ESG, Compliance and
Cognitive Sourcing:
New Era of Brand Value
Creation
www.orbit2transformation.com

Table of Content:
Abstract 04
Our partners participating to this position paper 04
Introducing the writers 05
Optimizing supply chains in the face of increasing
customer and regulatory expectations
06
ESG compliance: The benefits go beyond efficiency and
productivity gains
06
Harnessing the transformative power of cognitive
sourcing for superior business value and trust
07
Today’s landscape 08
Tomorrow's marketplace 09

Table of Content:
Bringing it all together: Aligning ESG compliance with
AI-driven cognitive sourcing
10
Procurement digitalization beyond P2P & B2B 10
Conclusion 11
Appendix: See more about what leaders in the industry
are saying on market trends
12
Question 1: How do you view “secondary” topics
as compliance................................................ 12
Question 2: Do you foresee a convergence/
harmonization of sustainability........................
13
Question 3: What do you believe is the greatest
added ....................................................
14
Question 4: What do you think are the key
conditions/requirements..............................
15

Whitepaper 04
Abstract
Procurement organizations are at an interesting
crossroads. Environmental, social, and governance
(ESG) management principles are becoming the new
gold standard for successful companies. Companies
are taking ESG principles beyond compliance to
create a reference set of values and expectations for
strategic business relationships. Integrating ESG
performance is becoming critical for modern
companies looking to grow their business with
trading partners that have shared values.
At the same time, the evolving socioeconomic and
financial environments demand an end-to-end
digital user experience across the procurement value
chain. Innovative solutions can help deliver such an
experience by leveraging robust decision analysis
capabilities and strategic decision models to perform
sensitivity analysis, quantify alternatives, accurately
estimate risks and uncertainties, and create new
business value.
As business leaders invest in relationships with
suppliers and customers who share the same values,
it is critical for procurement to go beyond
Procure-to-Pay, cost savings and basic compliance
controls. Leveraging richer data sources and
indicators, along with AI-driven decision processes
can help procurement organizations leverage ESG
performance with new relationship opportunities
by driving superior data collection and insights. For
example, such cognitive sourcing environments
could be used to develop a ‘category health check’,
enabling a superior user experience for
buyers/category managers around simple validation
and control points. This in turn accelerates and
improves their capacity to make business decisions
and enhances business value.
The paper sheds light on new cognitive sourcing
concepts and standards that are being
implemented in the manufacturing distribution
and service industries. It also showcases the path
forward as new functional dynamics come into
play between the Chief Procurement Officer
(CPO), the CFO and the CSO/CCO (chief
sustainability officer/chief compliance officer) in
an increasingly transparent data environment.
Our partners participating to this position paper:
A special thank you to our partners who accepted to share with us their market views and future trends.

Whitepaper 05
Introducing the writers
“I strive to achieve the “extraordinary”
through my passion and innovation, and
I am committed to developing business
models that foster economic, social,
and environmental successes.”
Tomas Wiemer
“I have long said ‘get comfortable, being
uncomfortable’. With the speed of
digital advancements and automation,
this could not be Truer. The individual
who grasps the leading-edge concepts
and applies what ‘could be’ to their area
of expertise, will be the one leading and
implementing tomorrow’s reality.”
DeAnn Hargis
“A leap forward on sustainability is
sometimes just a spark that changes
the mindset of people, but before that
you may have spent infinite time
rethinking the model, evaluating the
opportunities and changing the
processes for the spark to ignite."
