Quantifying supply-chain sustainability impacts is the most time-consuming yet uncertain part of an organization's sustainability assessment. In order to estimate supply-chain impacts, a list of inputs to an organization that includes products, services, equipment, and logistics needs to be compiled.

Traditionally, such a list has been compiled based on multiple interviews with relevant employees and suppliers. Such an interview-based approach relies on the interviewee's knowledge and judgement, and is exposed to potential omissions of important inputs. This process can take a significant amount of time, and the appreciable task remains to gather appropriate conversion factors and assign a boundary to the analysis. 

VitalMetrics offers a more efficient, two-phased approach to quantifying supply-chain sustainability impacts. By combining sustainable Spend Analysis and Process analysis into an integrated Hybrid approach, VitalMetrics delivers accurate, detailed results while saving you time and money.


FIGURE 1. SPEND ANALYSIS

FIGURE 1. SPEND ANALYSIS

Phase One - Spend Analysis:

  • Top Down
  • Time & Resource Efficient
  • Complete Results
  • Multiple Impacts Assessed 
  • Flexible  
  • Industry Averaged Data Points

Spend Analysis traces the economic flows and associated sustainability impacts between a company and its suppliers, suppliers' suppliers, the suppliers to those suppliers, and so on across a complete chain of interactions. Assessing these impacts manually (a process-based approach) is impossible alone. Spend Analysis resolves the issues of truncated system boundaries and multiple assessment approaches and makes sustainability impact assessments across products, services, and companies consistent and comparable. 

This approach utilizes only an organization’s general ledger, a reliable and complete source of information, and maps it to the Comprehensive Environmental Data Archive (CEDA®) (see: Spend Analysis • Data) via VitalMetrics’ proprietary software - looking from the "top down." This dramatically reduces the time and resources usually required to complete a supply-chain sustainability impact assessment, while simultaneously improving the completeness and accuracy of the results.

Figure 1 visually represents the Spend Analysis approach, i.e. the big picture - a complete ‘system boundary’, based on multiple industry averaged (hence slightly blurred) data points, multiple sustainability impacts analyzed, and delivery of core business information and a foundation for next step planning. For more details about VitalMetrics' Spend Analysis, click here.

This approach can be optionally extended to VitalMetrics' second phase, an integrated Hybrid analysis that includes a process-based approach to dive deep for more specific data and iteratively refine the initial Spend Analysis results. 

Phase Two - Hybrid Analysis:

Process-based (Traditional) :

FIGURE 2. A PROCESS-BASED APPROACH

FIGURE 2. A PROCESS-BASED APPROACH

  • Bottom Up
  • Partial Results
  • Limited # of Impacts Assessed
  • Rigid
  • Good but Limited Specific Data Points

Process-based analysis focuses on some first-tier, and sometimes second-tier, impacts. Since the boundary is subjective, this may lead to significant underestimations of impacts when it comes to cradle-to-gate or cradle-to-grave Scope 3 impact assessments - fortunately, the initial Spend Analysis assesses a complete system boundary and can identify supply chain "hot-spots", which can be targeted by the process-based analysis.

Figure 2 visually represents a process analysis: bottom-up, survey-based data collection, supplier-by-supplier, often resulting in good quality (in clear focus) specific data points, but very partial results within an arbitrary 'system boundary.'

FIGURE 3. A HYBRID APPROACH (©DollarPhotoClub/littleny)

FIGURE 3. A HYBRID APPROACH (©DollarPhotoClub/littleny)

Hybrid Analysis :

  • ‘Best of both’ Top Down & Bottom Up
  • Complete
  • Comprehensive
  • Efficient
  • Agile

By combining the process-based approach with Spend Analysis, you get the best of both worlds - a complete 'system boundary' from spend analysis, with specific primary data points from identified 'hot-spot' suppliers, materials, and services.

Figure 3 visually represents this approach of a combined top-down and bottom-up Hybrid approach, i.e. the complete picture.

 

A Comprehensive Result

In short, VitalMetrics’ 2-phase approach can be likened to figure drawing, as seen in Figure 4. It is essential for a good figure drawing to capture the main characteristics and proportion of a figure (Spend Analysis) before elaborating on any particular details (Hybrid Approach). Capturing the main characteristics and proportions also helps prioritize which parts should be further elaborated on. Without such prioritization, too much time is often wasted on elaborating unnecessary details, while the drawing loses overall proportionality, and ends up looking “wrong”

FIGURE 4 HYBRID ANALYSIS - A DETAILED, COMPLETE PICTURE ©DollarPhotoClub/amierulsailan

FIGURE 4 HYBRID ANALYSIS - A DETAILED, COMPLETE PICTURE ©DollarPhotoClub/amierulsailan