Category Archives: CSR

Open Gen-AI Isn’t Just Dumbing Your Business, It’s Killing the Planet!

Open Gen-AI is not just one of the most dangerous technologies we’ve ever invented* (as it lulls the uninformed into a false sense of security who will depend on it to make increasingly more critical decisions that could have increasingly more disastrous consequences), it’s also about to pose the biggest threat to planetary survival!

As it is, an average Data Center requires at least 10X the energy consumption of an average American home per square meter, with Open Gen AI data centers (which require ultra dense servers with cores running flat out all the time) requiring even more energy than that. However, whereas traditional AI models, including traditional Deep Learning Neural Nets which can be optimized post-training to often 10% of their original size using techniques developed by MIT researchers (including those described in this article) are now smaller and more stable than they used to be, these models just keep expanding exponentially in a futile quest to have them do more and now require models thousands of times bigger (and more energy intensive) than traditional models, often to generate output that wouldn’t even net a C grade in a high school class!

Think about that and read this article by Kate Crawford on Nature on how AI’s environmental costs are soaring (which notes that even OpenAI’s CEO has finally admitted that the AI industry is heading towards an energy crisis as there just isn’t enough power to keep up with the exponential energy demands [with ChatGPT already requiring more power than 33,000 average American homes … think about that, if you shut down just TWO Open Gen-AI models, you could power an entire small city]) before needlessly throwing a solution you don’t understand at a problem you don’t even have (when a better process would eliminate that problem and replace it with a smaller, different, problem that traditional technology and a human with just a bit of training could completely solve).

Because Open Gen-AI is just NOT ready for prime time, and just because these companies raised Billions of dollars on false promises that it would be ready years or decades sooner than AI development has traditionally taken, that doesn’t make it our responsibility to adopt the technology before it’s ready.

* And if a man afraid of nothing acknowledges this, we really should listen! (See this article.)

Source-to-Pay+ Part 10: Over 55 Supply Chain Risk Vendors to Check Out

Last quarter, we ran a 9-part series that served as An Introduction to Supply Chain Risk where we introduced you to the risk elements not covered by traditional supplier management platforms (which we covered in our 39 Steps … err … 30 Clues … err … 39 Part Series on Source to Pay where we listed over 90 supply management companies of which over 1/3 claimed to have some degree of “risk”, which we dub supplier “Uncertainty”, management).

In our series, we focussed heavily on corporate risk, third party risk (which included ESG, Human Rights, Regulatory Compliance), supply chain risk (including transparency, traceability, and multi-tier tracking), transport risk, cyber risk, and analytics. We also noted that our next instalment would provide a starting list of vendors that you could check out to meet (some of) your supply chain risk needs.

This is that instalment. Hopefully this starting list will be useful to you. In the months that come, the hope is that some of these will be covered

Finally, a second reminder that inclusion on this list DOES NOT imply Sourcing Innovation is recommending the vendor.

Legend

 3P 3rd Party / TPRM
S/V supplier risk / verification
SCT supply chain transparency
T/L transport / logistics
 MT multi-tier
  C cyber
ESG Environmental, Social, Governance
 HR Human Rights
 RC Regulatory Compliance
BoM Bill of Materials (Direct)
 DX Discovery
 TX Traceability
Vendor LI/#Emps  3P S/V SCT T/L  MT   C ESG  HR  RC BoM  DX  TX
&wider 20 Y Y
Agora Sourcing 2 Y Y
AMLRight Source 2795 Y Y
Apex Analytix 411 Y Y Y Y
Aravo 117 Y Y Y Y
Archer 681 Y Y Y
Altana Atlas 166 Y Y Y Y Y Y
Brooklyn Solutions 24 Y Y Y
Certa 200 Y Y Y Y
Circulor 63 Y Y Y Y Y
Contingent 28 Y Y Y Y
Darkbeam (Apex Analytix) ?? Y
Diligent 2245 Y Y Y
Exiger 765 Y Y Y Y Y
Everstream Analytics 165 Y Y Y Y
Fact 360 12 Y
FairSupply 40 Y Y
FRDM 28 Y Y Y
FusionRM 275 Y
GoSupply 33 Y Y
IntegrityNext 96 Y Y Y
Interos 254 Y Y Y Y
Kharon 102 Y Y Y Y
MetricStream 1373 Y Y Y Y Y
Navex 1343 Y
NQC 104 Y Y Y Y Y
Overhaul 312 Y Y
Prevalent 161 Y Y
Prewave 150 Y Y
ProcessUnity (w/CyberGRX) 143 Y Y Y
Raad360 3 Y Y
RapidRatings 166 Y
Resilinc 299 Y Y Y Y
Resolver (Kroll) 371 Y Y
Responsibly 17 Y Y
RiskLedger 34 Y Y
Riskonnect 801 Y Y
RiskRecon 116 Y
RoboAI 57 Y Y Y
SAI360 435 Y Y Y
Sayari 180 Y Y
Sedex 442 Y Y Y
Seerist 127 Y
SourceMap 91 Y Y
Sphera 125 Y Y
Supply Risk Solutions 10 Y
SupplyShift 59 Y Y
SupplyWisdom 116 Y
Sustainabill 15 Y Y
The Smart Cube 1033 Y
ThirdPartyTrust (Bitsight) 16 Y
TraceLink 947 Y Y Y Y Y
Trademo 97 Y Y Y Y
Transparency One 23 Y
Trust Your Supplier ?? Y Y
Versed.AI 17 Y Y
VisoTrust 47 Y
Whistic 81 Y
WholeChain 10 Y

