Across the manufacturing, retail, FMCG, and agricultural sectors, the push towards Net Zero is starting to gather momentum. Driven by both stricter regulations and consumer demand, the trend promises to drive sweeping change throughout the procurement process. However, there are benefits to a more sustainable procurement process beyond remaining compliant. A recent Amazon Business report noted that “more sustainable supply chains and inclusive vendor ecosystems … support compliance with these guidelines and also grant businesses a competitive advantage—helping them form deeper, value-based relationships with customers and employees.”
Despite the appeal of a more sustainable procurement process, many procurement leaders are struggling to clean up their value chains. Amazon’s report found that 85% of procurement leaders say the difficulty of sourcing suppliers that follow sustainable practices prevents their company from setting or achieving strategic sustainability goals for procurement. This frequent lack of actionable data is a major contributor to the lack of sustainable options within the supply chain. Without good data, distinguishing an ethical, sustainability focused supplier from an organisation that is merely paying lip service to the concept, and greenwashing their numbers, is next to impossible.
Aster Angagaw, a VP at Amazon Business, argues that “buyers need enhanced visibility into purchasing data and supplier information to cultivate the ability to make swift and assured decisions.” Accurately collecting and assessing supplier data from a long, historically opaque value chain presents some meaningful complexities for procurement teams.
AI: A Magnifying Glass For The Procurement Process
In cutting through the murky modern supply chain, artificial intelligence (AI) may have a role to play. In January 2024, manufacturing services company thyssenkrupp and CarbonChain partnered to release a carbon traceability and intensity tool. The software, powered by AI, uses asset-specific emissions factors and activity-based methods, instead of relying on global averages. The result is a product that allows organisations seeking lower-carbon materials to easily identify, compare and select them. At the same time, users can leverage this data to build sustainable procurement strategies to achieve their net-zero goals.
“Procurers can’t meet their net-zero targets without knowing the carbon footprint of the goods they buy. Meanwhile, metals producers who are decarbonising their industrial processes are facing barriers to quantifying and reporting their emissions reductions,” said Adam Hearne, founder and CEO of CarbonChain.
Cutting through the “jungle of data”
AI has the ability to sort through what Amazon Business’ Rajiv Bhatnagar, calls the “jungle of data”. This “jungle,” created by the modern, digitalised supply chain, is a huge barrier to accurately calculating emissions. A tool that can accurately pars and create insights from such a complex environment is of immense value to CPOs.
Similarly, in November of 2023, supply chain SaaS company Exiger partnered with Muir AI, merging their databases. The resulting tool allegedly allows companies to more accurately reduce their emissions.
“With over 80% of carbon emissions coming from the value chains organisations are connected to – rather than the organisations themselves — a company’s ability to reduce carbon emissions is entirely dependent on their ability to gain transparency into multi-tier supply chains,” said Erika Peters, Exiger’s ESG lead and SVP, Head of Innovation and Operations. “This partnership further expands our environmental risk scoring and Scope 3 capabilities ahead of the 2027 deadline, not only providing granular carbon emissions data across products, suppliers and geographies, but also streamlining the data collection process, automating and documenting how emissions are calculated, and surfacing real-time insights into the strategies that will drive the greatest impact.”
