Enabling sustainable procurement through data mining
The relevance of B2B sustainability is especially in times of the global climate crisis and supply chain resilience issues self-explanatory. Looking at a company's different business units, one mostly neglected part of integrating sustainability is procurement. As price, quality and time are the traditional decision pillars of procurement, social and ecological factors gain an important role in sustainable purchasing. This is lastly confirmed by governance acts such as the German Supply chain law, which is demanding the implementation of sustainability into day-to-day procurement operations.
The implementation of sustainable procurement practices into existing processes is a highly complex topic, one of the reasons being the requirement of sustainability data transparency in the direct supply chain. To aggregate these new non-financial data types, big data technology is a promising solution to achieve data availability and through this start operationalizing sustainable procurement. In this context, ecotrek has successfully assembled and conducted a multi-stakeholder board together with renowned academic, non-profit and consulting institutions as well as industry leading procurement professionals, pioneering in the area of sustainable procurement. As a sustainable data mining company, ecotrek initiated the multi-stakeholder board as the board lead and technological partner.
Together with members of academic, non-governmental and private consulting institutions, among them the JARO Institute, Roland Berger, B.A.U.M. e. V. and am.consult, an expert advisory board with decades of experience in procurement and sustainability experts was created. Five companies in the diverse manufacturing sector, among them Dürr AG, Ströer SE and Gerolsteiner Brunnen GmbH & Co. KG joined the board. The clear goal of the board was to integrate sustainability into day-to-day procurement operations through the help of data-driven approaches. As a technology partner, ecotrek successfully operationalized it’s sustainable data mining (SDM) technology, which automatically aggregates the entire data-footprint of each suppliers online sustainability data..
„As a member of the expert advisory board, I strongly advocate a multi-stakeholder approach for tackling highly complex challenges like sustainable procurement operationalization. As the connector between corporates and innovative Big-Data startups like ecotrek, Roland Berger was glad to be part of the SPL board and proactively shape the state of sustainable procurement.“
- Dr. Marcus Schüller, Supply Chain Expert & Senior Partner @Roland Berger
As research results such as the Guide for sustainable procurement from the the German Federal Association for Purchasing and Materials (BME) and the JARO institute of sustainability and digitization, an expert member of the board suggests, sustainable procurement begins with a general materiality analysis. Based on an empirical study together with the expert board members the most relevant and practice-oriented sustainable procurement criteria, based on the GRI standard categories werde defined. The board member companies then matched them with their sustainability strategy and created their individual evaluation criteria. As a technology partner, ecotrek provided the easy adaptation of individual sustainability criteria inside it’s software solutions.
With the materiality analysis being settled, the next step within the sustainable procurement journey is the aggregation of relevant sustainability data. To implement sustainable procurement the board member companies needed to gain transparency over their entire direct supply chain in regards to their sustainable purchasing criteria defined in the materiality analysis. Supported by ecotrek’s SDM approach, the supplier bases of the board member companies were analyzed and sustainability data for each and every supplier could be automatically aggregated. To make an assessment and operationalization possible, the data points were classified corresponding to the previous set sustainable procurement criteria with the help of ecotrek’s dedicated environmental social mapping (ESM) model. The data was then provided in appropriate interfaces, where the procurement teams were able to work with it.
„We intend to boost savings and value from sustainable procurement. By providing an industry-proven, top-notch data acquisition technology built into a seamless workflow interface. On top we leverage Machine Learning to include relevant external data insight.”
- Jolene Ernesti, Chief Product Officer & Co-Founder @ecotrek
With a high data availability on every supplier through the SDM technology and categorized datasets, individual ESG assessments of every supplier were possible. Using the previously set individual evaluation criteria, each board member company received dedicated sustainability assessments including ESG scorings for every single supplier, overall product categories, purchasing entities and the entire direct supply chain. In addition, a target setting system supported in not only evaluating each supplier based on company internal criteria once but also progressively track organizational functional targets that were set by the companies.
The last step to fully operationalize sustainable procurement was acting upon the gained sustainability insights. With the known status and set targets, action stati were defined and implemented into the overall assessment. Each supplier was now not only continuously assessed and rated but also given an individual action status that guides operational procurement. Ecotrek supported this process through dynamically monitoring and updating stati while taking over action recommendations automatically and performing data-drills to improve the board member companies sustainable procurement goals.
The sustainable procurement leadership board clearly shows the benefit and demand of multi-stakeholder approaches to solve challenges in sustainable procurement and beyond. Looking into the future, more and more company targets but also governance requirements will directly address and challenge procurement teams and other company units. A proper data aggregation and analysis is prerequisite to fulfil those challenges efficiently.
„With ecotrek, we could gain an initial overview over the sustainability performance of our supplier base and accelerate our sustainable procurement targets and processes. As a leading equipment manufacturer for the automotive industry, Dürr is pioneering the development towards shaping data-driven sustainable procurement.“
- Arno Immler, Expert Sustainable Supply Chain @Dürr AG
As the board shows, big-data technology, especially in terms of sustainable data mining can not only be a massive cost and time saver, but discover unknown internal sustainability strengths and weaknesses as well as support immensely in sustainable procurement compliance processes.
Please reach out to us, if you want to find out more about ecotrek’s SDM technology and procurement solutions.