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Sustainable Procurement: Go from retrospective reporting to continuous improvement
Across the world, businesses are developing comprehensive sustainability strategies to comply with regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD), the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and California’s Climate Corporate Data Accountability Act (SB253).
Responsible sourcing must be a significant part of these strategies, especially when new laws require businesses to monitor and control sustainability performance in their upstream supply chain as well as downstream.
But for many businesses, understanding how sustainable their suppliers are is a time consuming, tick-box exercise. The data needed to measure supplier sustainability is siloed across multiple systems and has to be compiled manually. This task is performed annually, or every few months at best, meaning insights are retrospective and are difficult to take action on and thus drive improvement. And too often, there’s too little buy-in from stakeholders because the process is disconnected from the tools, data and KPIs they use on a daily basis.
In order to increase speed, automation and effectiveness, businesses must connect these siloed systems. They need to bring together the data necessary to proactively monitor supplier sustainability, and move from retrospective reporting to continuous improvement.
Scaling supplier sustainability
The Celonis Sustainability Layer, powered by Process Intelligence, helps drive scalable, automated improvement at multiple levels. It enables fast, continuous, AI-driven measurement and reporting, so businesses are no longer relying on insights that are a year old. It increases adoption and assists target setting by integrating with the business-tracking systems that teams already use. And it promotes continuous improvement through validated trade-offs and prescriptive actions.
All this is achieved by connecting with multiple systems – such as ERP systems and data platforms – to understand who businesses are buying from, as well as what they are buying, in what quantities, and from which countries. Other information – including emissions and ESG data – is integrated to give a full picture of sustainability. And actions are put in place to drive automated improvements.
Because the platform is agnostic and customizable, businesses can integrate whichever systems and data sources are relevant to their specific needs. Use cases can include anything from supply chain due diligence, material emissions, and waste reduction, to carbon accounting, and supplier or product carbon footprints.
Integrating EcoVadis sustainability ratings
EcoVadis is a strategic Celonis partner, and a great example of the types of platforms and data sources that can be integrated with our sustainability layer.
The core focus of the Celonis and EcoVadis partnership is the integration of business sustainability ratings into the Celonis sustainability layer. These ratings are detailed assessments of a business’s high-risk suppliers, that provide an in-depth understanding of the suppliers’ approach and overall sustainability performance. Integrating EcoVadis ratings data into Celonis software makes managing supplier sustainability more scalable, systematic and successful.
Other EcoVadis modules can also be integrated with Celonis, including the IQ Plus risk mapping module. This enables a high-level risk assessment across the entire supplier base – without requiring supplier input – so businesses can determine which suppliers require greatest focus. There is also the EcoVadis Carbon Action Module for needs-based decarbonisation and supplier empowerment, and a program management module to help businesses drive real change in their organization.
Celonis and EcoVadis have co-developed a Sustainable Spend Management App that allows procurement teams to:
1. Automate measurement
The measurement of sustainable spend performance can be automated through the integration of supplier ratings with procurement data. This provides a high-level view of what proportion of suppliers in the procurement system are rated with EcoVadis, and what purchase order value that equates to. It also allows procurement category managers to drill down to view the suppliers that are in scope for their particular category and see how they are performing.
2. Prioritize suppliers
The Sustainable Spend Management App enables procurement teams to prioritize suppliers based on a variety of criteria including spend, risk, and sustainability performance. An intuitive interface allows them to see supplier strengths and areas for improvement across different categories.
This information can inform procurement decision making, but it can also show where the business can help its suppliers improve their sustainability performance. Where a supplier has no EcoVadis scorecard, for example, and is identified as high risk with a lot of spend, the business can request that the supplier begin the assessment process.
3. Streamline actions
By streamlining actions via integrations with the Ecovadis API, procurement teams can make ratings requests, progress tracking, and corrective actions a systematic part of their operations.
When a high-risk or strategic supplier doesn’t have a rating, a request to start the assessment process can be sent automatically. If their scorecard has expired, a request for reassessment can be triggered. In fact, an alert can be set up three months before a supplier's scorecard is due to expire, so a reassessment reminder can be delivered. And, when suppliers aren’t meeting sustainable performance goals, a corrective action plan can be put in place.
The partnership between Celonis and EcoVadis enables procurement teams to be more proactive about sustainable sourcing – actively working with suppliers to improve performance. It’s not just about connecting data and systems, but also about driving a real movement for cultural transformation and embedding sustainability values in supplier-customer collaboration.
Continuous improvement in action
Celonis and EcoVadis work closely with a leading multinational manufacturer of construction materials, to ensure responsible procurement. Sustainability is a core part of the organization’s corporate strategy, and it has a strong focus on decarbonization, reducing waste, manufacturing circular products and increasing biodiversity. The company has a responsible sourcing policy in place, along with an ambitious sustainability program, and uses the Sustainable Spend Management App to support these initiatives.
The company has a phased approach to measuring and improving the sustainability of its supplier base:
Suppliers are selected based on the Sustainability Accounting Standards Board (SASB) standards.
The EcoVadis IQ Plus module is used to perform a risk assessment across all suppliers to determine whether they are high, medium or low risk.
Every supplier that is identified as high risk, or is categorized as a strategic supplier, should have an EcoVadis rating.
Corrective action plans are put in place where necessary to help suppliers improve sustainability performance through a supportive partnership.
The Sustainable Spend Management App enables the company's procurement teams to manage this process for the suppliers within their remit. Whether a supplier requires an initial assessment, a reassessment, or corrective actions, the company can request these directly within the app.
The app is used by commodity managers in corporate procurement, by in-country procurement teams, and by other internal stakeholders that need data for their own reporting. It enables teams to tailor improvements and action plans, which is crucial for an international company with cultural differences. Because what works in one country doesn’t necessarily work in another.
In partnership with Celonis and EcoVadis, this organization is able to measure supplier sustainability, set annual targets, drive continuous improvement and realize real value for both itself and its suppliers.
Discover more about sustainability with Celonis
Sustainability transformation is one of Celonis’ core product solutions. Find out more about how we help you turn your sustainability goals into real-world wins and overcome the challenges in meeting your targets.
Alternatively take a look at some of our on-demand sessions from Sustainability Transformation Week. You’ll find out how Celonis Process Intelligence can be used to support a variety of sustainability goals, from regulatory compliance to emissions reduction.
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