CSR Content

Visibility is Key to Managing CSR Risks in Indirect Spend, EcoVadis Says (Part 3)

Indirect spend often gets overlooked by businesses because the outcomes from buying those goods and services are not the company’s core product, which relies on direct spend. But the potential for lost money and increased risk is so great that businesses must find a way to manage indirect spend.

“The broad reach of indirect spend, coupled with a lack of visibility creates risk, so the key to gaining visibility and managing this risk is to prioritize indirect spend management within an organization and start assessing indirect supplier performance in a formalized way,” said EcoVadis, a risk mitigation provider that offers business sustainability ratings and intelligence.

EcoVadis joined us for a Q&A to explore the next steps to figure out how to identify weak points, prioritize areas to defend against and create a plan for mitigating risks.

AI in Supplier Management: Tomorrow (Part 1) [PRO]

In our last pair of Spend Matters PRO articles about AI in supplier management today, Part 1 and Part 2, we overviewed some situations where you can find AI in e-sourcing platforms today, where we define AI as “assisted intelligence” because, as we've stated in our series about AI, there is no true artificial intelligence in any enterprise technology today. In fact, there is nothing close, at least not on the open marketplace.

But when we get to the point where we have an augmented intelligence solution that can help us not only monitor supplier performance (across a community), automatically identify issues and risks, and even help us with automated resource — and asset — assignment but can also help us identify automated corrective action resolution plans, risk mitigation strategies, and real-time relationship monitoring and resource re-alignment, they start to approach augmented intelligence and become quite useful to us indeed.

In this article, we are going to discuss the AI-enabled functionality that we expect to see in the leading supply management platforms tomorrow. We will continue our pattern and start by defining what we expect to see, how it will likely work, and then give some hints of the technology platform that will underlie it.

Tomorrow, we expect that the leading supplier management platform will also have the following capabilities:

— Smart information selection and auto profile updates
— Market-based supplier intelligence
— Real-time relationship monitoring
— Automated resolution plan creation, monitoring and adjustment
— Automated risk mitigation strategy identification
— Optimized real-time resource re-alignment

Q&A on Digital Procurement’s Role in Sustainability, Ethics and Compliance [PRO]

As supply chains get increasingly externalized and globalized, the broad scope of operations is subject to equally broad regulatory oversight and supply risk. Meanwhile, as consumers increasingly demand transparency and ethical behavior by value chain brand owners, supply chain organizations at those brands (and also at their suppliers), are having to increasingly respond to these demands. Procurement organizations, for their part, are trying their best to support this externalization on all fronts, but they are so busy with strategic sourcing and P2P execution that even the “basics” of supplier qualification, certification and on-boarding are suffering — never mind having time for more strategic activities in supplier innovation, advanced risk management, digital transformation and other areas.

So, what’s the solution? Well, procurement must first practice what it preaches by tapping supply market innovation for itself, and this innovation is taking many forms. In an everything-as-a-service (XaaS) world, procurement must not only take a leadership role in robustly contracting for these diverse cloud services, but also:

— identifying how various providers beyond cloud applications can help procurement execute much more efficiently — at the cadence of the business.
— embedding the best digital supply market innovations into its own service delivery in order to expand its own influence and brand within the enterprise.
— enabling and empowering functional partners in GRC, IT, Finance, Legal, HR, Risk/Audit, etc. to enable their own service value (increasingly in a cross-functional GBS environment) and integrate the disparate services together much more coherently.

For example, consider the question: Who is responsible for establishing the single face to the supplier when we digitally on-board and manage them to not only transact with them in a compliant manner, but also ensure that they’re operating securely, ethically and transparently more broadly? It’s not just procurement, but rather a combination of procurement, IT, GRC and various centers-of-excellence that should be working tightly together. Unfortunately, misalignment is the norm, but not because of outright conflict or malfeasance, but because functional folks are too busy just trying to execute within their own silos. And they’ll never extricate themselves from that situation unless they have drastically new capabilities to deploy.

This is where procurement organizations need to make smart choices on how they apply digital strategies and tools/services to this area of sustainability, ethics and compliance.

I was recently catching up with an industry colleague of mine named Tomas Wiemer on the topic (he’s a former procurement transformation leader from Nokia and Alcatel-Lucent). He is very deep into this area and typical of leaders at European firms who are definitely in the vanguard here. Tomas is considering some career changes right now, primarily with some emerging tech players who can have a dramatic impact in the industry. Tomas reminds me a bit of a European version of Roy Anderson, who just joined Tradeshift (here’s part 3 of an interview that I did with him), and I think that Tomas will do similarly well when he lands somewhere. He’s doing some interim work for a client, and I agreed to let him interview me for my inputs, but given my role, I asked him for the questions in writing so that I could fully respond in kind and publish it to our subscribers. The questions are below:

How do you view topics as compliance and sustainability in the procurement digitalization landscape?
Do you foresee a convergence/harmonization of sustainability/compliance requirements toward suppliers thanks to the rise of S2P platforms/marketplaces?
What do you believe is the greatest added value of procurement digitalization / AI for compliance and sustainability?
What do you think are the key conditions/requirements to enable the emergence of sustainability/compliance topics in digital procurement?