Pierre-Louis Frouein
Has a distinguished career in Fortune 500 and SMB enterprises. Currently building Career 4.0 within the
digital transformation space, DeAnn’s career began in Operations Excellence being the “Go To” person to
transform organizations and operating models
Led Purchasing and Supply Chain organizations at a time when extreme cost reductions were required to
meet bottom-line commitments. Ultimately, DeAnn turned Supply Chain Sustainability and Compliance into
brand differentiating, bottom-line impacting programs
Is currently working with thought leaders in the industry to apply new digital capabilities into the supply
chain sustainability and compliance space
DeAnn
Has extensive experience in Global Direct & Indirect Procurement category management, in Digital
operations transformation strategy and in integrating companies following merger and acquisitions
Held leadership positions in numerous industries including specialty chemicals, flavor and fragrances and
most recently in telecommunication
The focus on continuous improvement in procurement and digital transformation is a natural result of
Mr. Wiemer’s broad international experience, having worked with major corporations in constant
changing environments, that have included Rhone-Poulenc (now Sanofi), Rhodia (now Solvay), Chemtura
(now Lanxess), Firmenich, Alcatel-Lucent which the merged with Nokia
Tomas
Is passionate about sustainability topics and had been acting on product environmental engineering,
sustainable procurement, compliance/anticorruption, materials traceability and health in relation to
electromagnetic fields
Is fond about team work and has been working as team lead, individual contributor or project manager in
different environments such as consumer electronics, multinational companies, industry associations,
standardization bodies and universities
Believes that the combination of transparency, big data and digitalization has the potential to create
"emerging properties" which may radically transform the compliance and sustainability landscape
Pierre-Louis

Whitepaper 06
ESG (Environment, Social and Governance) Compliance:
The Benefits Go Beyond Efficiency and Productivity Gains
As digital transformation gains rapid traction, it is
important to develop an effective digital and user
experience strategy for enhanced compliance and
procurement functions. To achieve this, enterprises
must do two things: first, they must integrate
constantly changing standards, regulations,
processes, ethics, and governance with new digital
technologies. Second, they must effectively manage
emerging local, international, social, economic, and
political risks in order to properly execute.
SpendMatters: Sustainability and regulatory
compliance always seem to drop to the bottom
of the priority list of procurement, but it doesn't
mean that procurement executives are not focusing
on it.
Velocity Procurement: These topics have
not developed to maturity in the procurement
digitization landscape. There is very little
integration of compliance and sustainability
within current procurement systems and less so
within ERPs.
Ecovadis: We believe the topic of Sustainability
is no longer secondary. As we see increasing
‘convergence’ in the traditional three supplier
selection factors of price, quality and on-time
delivery. Sustainability has emerged as a key
distinguishing factor. It covers a wide range of
topics, and still has far more variability in maturity
level within the supply base and can be a powerful
indicator of performance. The era of integrating
those indicators digitally is just beginning.
Assent: Companies that have embraced
digitization recognize that compliance and
sustainability are key to maintaining market
access.
How can they do this?
While there is no quick solution to developing
high-end business value with new data traceability
capabilities, ESG management will continue to be
the cornerstone for driving sustained value by
promoting new types of suppliers with completely
new business opportunities that create different
avenues for ROI.
Optimizing Supply Chains in the Face of Increasing
Customer and Regulatory Expectations
Picture this. It’s a Monday morning. The CEO calls for
a meeting with the CFO, CIO (Chief Information
Officer), CPO, and CCO to address the following
pressing challenges:
Closing the financial quarter and signing off
on transactions across the last four quarters to
secure upcoming credit lines with banks.
Guaranteeing zero bribery cases in global
operations and screening all suppliers to address
Department of Justice (DOJ) inquiries.
Ensuring all sourcing activities are compliant with
sustainability values, including human and labor
rights, to meet customer demands.
The CFO and CPO explain that the current P2P and
business-to-business (B2B) cloud investments are
designed to address transaction traceability issues,
while early-stage investments in AI, (currently Proof
of Concept initiatives), are expected to address
brand-related issues. The CCO adds that the
compliance organization has already defined the
standards and expects the investments in AI and
improvements in user experience to further raise
awareness and expectations.
It is this rendezvous between compliance and
cognitive sourcing that will help align ESG
standards, regulations and performance
expectations with new digital procurement
capabilities.

