Big data and analytics hold the key to supply chain sustainability

A sustainable supply chain requires corporate social responsibility to become part of the sourcing agenda. The main topic of discussion at the Sustainability Summit, organized by SAP Ariba in Barcelona, was how to monitor and improve not only the first tier of suppliers, but also the second and third.

By Mirjam Hulsebos

The summit kicked off with an observation that saving costs is no longer the top priority for chief procurement officers (CPOs). This has been replaced by issues like risk management, shareholder value and attracting the right talent. Perhaps coincidentally, those three issues are strongly linked to corporate social responsibility (CSR). “The days that purchasers only think about the price are over. To win a deal as a supplier, you can better focus on the social impact of your product or service rather than giving a discount,” said Paul Polizzotto, founder of tech company Givewith.

Givewith enables suppliers and customers to agree targets for the impact they want to achieve together, and to monitor their progress. He gave the following example: “The US broadcasting network CBS used our platform to evaluate IT suppliers based on various CSR criteria, such as energy consumption of the equipment. Any suppliers with low scores were dismissed automatically. CBS then added a requirement to its Request for Proposal (RfP) stating that the supplier must provide coding training for a hundred girls of colour. HP won the RfP and did in fact organize the training. The huge amount of publicity that generated was actually more valuable for both companies than the value of the contract itself.”

To measure is to know

It is important for all companies to pay attention to CSR, but especially for those whose business activities are not automatically seen as sustainable, according to Sebastian Ociepka, Head of BI at International Airlines Group which includes Aer Lingus, Britis Airways, Iberia, Level and Vueling. “Making flying more sustainable is fundamental for our company growth. Needless to say, reducing the emissions and noise of the planes themselves makes the biggest difference, but we’re also looking at how we can profit from improving supply chain sustainability. In that context, it’s crucial to use big data to gain transparency. We’re creating better insight into who we’re working with and what they’re doing in terms of sustainability. We’re developing KPIs and using analytics to monitor shared targets. That enables us to let everyone within the organization see how much plastic we’re saving, the impact of our investment into better rail links to airports, and so on. Our motto is ‘To measure is to know’, and that’s the key to making improvements.”

Polizzotto agreed that data and analytics hold the key to success. “An airline company can calculate precisely how much profit it stands to make from switching to meals with reduced packaging. It might seem like only a marginal improvement in the bigger scheme of things, but in our experience you can actually achieve a lot through better day-to-day decision-making. Lots of companies focus on big goals that are often accompanied by big investment. That’s good, of course, but don’t forget to pick the low-hanging fruit too. Data can tell you where that low-hanging fruit is, and what the benefit will be in terms of saving carbon or plastic, for example.” Although data might not yet be able to tell you about the impact on your image, sustainability can have a big effect on that too, and Polizotto can recommend it: “Make sure employees and customers know what you’re doing and how it makes a difference.” … … …

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This article was first published in Supply Chain Movement 34 | Q3 – 2019