The vast majority of emissions in manufacturing companies come from suppliers. That’s why close, green and continuous collaboration is crucial for the green transition, says the supply chain expert.
Factories are adjusting production lines, switching lighting to LED and installing solar panels on the roof. All in the service of the green transition. But if they really want to make a difference, they should look to their suppliers. This is often where the vast majority of their emissions come from.
“Corporate supply chain emissions are on average 26 times greater than their own operational emissions,” explains Timo Rossi, co-founder of the supplier experience platform Jakamo, Visiting Professor of Supply Chain Development at the IÉSEG School of Management in Lille and Paris and author of the book Supplier Experience – The Fundamentals of Modern Supplier Collaboration.
Consumers want greener solutions, and regulations are increasingly demanding them.
“There are so many drivers. It’s becoming a license to operate, and companies that are not doing anything are becoming obsolete. And it can be a competitive edge if you do it right,” says Timo Rossi.
Closer collaboration every day
There are big green wins to be found with suppliers, but collaborating on data and innovation is a complex task in everyday life.
Many companies start with an ESG consultant and report in Excel sheets sent back and forth to suppliers. Jakamo has a different, practical approach to greening the relationship with suppliers.
“With us, it’s built into the processes. When you have a purchase order, suppliers confirm the date, price and quantity. At that point, it’s also possible to collect data about CO2, conflict minerals, chemicals, etc., while ordering. We automate the data collection directly in the ordering process,” says Matti Mäkelä, co-founder and Chief Product Officer of Jakamo.
The solution makes it more transparent to assess different suppliers’ emissions and compliance levels against each other through a dashboard. And it makes working with sustainability in the value chain easier.
“It’s primary data that suppliers are filling in, and front runners are valuing that. It ensures full traceability to suppliers and customers. This way, you can make better decisions and start collaboration with suppliers,” says Timo Rossi and continues:
“If there is a customer who is valuing lower CO2, they might be willing to pay more – which can benefit sales if you know it proactively.”
Closer relationship by design
Jakamo sees that many manufacturing companies in the Nordics are already working on their green transition. Collecting real-time data is the first step in making the right decisions and working more closely with suppliers on the green transition.
Building the process directly into the order process with suppliers gives it a strategic position throughout the organisation.
“Everybody wins with more transparency, and our platform forces a closer relationship with suppliers by design. When it becomes a part of your daily process with your contact person, it gets strategic focus – which is the key to fostering more innovative collaboration,” says Timo Rossi.
The article was published originally in TechSavvy Media.