Whitepaper 07
Tradeshift: Massive increase in usable, reliable,
and low-cost data, from IOT, and transparency
across the supply chain… will drive holistic decisions
on product and services that will lower costs and
improve delivery. This will be the transformation of
the Supply Chain decision process. This will also
make SCM, if teams drive to excellence in this field, a
way to bring the CPO to the C-level
Cognitive software companies will be able to create –
through integration of external data and indicators,
advanced analytics and applied AI – a digital sourcing
ecosystem that integrates external market
information and regulatory requirements with
traditional enterprise procurement data to drive
faster business decisions and to build new risk and
opportunity maps. This will give procurement
executives the opportunity to focus at an ecosystem
level instead of seeing disparate touch points
amongst numerous partners and databases in the
end-to-end process.
One emerging solution, with many trials underway, is
blockchain. An immutable blockchain network
provides transparency and trust in information
shared during the bidding, evaluation and award
phases, minimizing common practices such as
demand for payment, rigged bids and fraud. The
same blockchain technology can also be leveraged to
create transparency and trust to comply with
growing regulatory requirements such as child
labor, slavery, environmental waste, etc.
Velocity Procurement: The ability to ingest
multiple sources of regulatory compliance into a
database that cross references compliant
suppliers
will dramatically set apart suppliers that meet
those requirements. The cycle time for identifying
qualified suppliers will drop drastically. Using the
AI functionality will reduce reporting time for
internal customers and to external agencies.
Assent: Supply chain data management and
sustainability are niche specialties that require
constant regulatory monitoring, specialized talent
to interpret requirements and a heavy investment
in technology. Source-to-Pay (S2P) platforms will
likely seek partners that offer this blended skill set,
rather than build departments to manage the
requirements internally. Data exchange standards
and integrations with platforms will be the key
drivers toward harmonization between various
supply chain management functions. S2P
platforms and marketplaces that foster
ecosystems in support of developers and product
integrations will have the most robust offerings
and unique competitive advantages when the
market consolidates around best-of-breed
solutions.
Harnessing the Transformative Power of Cognitive
Sourcing for Superior Business Value and Trust
While organizations continue to expect
procurement to deliver core KPIs such as savings
and innovation, the deployment of digital solutions
will drastically change the procurement ecosystem
and its standards. In today’s world, multiple
disciplines (CSR, Compliance, Legal, IT, etc.) engage
individual suppliers to share expectations, collect
specific data and assess alignment to regulations
and standards. (see chart 1 “Today’s landscape”)
Each discipline will either perform this function in-
house or partner with a specialist firm to conduct
the data collection, review and assess compliance
on their behalf. Where these multiple,
singular-focused engagements with the
suppliers bring true expertise on key ESG topics,
the multiple data repositories do very little to
assist the procurement organization in quickly
accessing the information, understanding risks
and applying information to shape the
relationship with the supplier. In reality, the
current state of multiple data repositories gives
the advantage to the supplier.

Whitepaper 08
As technology advances, new AI-enabled cognitive
sourcing solutions will emerge around Data Lakes or
Marketplaces. These Data Marketplaces will contain
subscription-based data as well as “Fire Wall
protected” enterprise data sources, created by the
organization. The Data Marketplace will grow through
information accessed through raw data downloads,
BI and analytic reports available based
predetermined subscriptions; and through API
linkage into existing P2P platforms and data
repositories. New cloud-based solutions have
significantly facilitated this process, nevertheless,
human interpretation will always be required to
establish information requirements and determine
how to utilize the information to satisfy internal
procedures. (see chart 2 “Tomorrow’s Market Place”).
SpendMatters: You first have to define the role
of S2P applications versus the
networks/marketplaces in this area. First, we believe
that applications (SaaS) should be "loosely coupled"
to the various marketplaces and network providers
(DaaS and BPaaS) that the applications connect to.
In other words, buyers want their application
providers to connect to any service providers that
add value, and the service providers generally
want to connect to multiple applications that
access them.
