ARMONK, NY — (MARKET WIRE) — 05/22/08 — IBM (NYSE: IBM) today

announced the Carbon Tradeoff Modeler, a first-of-a-kind tool that

enables organizations to analyze and manage the climate impact of

their supply chains. The tool allows organizations to understand the

outcome of critical tradeoffs to make smarter energy choices and

better economic decisions by optimizing on service levels, quality,

cost, and carbon dioxide emissions.

Developed by IBM Research and IBM Global Business Services, the

Carbon Tradeoff Modeler models the complex interaction of factors

driving supply chain carbon dioxide (CO2) emissions from both a

manufacturing and distribution perspective. It can also quantify the

tradeoffs between CO2 emissions reductions and other supply chain

metrics such as inventory levels, and on-time delivery. IBM’s Carbon

Management Analysis Tool also identifies areas where carbon dioxide

emissions and costs can be reduced simultaneously.

According to the 2008 IBM Global CEO Study and a separate IBM study,

corporate social responsibility (CSR) is at the top of the agenda for

chief executives, and is fast becoming a revenue growth platform for

businesses, as customers increasingly demand transparency and

accountability from organizations they conduct business with. With

the automated Carbon Tradeoff Modeler, organizations can incorporate

carbon reduction into their overall CSR strategy, to reduce their

carbon emissions and potentially strengthen their brand to gain a

competitive advantage. This is an example of IBM’s focus on higher

value services and innovative solutions to address client needs.

“To achieve a carbon efficient supply chain, companies need to assess

the CO2 emissions impact of their end-to-end operations,” said

Sanjeev Nagrath, Global Leader, Supply Chain Management, IBM Global

Business Services. “By incorporating Research-based tools to model the

cost and carbon impact of key steps in the supply chain,

organizations now can take action to reduce CO2 emissions and

influence suppliers’ behavior toward reducing their own greenhouse

gas emissions.”

IBM’s carbon management analysis tool models the cost and carbon

impact of several key levers and provides insights for balancing cost

and carbon management objectives. Key factors the tool captures

include: packaging options, alternative operational processes,

alternative transportation modes and energy sources, inventory

policies, and sourcing policies. The Carbon Management Analysis Tool

can identify and recommend the most desirable actions to take among

the many that can be used to achieve carbon dioxide emissions

reduction.

For example, shipment and package consolidation is one of the major

opportunities to reduce CO2 emissions. Quantifying the impact of

shipment frequency on cost and emissions can help establish a more

energy efficient inventory replenishment policy. Some levers such as

better routing can create a win-win case for reducing both CO2

emissions and cost in the supply chain.

Some of the issues that the tool addresses include:

— The impact on cost and carbon dioxide emissions when changing package

sizes and/or packaging materials

— The impact of lot sizes on transportation requirements, cost and

carbon dioxide emissions

— The impact of consolidating orders to reduce the carbon dioxide

emissions in transportation as well as on-time delivery performance

— How inventory replenishment policies can influence carbon dioxide

emissions.

— How to evaluate alternative supply policies in terms of cost and

climate impact in the supply chain

In addition, IBM released today further analysis from the Institute

for Business Value, entitled “Mastering Carbon Management.” The paper

emphasizes how carbon management, energy consumption and other

environmental issues should be analysed and approached in an

integrated manner — evaluating overall performance goals (cost,

service, quality and carbon dioxide emissions) in terms of their

relationship to one another. A trade-off model looks at these areas

and considers relevant factors such as design, packaging and

processes. These options represent the “levers” available to

influence cost, quality and service, as well as greenhouse gas (GHG)

emissions.

There are specific steps companies can take to limit GHG emissions —

from easy-to-implement local improvements to complex optimizations

that involve an extended supply chain. The further these activities

extend and integrate across the supply chain, the greater leverage

and control they will have over carbon dioxide emissions. IBM

therefore recommends a step-wise

approach:

1. Strategy: Diagnose, assess, plan and operationalize

2. Carbon asset (facility) management: Implement asset management

and realize point solutions

3. Functional Optimization: Address emissions in supply chain functions

4. Internal Horizontal Integration: Find the optimum solution for

integrating across functions

5. Collaborative, end-to-end Optimization: Collaborate with supply chain

partners to realize overall potential

For more details on the “five steps to mastering carbon in the

supply chain” and the complete IBM Global Business Services Paper on

Mastering Carbon Management please visit www.ibm.com/gbs/supplychain

About IBM

For more information visit www.ibm.com.