What’s interesting is that this topic is very hot right now. My business partner Jason Busch just attended the recent EcoVadis conference in Paris, and the buzz (beyond the buzz from the sustainably grown coffee that was undoubtedly served there) was palpable. Part of the reason is that the topic is giving many procurement organizations new ways to engage the business and the suppliers alike in a way that drives much more meaningful value across the value chain beyond just price-centric cost savings. And it also engages a new generation of procurement professionals who want to have a meaningful impact on value chains rather than just being deal-makers and “firefighters.”

Anyway, the questions above are big ones, and require very thorough answers, so without further ado, let’s get to answering them ...

Sustainability, Environmental Stewardship and CSR: The CPO’s Outside-In Agenda (Part 2B) [PRO]

sustainable supply chain

In our last article in this Spend Matters PRO series, we focused on several pressing issues that are shaping procurement from the outside in, yet chief procurement officers are primarily still concerned with issues set by an inside-out agenda — that is, cost-cutting and supply assurance targets mandated by upper management. However, our PESTLE analysis of factors shaping the modern CPO agenda identified broad outside-in trends that an organization needs to consider if it wants to truly tap and manage the opportunities (and risks) offered by external supply markets. (Read the CPO’s Conundrum: Parts 1A and 1B.)

Nowhere is this more readily apparent than with the topic of sustainability and environmental stewardship, the focus of today’s brief. The environment is an inseparable component of any business. It forms the platform layer off which all goods and services are produced, and cannot be ignored. And the difference between effective and sustainable management and ineffective and unsustainable management, as pointed out in yesterday’s article, is shocking. Not only would investments in environmental sustainability focussed companies over the past two decades doubled an average rate of return, but millennials will pay a (small) premium for sustainably (and ethically) sourced products and you are ensuring that you will have raw material supply for years (and decades to come).

Sustainability, Environmental Stewardship and CSR: The CPO’s Outside-In Agenda (Part 2A) [PRO]

leading cross-functional teams

In this first installment of this Spend Matters PRO series (see Part 1A and Part 1B), we noted that a number of pressing issues are shaping procurement from the outside in, yet chief procurement officers (CPOs) are primarily still concerned with issues set by an inside-out agenda — that is, cost cutting and supply assurance targets mandated by upper management. Our PESTLE analysis of factors shaping the modern CPO agenda identified broad trends like economic instability, globalization, changing digital business strategies and the need to address corporate social responsibility (CSR) as areas that procurement organizations need to consider if they want to truly tap and manage the opportunities (and risks) offered by external supply markets.

Perhaps nowhere is this more readily apparent than with the topic of sustainability and environmental stewardship, the focus of today’s brief. The environment is an inseparable component of any business. It forms the platform layer off which all goods and services are produced, and, more fundamentally, the resulting ecosystem services from which humans benefit create the foundations for our species’ survival and quality of life. Due to multiple ongoing trends, however, the environment is changing, as are the ways that consumers, investors and governments think about our relationship to the environment.

Accordingly, Part 2 of this series on the CPO’s Conundrum examines the outside-in drivers pushing sustainability and environmental stewardship higher on the procurement agenda. It also explores recent examples of how businesses are integrating these issues into their supply management strategies, while simultaneously addressing them in balance with traditional procurement objectives, such as category management, supply base alignment and demand shaping.

EcoVadis to Add Risk Mapping Tool, On-Site Audit Feature to Its Core CSR Rating

wind power

EcoVadis, a provider that rates businesses on sustainability and corporate social responsibility (CSR), announced Tuesday that it is expanding its capabilities with the new Sustainability Intelligence Suite, which will include "predictive risk mapping, performance signals and audit management."

UX, Blockchain, IoT: The Future of Procurement Technology Unfolds at BearingPoint Speakers’ Series

Imagine ordering a replacement part with your camera, or having your IoT devices order supplies themselves, or just telling your chatbot assistant to assess and restock your inventory while you work on another project. Those digital-assisted feats aren’t futuristic. They’re already happening — but we’ll be seeing more uses of them in procurement as the digital transformation continues to evolve, according to speakers last week at a daylong discussion called Digital Procurement: Beyond the IT Landscape. Subjects ranged from blockchain and the internet of things (IoT) to process mining and best practices for digital implementation.

After EcoVadis’ Sustain 2019: Product Strategy, Roadmap and Prospect/Customer Analysis (Part 3) [PRO]

EcoVadis, which provides vendor ratings and scorecarding for sustainability and broader CSR metrics as a component of an integrated “many-to-many” supplier network and platform, has an aggressive product roadmap to expand how users interact with and leverage the supplier intelligence, which is at the very core of its value proposition.