Only Half Of Organizations are Concerned They’re At Risk of Greenwashing. What are the other half smoking?

A recent press release from Ivalua over on the Supply Chain Quarterly site stated that nearly half of organization are concerned they’re at risk of unintentional greenwashing and that 48% of US organizations are very confident they can accurately report on Scope 3 emissions.

This falls into the same category as half of Procurement leaders expect their budgets to increase and 9% of companies claim to be ready to manage risks posed by AI … ridiculous.

The 52% that feel that Scope 3 reporting is a ‘best-guess’ measurement have it right. There isn’t a single carbon calculator (service) offering that is accurate. Some aren’t bad, and a subset of these will meet the baseline requirements for carbon reporting, but even those that make the baseline cut for reporting aren’t as good as you think. The majority of these work by using country-industry averages computed by third party institutes and agencies, which are then multiplied by the estimated total volume of product coming from the country-industry average adjusted. It could be totally accurate, or it could be totally inaccurate if your supplier is using a significantly older production line technology and using dirtier energy than its peers or, in the best case, was the first supplier in the region to update its production line, switched to primarily renewable energy sources, and found a way to recycle water and minimize fresh water usage.

Plus, with no clear guidance on how to properly calculate your e-Liability, how do you know that you are truly accounting for all of the carbon you are responsible for (in terms of products, logistics, services, etc.) while not taking on carbon that belongs to your supplier (that they are trying to pass on to you).

Also, if you’re passing on your calculation to a third party, or even worse, to a supplier, how do you know that, if there are multiple potential third party region-industry estimates to choose from, that the third party isn’t choosing the absolute worst (so you will believe you need their carbon reduction consulting services) or that the supplier isn’t choosing the absolute best when answering your RFX (when neither of these estimates are correct).

The reality is that, even if you use a third party, your scope 3 calculations are acceptable (but not necessarily accurate) approximations at best, but likely of little value the majority of the time and your true knowledge of whether or not your supplier:

  • uses renewable energy
  • recycles or minimizes (fresh) water usage
  • uses efficient production processes that minimize direct (production) and indirect (energy and [fresh]water) carbon
  • actively looks for ways to be sustainable

doesn’t exist unless they have been audited on-site by you or a third party service that you trust. And accepting anything less is accepting greenwashing (or some variant of) to some degree.

And the only way you are truly going to reduce your Scope 3 is to:

  • minimize demand for consumables, and use as many renewables as you can
  • focus on renewable, or at least recyclable, content in your products
  • work with suppliers to optimize processes
  • invest in suppliers (possibly through long-term contractual commitments) to upgrade to modern processes that will minimize their carbon production
  • etc.

Need Some Procurement Principles? Balfour Beatty Published a Great Starting Point.

Google sometimes digs up the strangest things when you ask for Procurement News. One thing it recently dug up was the Balfour Beatty “Procurement Strategy” page, which wasn’t so much a strategy, but a set of principles that every organization should subscribe to. (Regardless of what industry they are in.)

