increasing the energy efficiency of supply chains

Explore levers for potential energy-efficiency gains in each stage of the supply chain.

In an ongoing study of energy efficiency in supply chains, McKinsey looked at numerous opportunities to reduce the amount of oil used to get goods from a manufacturer’s dock to a retailer’s shelf. These opportunities are available not only to manufacturers but to wholesalers, distributors, carriers, and third-party businesses. We’ve grouped these opportunities into six levers to illustrate possible next steps. Of course, the players in a chain operate independently from one another, so achieving all of these gains would require coordinated efforts and investments—a considerable challenge.

Finally, we examine potential gains in supply chain energy efficiency under three scenarios, based on low, medium, and high oil prices and electricity costs. In any scenario, however, companies would do well to set up energy-efficient supply chains, as their benefits greatly outweigh any downsides.

About the author

Tobias Meyer is an associate principal in McKinsey’s Frankfurt office.

Related articles

A supply chain CEO on the global downturn
commentary

A supply chain CEO on the global downturn

February 2009—Noble Group’s Richard Elman explains the domino effect of the financial crisis on moving commodities around the world.more

  • includes:
    •  
Building a flexible supply chain for uncertain times
article

Building a flexible supply chain for uncertain times

March 2009—The “bullwhip effect” means that distortions in data cascade through a company’s suppliers. Businesses must remain flexible to protect themselves.more

McKinsey Quarterly

McKinsey Quarterly 50th Anniversary art

The Quarterly has been shaping the senior-management agenda since 1964.more

About this content

The material on this page draws on the research and experience of McKinsey consultants and other sources. To learn more about our expertise, please visit the Sustainability & Resource Productivity Practice.