Tradeshift: Third-party apps will be developed
in the marketplace, built on common ecosystems,
with the ability to ingest data from multiple
sources, languages, and environments to deliver
for analysis. The rapid growth of value, created by
the marketplace, and the efficiencies of that
environment will lower the cost of doing business
and create liquidity to fund these initiatives. Digital
will generate lower cost financing, streamline
ordering, improve quality and deliver on the ability,
to improve the global alignment of resources,
supply and demand.
SpendMatters: We are moving towards deeper
and more flexible data modeling and
management. Digitizing procurement processes is
increasingly more than just simple forms and
workflow management of documents, but rather,
modeling data more deeply and granularly.
Today’s Landscape
CSR
ESG
ESG
Compliance
Legal
IT
Anti-
corruption
Sanctions
Cyber
security/
data
privacy
Compliance
Legal
IT/compliance
What/how
• Code of conduct
• Management/ownership identification
• Conflict of interest declaration
• Internal controls on PO and invoice
approvals
• Code of conduct
• Industry standards
• Questionnaire
User
experience
today
• Category
mgmt.
• COE
• BPO
• Managed
services
ERP
S2C
P2P
• Legal review
• 3rd
-party lists
• Contract requirements
• Policy/procedure reviews
Who Where Audience
Chart 1

Whitepaper 09
The Data Marketplace is a key facilitator for the new
AI-enabled cognitive sourcing capabilities. These
cognitive sourcing solutions will enable a simplified
management of an organization’s direct materials
spend and allow procurement teams to focus on
high-value activities such as joint-vendor innovation,
competitive negotiation and proactive risk mitigation.
This will result in positive outcomes such as
sustainable cost savings and agility, highly secure
business environments, better user experience in risk
identification and opportunity management –
ultimately leading to enhanced trust and revenue
growth.
Tradeshift: Compliance will be radically improved
as terms, conditions, Service level agreements,
payment structures, deliverables, quality indicators,
delivery points, temperature management, point of
control, will all be easily tagged and measured using
IOT and data collection along the entire supply
chain, AI and RPA will become standards in the
review of this data and be able to highlight
appropriate steps to align the entities.
Assent: Integrating supply chain compliance
metrics into component and raw material selection
saves costs and contributes significantly to
on-time delivery and profitability.
Cognitive sourcing enables organizations to assess
new sets of risks and opportunities. It will drive
collaboration with suppliers and customers to
promote new business models based on a new set
of data collection and perspectives.
Ecovadis: There is another dimension beyond
being alerted of and avoiding risks, but in
identifying opportunities and developing richer
applications that drive growth and innovation. For
example, you could use AI to make it easier to
identify high performing suppliers for sustainable
innovation, or to enable them to participate in
financing options like the ING Sustainable
Improvement Loan program, or sustainable supply
chain finance, insurance, diversity-based
programs, and so on. There is also value added by
connecting internally. Marketing and
communications teams can leverage detailed
reporting to credibly integrate sustainability
performance of a specific product’s supply base
into brand positioning and promotion.
Tomorrow's Marketplace
Self register
• 3rd
Party Screenings
• Government Lists
Subscriptions
S
U
P
P
L
I
E
R
• ISO Certifications
• Public Filing/
Records
Marketplace
• Corruption
• ESG
• Geography
• Supply Risk Tolerance
Organization requirements
Data Privacy
Vendor
Gov’t
Sanctions
Vendor
Anti-Corruption
Vendor
ESG Vendor
DATA LAKE
One Platform
S
U
P
P
L
I
E
R
AI
ERP
S2C
P2P
• Managed
Services•
Smart COE
• Category
Mgmt
• 3rd
Party
Assessors
User
experience
tomorrow
Chart 2

Whitepaper 10
Bringing it All Together: Aligning ESG Compliance with
AI-Driven Cognitive Sourcing
AI-driven cognitive sourcing will significantly change
user experience and existing financial control
configurations while creating the need for new skill
sets. As elements in the cognitive sourcing ecosystem
undergo constant change, companies can no longer
apply policies and business processes in a linear
operational fashion.
