The Case for a Sustainability Network Solution (part 2)
What value would it bring?As indicated in the first part of this post, the OEPI research project envisions a solution that connects participating organizations in a many-to-many network where they can share sustainability indicators, thereby reducing the efforts for provisioning the data and at the same time improving the data availability, quality, and reliability. We highlighted the current pain points that such a solution would address using four sustainability use cases: sustainable supplier management, green logistics, product compliance, and product lifecycle assessment/design. In the following paragraphs, we outline the key value delivered to companies via the many-to-many network, again focusing on the above-mentioned use cases.
With such a solution in place, companies can save time and money, in addition to make better sourcing decisions in “sustainable supplier management”. Bigger companies have several employees whose core function is to manage the process of collecting, analyzing, and improving supplier sustainability KPIs (upstream, client perspective) and/or respond to requests from the various customers and NGOs to provide and improve these KPIs (downstream, supplier perspective). A core functionality of the solution is a network-centric approach for sharing and provisioning sustainability KPIs among clients and suppliers in a many-to-many fashion. That way, data providers save time and effort because they enter the KPIs once instead of responding separately to each request. Similarly, data requesters can find the KPIs already published by some of their suppliers while others might need to simply update their data. Sharing KPIs instead of going through the lengthy request-collect-remind process would ultimately save much of the resources dedicated to the current manual process. With content rating features derived from Web 2.0 consumer applications, expert users would be able to judge the quality of the provided data. The resulting high-quality and better-available data leads to improved sourcing decisions after the comparison and analysis of data from alternative suppliers. These decisions can be based on supplier-level KPIs (for general supplier rating, not product-specific) or product-level KPIs whose values are supplier-specific and not only average (for sourcing a specific component).
In “green logistics”, shippers can save costs by finding load sharing opportunities across organizational boundaries, while carriers and logistics service providers (LSPs) can prepare the CO2 reports of their customers more easily and accurately. One of the biggest consumer products shippers we recently interviewed around their green logistics activities explained that they already do lots of optimizations based on their own transport planning, but there is a huge potential for companies to cooperate in order to optimize by collaborating in a network. If shippers and transportation companies share parts of their planning data in a many-to-many fashion, the solution could suggest consolidating loads belonging to various shippers, ultimately brining the vehicle utilization ratio up and the percentage of empty truck returns down. This translates directly into saved fuel costs for the various companies involved. A more urgent need though, both for shippers and carriers alike, is to improve the speed and quality of providing customer-specific CO2 reports. Similar to the overall supplier KPIs discussed above, the logistics emission reports suffer from the data availability, quality, and comparability problem. With a network solution holding the activity data – or even fuel data from the carriers – shippers and LSPs can get quick reports with comparable results. The concrete value for the participating companies is, similar to the supplier management scenario, reduced time and resources to prepare the customer reports (on the provider side) and better logistics decisions (on the client side).
Finally, let’s see what the business value is that a sustainability network solution brings into the product-related use cases of compliance and lifecycle assessment/design – considered together due to their similarities. Currently, suppliers are separately requested by many customers (as part of the mentioned use cases) to provide environmentally-relevant data about their products, e.g. amounts of hazardous materials used and production energy consumed. With a network solution where the material declarations and environmental KPIs are published once per suppliers and shared with selected customers, significant time and resources will be saved by both the data providers and requesters. The OEMs benefit from a bigger percentage of supplier response which is major shortcoming in the current approach. Higher response rates lead to more assured product compliance and better lifecycle assessments and design decisions, not unlike the “sustainable supplier management” use case. All this happens at a lower investment of resources to collect the data, directly translated into saved costs for the data requester. The suppliers also benefit from total saved time (publish once, share many) in addition to features that enable benchmarking with similar, anonymized companies.
In this article, we outlined, based on concrete use cases and current pain points, the business value of adopting a sustainability network solution for sharing and provisioning environmental data and indicators. This value falls in two categories: reduced time and effort (thereby resources and money) to collect and provide the data, in addition to better business decisions across these and other use cases due to the higher data availability and quality.
Ali Dada is a sustainability research lead at SAP