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sustainable procurement

The Role of Supply Chain Data Analytics in Sustainable Procurement

The idea of adopting sustainability initiatives throughout a company’s operations is extremely attractive. More countries and governmental bodies are adopting and finessing their emissions reduction schemes, and more consumers are calling for environmentally friendly and ethically sourced products.

Companies can establish sustainability goals and follow them even within their own supply chains by practicing sustainable procurement. They can implement sustainable procurement practices when making purchasing or sourcing decisions or when arranging tender contracts to transport a company’s goods and services.

However, there are some challenges surrounding the adoption of sustainability initiatives throughout a company’s supply chain, including how to determine the amount of emissions reductions occurring throughout the supply chain. Add to that the complexity characteristic of global supply chains, and the argument for data to provide that visibility into the supply chain becomes more apparent.

This is where data analytics can be a pivotal tool for companies seeking visibility, so they can determine the extent of emissions reductions occurring across the supply chain. Businesses like Searoutes can provide visibility on emissions reductions on each leg of the transportation journey. 

Sustainable Procurement: A Vital Step Toward Supply Chain Decarbonization

Sustainable procurement is when a company seeks to get raw materials or deliver products through the lens of its environmental, social, and governance (ESG) goals. Considering ESG during the procurement process is valuable because it paves the way for companies to meet any emissions reduction requirements imposed by governing bodies. 

Sustainable procurement also has relevance for the modern supply chain because consumers are becoming increasingly aware of sourcing origins and the emissions footprint of the goods they consume. Tracking — and advertising — how much emissions reductions occur in the process of making and delivering a consumer product can make people feel that they’re contributing to the broader goal of addressing climate change through their activity and behavior.

Significant Challenges Await Shippers Building Sustainable Procurement Processes

Despite the environmental benefits of sustainable procurement, implementing the practice at a global scale still presents challenges. This is in part because sustainability is still a relatively new business concept, and governing bodies, such as the European Union, are still working on standardizing processes for measuring supply chain emissions and collecting data. 

Companies seeking to adopt sustainable procurement practices also face issues such as a lack of data transparency, difficulty in measuring sustainability metrics, and managing suppliers’ performance in meeting sustainability goals. Companies might also have to decide whether to measure emissions reductions using averaged data or supplier-specific estimates.

Indeed, as the November 2023 white paper titled “Emissions Measurement in Supply Chains:

Business Realities and Challenges” by the World Economic Forum pointed out: “Ideally, supply chain emissions would be tracked using reliable firm-specific primary data, but these can be difficult and costly to obtain. 

“Data quality, accuracy and availability pose significant challenges. Suppliers and customers may not always disclose their environmental data, including due to privacy concerns or concerns about revealing sensitive business information. Data may not be available in real time, or the data may be incomplete or inconsistent. Data quality can vary significantly depending on the region, industry and individual supplier, leading to inaccuracies.”

The Power of Data Analytics in Overcoming Key Challenges

Although companies and governing bodies have challenges when seeking to develop visibility into supply chain emissions, one way to combat those challenges is through data analytics. 

Data analytics involves using raw data to draw conclusions. For sustainable procurement, that might mean using data such as energy consumption along the supply chain, inventory optimization, and on-time performance metrics to make observations, find patterns, and draw conclusions from those data sets.

Enhancing Transparency and Visibility

One way that data analytics can help with sustainable procurement is by providing procurement professionals with a deep dive into where sustainability initiatives can be successfully deployed within the supply chain. This visibility into the supply chain is gained by analyzing data to spot trends or patterns. From there, procurement professionals can make informed decisions that are grounded by their company’s sustainability criteria.

For instance, data analytics can take historical data, such as data relating to market trends or supply and demand for certain products, and create potential forecasts. These forecasts can help procurement professionals anticipate where to focus transportation resources.

Accurate Sustainability Metrics Measurement

Data analytics also enables supply chain and procurement professionals to see how well companies are meeting their sustainability metrics. Analysis can occur across a wide variety of data on the supply chain, from carbon emissions to water usage to waste generation. Companies can use these sustainability metrics measurements not only to gauge how well they’re performing against ESG goals but also to gauge how their suppliers and transport providers are adhering to sustainability goals. 

Streamlining Supplier Sustainability Management

As mentioned above, data analytics enables companies to evaluate and manage their suppliers’ sustainability performance through the use of certain tools and techniques that allow for continuous monitoring and improvement. It can also enable companies to choose suppliers and transport providers who might better align with the sustainability goals of the company.

Implementing Data Analytics for Sustainable Procurement

Once companies recognize the value of data analytics in enhancing their sustainability initiatives, they can start to determine how and where to collect data, interpret and analyze that data, and produce actionable insights from it.

Starting with Data Collection

The first step in making smart decisions about sustainable procurement is to ensure the right data is being collected. The right data means data that will inevitably provide useful insights into helping a company meet its ESG goals at the supply chain level. 

Collecting the right data entails knowing what to look for and examining the gathering methods used. It also stresses the importance of quality over quantity. 

Working with a data analytics provider can help companies avoid potential pitfalls when it comes to collecting supply chain data within their respective industries. Different sectors have different issues to overcome. Agriculture and food producers grapple with differences in geography and company size, while mining companies contend with the lack of verified data downstream.

Analyzing the Data for Insights

While collecting data is a good start, it’s by no means the end. 

When businesses partner with data analytics firms like Searoutes, they benefit because these firms gather and analyze various data sets and provide actionable intelligence that’s valuable for sustainable procurement decision-making. For instance, for Searoutes’ CO2 API tool, the company uses historical vessel traffic data, carrier schedules, and technical and operational information on individual vessels to help gauge the carbon emissions produced by a vessel along designated routes. 

Continuous Improvement through Data Analytics

Data analytics can provide insights that can help procurement professionals adjust their supply chains to maximize short-term, environmentally friendly benefits.

But companies can also take advantage of any long-term benefits arising from the insights gleaned from data analysis. Procurement professionals can use short-term gains to build procurement guidelines that will enable the company to meet long-term sustainability initiatives, such as reducing emissions by a certain amount by 2050.

Harness Data Analytics to Power Sustainability Goals

Companies can have an easier time adapting sustainable procurement practices if they can harness the power of data analytics. Employing data-driven strategies can help companies reduce their environmental footprint while also maintaining a competitive advantage. 

Data analytics providers such as Searoutes can help companies be more efficient in realizing ESG goals in their supply chain. Searoutes’ three offerings aim to help procurement professionals see how emissions reductions can occur throughout the whole supply chain. Our tools include:

  • Vessel API helps you keep track of a vessel’s position and provides historical trace information of numerous vessels.
  • Routing API monitors fuel consumption, tracks carbon emissions, and calculates accurate routes and sea distances.
  • CO2 API enables users to search for optimal routes and their related carbon emissions.

Contact Searoutes today to learn how our tools can help you effectively implement sustainability initiatives in your supply chain.

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