A new approach needs to be enabled, one focused on
continuous sensing of risks and opportunities and
proactive engagement with suppliers as soon as
relevant. It is therefore critical for organizations to
create a work environment where ESG and
compliance are constantly evolving and applied in
tandem.
Forward-looking companies should begin this
process with three traditional steps: promoting
awareness, communicating frequently on new
regulations, and ensuring proper supplier
management, coupled with AI-driven cognitive
sourcing solutions such as AI-driven scorecards
accessible on mobile-friendly interface to facilitate
rapid decision-making. For instance, by
incorporating third-party data feeds, organizations
can manage performance in real-time using
dashboards and scorecards at enterprise,
department, and individual levels (see Chart 3 -
Procurement Digitalization beyond P2P and B2B).
Such an approach will help mitigate procurement
demand risk in adverse circumstances, better
coordinate responses in case of emergency, and
bolster IT security, response, and recovery.
Ecovadis: It is essential to translate
sustainability data into reliable,
quantitative/numerical ratings or indicators, which
power digital capabilities such as calculating
benchmarks and trends, tracking performance
improvements, and developing and managing
smart contracts, connecting this performance to
provenance apps that leverage block chain, as
well as a rich potential for AI-enabled apps.
The graph below shows a possible technology architecture laying out challenging interconnections,
data lakes, and security.
Procurement digitalization beyond P2P & B2B
New digital
outputs
Intelligent sourcing
Transaction
data
Catalogs
Transaction flow
PO
INV
Inv. status
Remittance
Data Lake/
Business
Warehouse
Market
data Example
Cloud security/
gateway
Via connector
Cognitive risk and quality
management
Iterative innovation
Intelligent cost optimization
Intelligent contracts
Intelligent procurement &
supply planning
Savings +
Operational
excellence
Generative supplier
relationship management
New category
mgt dynamics
indirect & direct
New AI risk & opportunities
experience
Technology lead – Data
collection
P2P transaction value B2B transaction value
User experience
digitalization
• Managed services
• Smart COE
• BPO
• Change mgmt.
• Transformation
B
U
Y
E
R
S
U
P
P
L
I
E
R
S
U
P
P
L
I
E
R
P2P
network
ERP
1,2,3,4
• SaaS
• Compliance
• AI solution
Chart 3

Additional implementation challenges emerge
within individual organizations when moving
beyond proof-of-concept pilots to full
implementation, such as:
Global mobility operator: There is more
and more requirements and information
regarding anti-corruption/anti-bribery. We have
a policy on paper, but we are lacking the
systems or processes to implement the policy
consistently, globally. Rolling out procurement
tools is a high priority and the tools currently
rolling-out contain some AI capabilities, but
ultimately it is up to each BU/country to roll-out
the capabilities as they see fit.
Reviewing all these challenges and identifying
solutions to overcome them is a requirement to
successful emergence of a robust data
marketplace of the future.
Partnership between the expertise of current
ESG and compliance stakeholders and the
leaders driving digitalization is a requirement
during the development phase. The
opportunities are real and tangible, and the
momentum is building. With the number of
small proof-of-concepts underway, we expect the
data marketplace of the future to be firmly a
reality within the next five years.
Conclusion:
“This paper proposes a vision of the future and
focuses on ESG opportunity areas currently left on the
side-lines due to out-dated ROI calculations based on
a singular focus on savings and cost reductions. ROI
calculations must instead include the value of better,
smarter abilities to make fast business decisions
based on a broader set of requirements and increas-
ingly less expensive software as a service capabilities
(stand alone, suites or platforms).”
Global consumer goods leader:
Sustainability and specifically initiatives that
increase brand value and mitigate brand risk are
the driving forces behind changes in the tools and
capabilities. Consumer are the driving force on
multiple sustainability topics – not regulators.
Early stage proof-of-concepts are addressing industry
challenges that stand in the way of making the data
marketplace generally available and commonplace:
Global consumer goods leader:
To the extent we can define standards and
certifications for our industry on sustainability,
we will make the biggest impact.
