| By 2050, the European Union as a whole will be climate neutral. This is laid down in the European Climate Law of 2021. For companies operating in the energy sector, this means not only switching to renewable energy sources, but also increased cooperation and sustainable procurement. Vestas and Iberdrola, for example, are doing this with SAP Ariba.
Iberdrola and Vestas are examples of companies that are setting the bar high when it comes to sustainability. Spanish energy supplier Iberdrola has set itself the goal of being climate-neutral by 2050. Vestas, a Danish wind turbine manufacturer and global leader in sustainable energy solutions, aims to reduce the CO2e emissions in the supply chain by 45% per MWh generated by 2020 and zero waste wind turbines by 2040. According to Vestas’ ‘Circularity Roadmap‘, wind turbine blades will be produced entirely with recyclable materials.
“Often we ignore the waste aspects and only focus on CO2 emissions,” says Adeola Abegunde, at Vestas Director and IT Business Partner for Procurement, Logistics & Warehousing. “But we also have to take into account the waste produced in the supply chain, because that eventually ends up somewhere. Then you need to know what impact that has on the environment.”
Making supply chain more sustainable
To meet its climate goals, Iberdrola is investing, among other things, in wind and solar farms and in the smart grids needed to match different energy sources and supply and demand. For example, Vestas is investigating the possibilities of decarbonization or finding replacement for steel as the key lever to deliver net-zero commitments in the wind industry and help reducing CO2e emissions.
“But further sustainability also requires cooperation in the supply chain,” says Ramón Zumárraga, Director Purchasing Services at Iberdrola. The sustainability goals are ambitious. “No single party will succeed in achieving them alone. For that, the parties in the supply chain have to work together. Together we have to look at how to build a supply chain that does not exist today.”
Sharing best practices
An example of cooperation is sharing best practices on sustainability with each other. Iberdrola is actively doing just that. Zumárraga: “In the period 2020-2022, we shared around a thousand sustainability improvement plans with our suppliers. 53 per cent of the suppliers actually took steps towards sustainability during that period.” Iberdrola’s goal is for 85 per cent of its main suppliers to have adopted sustainable practices by 2025.
To achieve these goals, the company looked for ways to improve supplier relationships, monitor and measure progress, and make smarter and more efficient procurement decisions. “You need to make sure that the products you buy are green and contribute to lower emissions in the supply chain,” Vestas’ Abegunde also knows.
“For suppliers that do not initially meet our sustainability targets, we use our scoring tool to provide them with a clear set of actions they can take to improve the sustainability of their business model,” Zumárraga continues. “That way, we can drive positive change, not only within Iberdrola, but across the entire energy sector.”
SAP Ariba
For supplier contact and efficient and sustainable procurement, both companies have been using SAP Ariba for several years. “Before, often a supplier was only assessed in terms of sustainability at the end of a procurement process, as if sustainability is the last item on a checklist,” Zumárraga outlines. “With SAP Ariba, we can assess existing and new suppliers on sustainability aspects early in the procurement process.”
For Iberdrola, SAP Ariba is a one-stop shop for all spending, totalling between 10 and 15 billion euros annually. It allows Iberdrola to do business more efficiently with its 20,000 suppliers and manage procurement processes properly. In collaboration with IBM Services, Iberdrola has integrated SAP Ariba with the scoring tool it uses. This helps make informed purchasing decisions and helps ensure that at least 85 per cent of suppliers demonstrate a commitment to sustainability by 2025.
Centralised Supplier Collaboration Portal
Vestas has deployed tools facilitating the collection of important sustainability information from suppliers and track information to N-tier suppliers. The ambition is to link the tools to SAP enabled by open APIs providing a centralised dashboard view of the Supplier performance. “But that is something we are looking at so that our purchasing organisations can make an informed decision from a central portal including sustainability performance of our suppliers”, Abegunde says.
According to Abegunde, SAP Ariba is also an important link in working with suppliers and other partners. In Vestas’ case, there are almost 7,000 of them. “The Ariba Network brings those suppliers together on a shared platform, where we can not only exchange purchase orders and receive invoices, but where we actually do transactions together. That means we somehow have a shared process, and speak the same language. That’s where collaboration starts.”
Starting conversations
According to Zumárraga, Iberdrola has even managed to exceed its own target with SAP Ariba. “For 2022, we had set a target of 70 per cent of our suppliers implementing sustainable working practices. We achieved 77 per cent, and were able to set the target for 2025 at 85 per cent. In 2020, we were still below 40 per cent.”
“But even more important than achieving the big target is engaging with each other,” Zumárraga concludes. “Recently here in Spain we had a discussion with small and medium enterprises, and it was just great how the conversation went. They started by saying, ‘We don’t have a lot of resources, but we know we have to reduce emissions. We realise we have to focus on getting energy from renewable sources and adjusting some of our processes’.”
Video link Iberdrola: https://youtu.be/Knt4tUYCXm4
Video link Vestas: https://youtu.be/9xDvDwprQo0 |
