Scenario: Selection of T-shirts Suppliers
Let us take the example used in the previous articles about Life Cycle Assessment.
You are the Data Science Manager of an international clothing group that has stores all around the world.
The company sources garments, bags, and accessories from suppliers located in Asia.
Stores are delivered from local warehouses that are directly replenished by suppliers.
Can you automatically select suppliers that minimize your costs while respecting environmental and social constraints?
The sourcing team has decided to implement sustainable sourcing on the limited scope of T-shirt suppliers.
They want to review their supplier selection process to support the company’s sustainability roadmap.
However, they are facing several obstacles
- Suppliers data collection and storage
There is no central source of information as the data is stored in unstructured Excel files across the organization. - Complex decision-making based on many parameters
Their current system of Excel Scorecard is showing its limits as the number of indicators is increasing.
Therefore, they request your help deploying a product to monitor suppliers’ KPIs and automate the selection.
Let’s see how data analytics can answer this problem.
Sustainable Sourcing Indicators
I will use a simple example with a limited range of indicators for this article.
- Environmental Indicators including Carbon Emissions, Energy Consumption, Waste Generation and Water Usage
- Social Indicators, including labour and human rights
We can quickly review them to understand their definition and how to measure them.
Carbon emissions
The primary indicator that will drive your sustainability roadmap is the carbon footprint of the supply chain.
This can be measured by calculating the total emissions of greenhouse gases such as carbon dioxide, methane and nitrous oxide.
💡 What should we consider?
- Emissions during the cultivation of the cotton used for your t-shirts
- Emissions from electricity generation and chemicals used for t-shirt production
- Transportation of the finished goods (t-shirt) from the factory to the central distribution centre by sea freight
The first two metrics should be collected from the suppliers, but your team can calculate the third one.
The formula is quite straightforward
With,
E_CO2: emissions in kilograms of CO2 equivalent (kgCO2eq)
W_goods: weight of the goods (Ton)
D: distance from your warehouse to the final destination(km)
F_mode: emissions factor for each transportation mode (kgCO2eq/t.km)
The data sources are
- Transportation Management System databases with shipments including (dates, source, destination, shipment quantity)
- Master Data to convert shipment quantities into weight
If you need more information, I have detailed the process in this article
Energy consumption
Another indicator is the amount of energy consumed by the supplier to produce and deliver products.
It can be expressed in Joules used per production unit (called functional units in the Life Cycle Assessment Methodology).
💡 What should we consider?
- Energy consumption for cotton cultivation (kJ)
- Energy consumption for spinning, weaving and dying (kJ)
- Energy consumption for transportation (kJ)
The sourcing team should collect this metric.
Water usage
As it becomes a scarce resource, new regulations are pushing companies to redesign their processes for water consumption reduction.
With this indicator, you can focus on suppliers that do not affect the local water supply.
💡 What should we consider?
- Water consumption for cotton cultivation (L/Unit)
- Water consumption for spinning, weaving and dying (L/Unit)
Waste generation
Measuring the amount of waste generated during production can help identify areas for adopting more sustainable production methods.
💡 What should we consider?
- Solid waste generation during production (kg/Unit)
Social indicators
These indicators assess suppliers’ performance in terms of social sustainability.
You can conduct your own audits or use third-party assessments.
💡 How to Measure it?
Your sourcing team assigns a weight to each criterion in the scorecard below.
The auditors calculate a score linked to each criterion to represent the supplier’s performance.
The total score is a pondered average of the scores that provide a general supplier assessment.