Ability for industries to converge and
harmonize standards
Ability of customer-supplier interfaces to
define relevant data to collect
Ability and willingness of suppliers, apps and
other data sources to provide the expected
data, due to data ownership, privacy and
protection considerations
Accuracy, reliability and ongoing updates
of the data
Whitepaper 11
Interpretation of global standards within local
operating jurisdictions
Balance between global programs and local
unit controls
Degree of transparency within and among
operating units

Whitepaper 12
APPENDIX
See more about what leaders in the industry are saying on
market trends
Question 1:
How do you view “secondary” topics as
compliance and sustainability in the
procurement digitalization landscape?
SpendMatters
Sustainability and regulatory compliance always seem
to drop to the bottom of the priority list of procurement,
but it doesn't mean that procurement executives are not
focusing on it.
Part of this is a regional issue because European firms or
global firms headquartered in Europe have a more
progressive and proactive view into implementing GRC
and sustainability programs in the supply chain. This is
of course driven heavily by a more stringent regulatory
environment, but it also reflects a stronger customer
focus and brand focus, not to mention the fact that
many organizations are more resource constrained and
see an improvement of Enterprise Value (EV) by focusing
on the "triple bottom line”.
Tradeshift
The movement to digital will allow for an explosion of
data for analysis that will lead to better decisions around
sustainability, with 3rd party data from transportation,
mfg efficiencies, holistic cost understanding, carbon
footprints, and human impact, to name a few, that will
fundamentally transform the Supply Chain. GeoPolitical
realities in China, South China Sea, North Korea, Middle
East, Brexit and many others will require new risk
analysis, and new sustainability impact statements,
delivered in real time.
Compliance will be radically improved as terms,
conditions, Service level agreements, payment
structures, deliverables, quality indicators, delivery points,
temperature management, point of control, will all be
easily tagged and measured using IOT and data
collection along the entire supply chain, AI and RPA will
become standards in the review of this data and be able
to highlight appropriate steps to align the entities.
Velocity Procurement
These topics have not developed to maturity in the
procurement digitization landscape. There is very little
integration of compliance and sustainability within
current procurement systems and less so within ERPs.
Assent
The answer largely depends on the sophistication
of the company’s procurement organization.
Companies that have embraced digitization recognize
that compliance and sustainability are key to
maintaining market access. Accordingly, integrating
supply chain compliance metrics into component and
raw material selection saves costs and contributes
significantly to on-time delivery and profitability.
Less sophisticated procurement organizations are
struggling with supply chain data management,
and still take a reactive approach to customer inquiries
and regulatory audits. This is traditionally because they
lack a digitized procurement environment, or the
supply chain management tools they have selected
lack the appropriate functionality to address these
business continuity risks.
Ecovadis
We believe the topic of Sustainability is no longer
secondary. As we see increasing ‘convergence’ in the
traditional three supplier selection factors of price,
quality and on-time delivery. Sustainability has
emerged as a key distinguishing factor. It covers a wide
range of topics, and still has far more variability in
maturity level within the supply base and can be a
powerful indicator of performance. The era of
integrating those indicators digitally is just beginning.
Thus, we see integration of sustainability performance
indicators into digital procurement has already begun.
For example: The EcoVadis API 2.0 integrates
sustainability ratings and scorecard data into
procurement tools (such as Coupa, ivalua, Synertrade,
SAP Ariba).

Whitepaper 13
Question 2:
Do you foresee a
convergence/harmonization of
sustainability/compliance requirements
towards suppliers thanks to the rise of
S2P platforms/marketplaces?
SpendMatters
As the old adage goes, the beauty [and curse] of
standards is that there’s so many of them to choose
from! It’s a quite an alphabet soup of reporting
standards, frameworks, and governing bodies: GRI, SASB,
CDP, IIRC, CDSB, ISO, FASB, IFRS, etc. This
list would get much longer if added industry-specific,
region-specific, or category/content specific standards!