So, if you’re wondering what principles you should adopt before you set your Procurement organization strategy, you can start with these seven principles:

  1. Become the customer of choice
  2. Ensure that we have the right, skilled people for the job, a strong talent pipeline and that we provide an environment where they excel
  3. Put in place processes that work, are compliant and transparent, making the best use of technology to deliver for our business and for our supply chain partners
  4. Mitigate and manage risk through early and closer integration with our supply chain partners
  5. Work together to identify market risks and forecasts
  6. Keep safety and wellbeing at the forefront of all that we do
  7. Prompt Payment for Suppliers

The great thing is they will lead to a great strategy as:

  • it covers talent, technology, and process transformation
  • it places importance on the supplier, the relationship, and the supplier sustainability
  • it covers CSR (corporate social responsibility)
  • it covers risk

In fact, the only principle that is missing is Sustainability, so if you add this eight principle

  1. Embrace sustainability in all that we do

We’re pretty sure that if you were to start here, you won’t go too far astray in the creation of your Procurement Strategy.

Will a Circular Economy Work with Leakage?

Sustainability is one of the big buzzwords, and the biggest verbal pushes, in today’s Procurement. (In practicality, most organizations won’t put their money where their mouth is and if the more sustainable solution is more than a point or two more cost-wise, environmentally damaging sweat-shop production, here we come!) We need to get there, because only an idiot would deny global warming (the last 13 years have seen 10 of the hottest year on record), and no one can deny the correlation between carbon emission, atmospheric carbon increase, and global warming. (You can argue just how much is due to carbon emission and how much due to other factors, many of which are indirectly caused by warming, but not that carbon is a problem.) Thus, even though we don’t know how much carbon reduction will help, we know it will, so we need to get there.

One big way to reduce carbon is to reduce production, which can done by reducing waste, which can be done through more refurbishment, repair, re-use, recycling, and reclamation — which are all part of the circular economy. Which is where we really need to get to (because waste is a problem — in addition to overflowing landfills that can pollute nearby water suppliers and make nearby land unfarmable, and even uninhabitable, think of the great pacific garbage patch and the containers of e-waste being sent to India, which has been a problem for well over a decade, see this 2010 article on the Times of India, and you start to get a grip on the magnitude of the problem).

But how efficient does the circular economy have to be to be effective? Theoretically, anything more that we do is one step better than what we are doing today, but, given that most products weren’t designed for recycle and reclamation, technologies for recycling and reclamation are immature and possibly carbon/generating themselves (especially if the answer is extract what we can, bury or burn the rest), and that there are breaks in the chain, is this leading to new waste that could possibly offset (or exceed) the expected (carbon) savings?

It’s a question Karolina Safarzynska, Lorenzo Di Domenico, and Marco Raberto recently tackled in an open-access paper on how the leakage effect may undermine the circular economy efforts available on nature.com. In the paper, the authors examine the impact of the circular economy on global resource extraction by way of an input-output analysis using an agent-based model of the capital sector. Through a detailed analysis they find that an appropriately structured circular economy economy can significantly reduce the extraction of iron, aluminum, and nonferrous metals if
implemented globally but the leakage effect may also cause some metal-intensive industries to relocate outside the EU, offsetting the circular economy efforts because an overlooked requirement for the circular economy is not just a reduction of waste, but a reduction of transport as transportation (air, rail, truck, and ship) contributes a significant amount of global carbon. In fact, if you go to Our World in Data, in the United States, the transportation sector accounts, like the energy (electricity and heat) sector, for approximately 30% of transportation emissions. The statistics right now are similar for the EU (24% for transportation and 28% for energy). So, if all of a sudden products need to be shipped halfway around the world to be recycled and reclaimed and the core materials shipped back, transportation-based emissions would increase significantly and possibly even overtake the extraction and raw material processing emissions!

In all fairness, we should note that the paper is pretty technical and metric heavy, and this is a bit of a simplification, but it’s the core idea we need to be aware of. It’s not an improvement if the carbon you take out of one segment is exceeded by changes in another. Just like we need to home/near-source for anything we can grow/mine/make at/near home, we also need to home/near reduce/reuse/refurbish/remanufacture/recycle whatever we can. It might be that the rare earths can only be mined in certain areas, but that doesn’t mean they have to be reclaimed and re-used there.