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Sandwich maker Subway was an environmental leader long before sustainability was in vogue. When the Independent Purchasing Cooperative (IPC) was formed in 1996—Subway’s franchisee-owned and operated buying cooperative—the group took a long hard look at its supply chain.

At first, Miami-based IPC was primarily responsible for procuring food, packaging, equipment and services for all Subway locations in North America, negotiating the lowest costs for its franchisees. But by 1999, IPC turned its attention to logistics and distribution, realizing that there were significant opportunities to be gained by reducing the amount of miles driven, revamping packaging and redesigning its supply chain network.

Subway wanted to become the “greenest QSR in the world,” so in 2006, senior management initiated a formal sustainability effort, not knowing how it would impact the bottom line but certain that it would benefit suppliers, distributors, store operators and ultimately, consumers.

“Being a food organization, food safety and quality are our number one priority and we have stringent audit processes all the way back to the farm,” says Tina Fitzgerald, IPC’s director of produce and social accountability. “We have good agricultural practices for all of our produce and we’re always looking at the vendor code of conduct. We used to address just the manufacturing level, but now you have to look at how the workers are being treated and how the animals are being taken care of.”

The co-op decided to focus on four areas—energy efficiency, resource conversation, waste reduction and food safety—and those efforts have paid off. In 2009, IPC saved 294,360 barrels of oil, eliminated 126,456 metric tons of carbon dioxide and preserved 1,047 acres of trees from deforestation.

IPC started with packaging by switching to “green” cup carriers, recyclable napkins, salad bowls, utensils and paper towels. “One of our top priorities was to reduce unnecessary packaging and source material—it’s the lowest hanging fruit,” says Fitzgerald. “Right now we’re really focused on increasing the recycled content, recyclability, degradability and compostability of our products, as well as making them better.”

The co-op is doing this in various ways throughout it supply chain. For example, one of its suppliers provides cleaning products for Subway customers worldwide. The products, pre-mixed with water, had been shipped as six one-gallon containers in a case. The supplier extracted the water and started shipping the product as concentrated strips, which dramatically increased the number of cases that could be put on the truck.

“The strips have enabled us to save about 180,000 pounds of plastic and 150,000 pounds of corrugate a year,” says Julio Berrios, IPC’s supply chain manager. “Plus, there is little product damage and our customers like the fact that these take up less storage space in their back room.”

IPC is getting these metrics by measuring its carbon footprint, which is often a challenge for companies that want to go green. “We wanted to establish a carbon base line as well as see where our growth was going,” says Berrios. “We needed to measure our supply chain and establish our annual numbers. It seemed like an incredible task—we are a large chain and have a tremendous amount of data. We knew we needed outside help.”

IPC turned to Atlanta-based Chainalytics for help. Chainalytics offers a carbon footprint analysis service that can measure greenhouse emissions, calculate energy consumption and reduce the environmental impact of a supply chain.

“We’re finding that many of our clients need to know and report on their carbon footprint,” says Jeff Metersky, vice president, supply chain strategy practice, Chainalytics.

“For companies that want to be leaders in sustainability, they have to establish that baseline and understand the levers they can pull to reduce emissions in the supply chain.”

Metersky says that companies need to be able understand their own infrastructure as well as what they can and cannot control. For some companies, that may mean more distribution centers or replenishing a warehouse more frequently, or changing transportation modes. In IPC’s case, it involved moving a number of facilities around. “We’re very aware of the placement of the facilities of our redistributors, distributors and suppliers. We have found that by properly placing those facilities to our needs, it actually drives down the cost of our supply chain,” says Berrios.

For example, one of its salad packaging suppliers moved a facility from West Virginia to Abilene, TX, to be closer to its redistribution center. This move cut the supplier’s annual transportation by more than one million miles and eliminated 1,967 metric tons of greenhouse emissions. Since IPC realigned its distribution network, it has been saving 17,000 shipments annually since 2006 and by relocating facilities, the company reduced miles by 15,104,661 in 2009.

“It’s a matter of right-sizing your supply chain—how many distributors do I need based on how many stores I have. We’re always looking to optimize the load build and make sure our product is traveling in full truckloads whenever possible,” says Berrios. “We also have to evaluate where the product was moving and in the right mode. Many of our loads that were carrier driven wound up being split between carrier and rail.”

To establish a baseline for a carbon footprint, Metersky says the vast majority of the information comes from shipment transaction histories. “We take a look at all of the physical movements you made in your supply chain, so that takes care of the transportation-related carbon footprinting. Then we look at activities in terms of what’s happening inside the manufacturing operations, so we’re looking at the production history and the warehousing aspects.”

Depending upon the size of your network, Metersky says the carbon footprinting process can run anywhere from $20,000 to $50,000. “The biggest lead time is the client pulling the production history,” he says. “As a stand alone project, it can take a week or two to get the carbon footprint once we have the data.”