To answer the question specifically, you first have to
define the role of S2P applications versus the networks/
marketplaces in this area. First, we believe that
applications (SaaS) should be "loosely coupled" to the
various marketplaces and network providers (DaaS and
BPaaS) that the applications connect to. In other words,
buyers want their application providers to connect to
any service providers that add value, and the service
providers generally want to connect to multiple
applications that access them.
Tradeshift
Third-party apps will be developed in the marketplace,
built on common ecosystems, with the ability to ingest
data from multiple sources, languages, and
environments to deliver for analysis. The rapid growth of
value, created by the marketplace, and the efficiencies
of that environment will lower the cost of doing business
and create liquidity to fund these initiatives, Digital will
generate lower cost financing, streamline ordering,
improve quality and deliver on the ability, to improve the
global alignment of resources, supply and demand.
Velocity Procurement
Within the next 5 years, it will be more common for S2P
platforms to integrate with existing standalone
solutions for sustainability/compliance. However, S2P
platforms will see very little development of modules to
support compliance/sustainability.
Assent
Compliance and sustainability are niche specialties
that require constant regulatory monitoring,
specialized talent to interpret requirements and a
heavy investment in technology. Source-to-Pay (S2P)
platforms will likely seek partners that offer this
blended skill set, rather than build departments to
manage the requirements internally.
Data exchange standards and integrations with
platforms will be the key drivers toward harmonization
between various supply chain management functions.
S2P platforms and marketplaces that foster
ecosystems in support of developers and product
integrations will have the most robust offerings and
unique competitive advantages when the market
consolidates around the best-of-breed solutions.
Ecovadis
While we do not foresee P2P or marketplaces
themselves driving convergence in sustainability
requirements. This is being driven more by standards
like the UN Sustainable Development Goals (SDGs),
GRI and CDP for reporting, and by EcoVadis for ratings
used in commercial relationships, and Industry
initiatives such as TfS, RBI, AIM-Progress who are
playing a strong role in harmonizing these rating
indicators within their collective supply chains.

Whitepaper 14
Question 3:
What do you believe is the greatest
added value of procurement
digitalization/AI for compliance and
sustainability?
SpendMatters
It’s a multistage rocket of value…
Stage 1 is really just moving from basic document
management of word processing, spreadsheets, etc. to a
decent supplier management application where you
can track the supplier qualification, certification,
onboarding, and monitoring processes.
Stage 2 is moving towards deeper and more flexible data
modeling and management. Digitizing procurement
processes is increasingly more than just simple forms
and workflow management of documents, but rather,
modeling data more deeply and granularly.
Stage 3 is when you move beyond the “empty app” and
begin to use “outside in” big data to enhance the process
in various way. This is where you can begin to tap the
collective intelligence of the communities built by such
providers so that you don’t have to reinvent the wheel
here. Once you can use extremely flexible “inside out”
cloud applications to assemble and integrate critical
“outside in” content into the workflow (and drive the
decisioning and guidance in the workflow), then the
magic starts to happen.
Tradeshift
Massive increase in usable, reliable, and low-cost data,
from IOT, and transparency across the supply chain. This
increase in usable, accurate, real time data, will drive
holistic decisions on product and services that will lower
costs and improve delivery. This will be the
transformation of the Supply Chain decision process. This
will also make SCM, if teams drive to excellence in this
field, a way to bring the CPO to the C-level.
Velocity Procurement
The ability to ingest multiple sources of regulatory
compliance into a database that cross references
compliant suppliers will dramatically set apart suppliers
that meet those requirements.
The cycle time for identifying qualified suppliers will
drop drastically. Using the AI functionality will reduce
reporting time for internal customers and to
external agencies.
Assent
Big data analytics, block chain, artificial intelligence
and procurement digitalization are not just functional
terms when it comes to compliance and sustainability
programs. Regulatory authorities have access to these
tools and are actively leveraging them to identify high
risk companies. This is evidenced by growing instances
of precise enforcement actions, where authorities enter
into audits already knowing what and where
non-compliance exists in audit targets.