Today, in this final installment in this Spend Matters’ PRO series based on our analysis from the EcoVadis Sustain 2019 customer event, we turn our attention to the future direction of where EcoVadis is expanding its capabilities. We also include customer/prospect recommendations.

In previous Spend Matters PRO coverage on EcoVadis, we offered a recap and update on the provider’s most recent capabilities and solution footprint — and an analysis of where EcoVadis fits in the broader supplier management and supply chain risk management landscape.

After EcoVadis’ Sustain 2019: How Its Offering Fits With Supplier Management, Risk Management Solutions (Part 2) [PRO]

supply risk

Last week, I represented the Spend Matters analyst team at EcoVadis’ Sustain 2019 customer event in Paris. In between lessons on sustainable supply chains, vendor CSR ratings and French labor unions I never knew existed — thank goodness for British Airways when the Eurostar shuts down because a handful of customs workers at Gare du Nord decided to protest Brexit by striking — I had the chance to learn about the latest enhancements to the EcoVadis platform.

In Part 1 of this Spend Matters PRO research series, we shared some of the most recent capabilities that EcoVadis has embedded in its sustainability and ratings supplier management platform. Today, we turn our attention to explaining how EcoVadis fits in the broader supplier management and risk solutions landscape. (Hint: It is a complement to other solutions, but not a replacement for them, at least not yet.)

We will conclude our series with a look at the EcoVadis solutions roadmap and landscape in the coming weeks with specific recommendations on what it means for current and future customers who are likely to also make investments in adjacent solution areas and need to think about the architectural “fit” of all these components together. But to answer that question, we first need to explore where EcoVadis sits today in the broader supplier management and supply/supply chain risk management technology and solutions universe?

This Spend Matters PRO research brief provides insight into all of the components that comprise the supplier management and supplier/supply chain risk management sectors. It then attempts to place EcoVadis, a sustainability and CSR specialist in vendor ratings and management, in the context of these two highly complex solutions markets. Our analysis includes detailed functional and requirements for each of these solution types.

After EcoVadis’ Sustain 2019: Company Update, Solution Overview and Technology Enhancements (Part 1) [PRO]

sustainable

This week, Spend Matters founder and analyst team member Jason Busch represented the Spend Matters team at the EcoVadis Sustain 2019 customer conference in Paris, where about 500 attendees gathered.

EcoVadis, a sustainability/CSR solutions provider that combines ratings content (CSR focused) and a technology platform, is not so dissimilar from providers such as Avetta and ISNetworld, albeit that it focuses on vendor sustainability practices and metrics rather than general compliance/credentialing (e.g., insurance validation) or “pre-qualification” for health and safety.

But like these related firms, EcoVadis is able to take advantage of platform economics (network-based economics) in its business model by qualifying and rating suppliers a single time — with yearly updates — and then leveraging this information across the procurement community. What is special about all of these models is that unlike pure-play technology solutions (e.g., supplier information management) or even general risk management offerings, they tend more toward “winner take all” markets because suppliers carry their credentials with them from customer to customer.

This approaches provides value for all parties and makes switching potential solution providers such as EcoVadis more painful (when alternatives even exist), creating an incentive for buyers and suppliers to remain using the system on a permanent basis. But unlike Avetta (which is growing but still must compete with Achilles and ISNetworld), the only material competition that EcoVadis faces — in a single industry/vertical only — is via the highly specialized, not-for-profit Sedex.

This two-part Spend Matters PRO update provides an overview of what is new at EcoVadis. Today, we provide an update on EcoVadis (overall) and explore its recent solution update and overall platform. An introduction to EcoVadis can be found in our PRO Vendor Snapshot coverage: Background & Solution Overview, Product Strengths & Weaknesses, and Competitive & Summary Analysis.

Icertis Blockchain Framework: A Glimpse of CLM’s Expanding Footprint into the Supply Chain

blockchain

Icertis recently announced it has developed, in partnership with client Mercedes-Benz, a blockchain framework to address multi-tier supply chain visibility challenges. Called the Icertis Blockchain Framework, the new offering allows companies to deploy a permissioned, standards-based blockchain (using one of the ecosystem standards through Hyperledger) within the core ICM platform on Microsoft Azure, as well as record specific transactions based on rules and metadata. Icertis developed the framework as an initiative within Mercedes-Benz Cars to better enforce requirements for CSR and compliance obligations without compromising contract confidentiality.

3 Areas Where CSR Risks Hide in Your Indirect Spend (Part 2)

risk

Because procurement is so often measured on cost savings as its primary KPI, another essential factor can be left by the wayside: risk. Especially when it comes to corporate social responsibility (CSR) and sustainability, risk remains hidden within indirect spend. To see how these dangers go unaddressed, here are three areas with examples of where organizations miss — but, with proper tools, can address — CSR and sustainability risks for indirect procurement.