Moreover, the sophistication and disparity of
international trade, product compliance and
sustainability regulations have made it nearly
impossible to manage the complexity of global
regulations without these tools and strategies. In
short, procurement digitalization and AI are not just
value-add when it comes to compliance and
sustainability – they are essential.
Ecovadis
Beyond the obvious ones of speed (Identify risks and
respond faster), and scalability (to cover thousands of
buyers and the long tail of 10’s of thousands of
suppliers), there is another dimension beyond being
alerted of and avoiding risks, but in identifying
opportunities and developing richer applications that
drive growth and innovation. For example, you could
use AI to make it easier to identify high performing
suppliers for sustainable innovation, or to enable them
to participate in financing options like the ING
Sustainable Improvement Loan program, or
sustainable supply chain finance, insurance,
diversity-based programs, and so on. There is also
value added by connecting internally. Marketing and
communications teams can leverage detailed
reporting to credibly integrate sustainability
performance of a specific product’s supply base into
brand positioning and promotion.

Whitepaper 15
Question 4:
What do you think are the key
conditions/requirements to enable the
emergence of sustainability/compliance
topics in digital procurement?
SpendMatters
There are many drivers for this shift towards managing
sustainability and compliance within procurement.
Sometimes it occurs simply based on the nature of the
spend. If you’re buying palm oil, paper, conflict minerals,
hydrocarbons, and so on, the topic is clearly front of
mind. For everybody else, there’s still energy/utilities
spend and travel related spend that also has an
environmental sustainability aspect. For those sourcing
from low cost countries, that obviously brings socially
responsible sourcing and supplier management into the
mix.
One quick diagnostic tool is to sketch out these areas,
assess the gaps (driven by importance vs. effectiveness),
and then connect the areas with the greatest gaps
where there is greatest collective promise in improving.
Expanding it into multiple risk/compliance types would
take it even further, but also make it potentially
overwhelming
Tradeshift
Connectivity within open marketplaces will reduce the
resistance of getting all suppliers on the network. Allow
suppliers and buyers to focus on the value creation of the
data versus the pain of one to one integration.
Velocity
The source data needs to be digitized, classified and
available as the first step to enable this emergence.
Assent
Continued loss of market access and targeted
enforcement are the greatest contributors to zeitgeist
change. After enforcement, cost savings and efficiency
are the primary drivers. Frequently, companies’ reliance
on legacy processes and tools have left them vulnerable
and overly-resourced in areas of sustainability and
compliance, because the internal costs are poorly
understood and not tracked by finance or operations.
As a result, investments in the appropriate compliance
software frequently achieve single-year return on
investment.
Ecovadis
One key success factor is to address the challenge that
sustainability and compliance data is often either
‘binary’, or very qualitative and unstructured
(compared to some other quantitative data such as
from quality or financial inputs). It is essential to
translate sustainability data into reliable,
quantitative/numerical ratings or indicators, which
power digital capabilities such as calculating
benchmarks and trends, tracking performance
improvements, and developing and managing smart
contracts, connecting this performance to provenance
apps that leverage block chain, as well as a rich
potential for AI-enabled apps.
More in detail:
Performance oriented approach: E.g.
quantitative indicators that have a richer scale
compared to checkbox/or binary “Good/bad”
compliance or heavily qualitative measures.
Interactivity: The platform must support flows
of information and facilitate collaboration in
both directions – to suppliers, and to buyers. E.g.
collaborating on corrective action/improvement
plans, or getting access to relevant content, and
a support network/community.
Multi-tier access: These networks/platforms
must engage all tiers, with mechanisms to drive
transparency/visibility upstream to tier 2, 3 and
beyond in the supply chain. This means making
it easy for those tiers to participate, set some
threshold of expectations for transparency
(which the “buyer” organizations must also
participate), and with some appropriate level of
control.