AI, Scope 3 Emissions, and Supply Chain Sustainability: A Deep Dive

In this episode of the Sustainable Supply Chain Podcast, I had the pleasure of speaking with Jarrod McAdoo, the Director of Product Marketing at Ivalua. We delved into the pressing challenges and emerging trends in sustainable procurement.

Jarrod offered insightful analysis on how companies can navigate the complexities of sustainable procurement, especially in balancing competing priorities such as cost savings, quality, risk management, and sustainability. He emphasised the critical role of understanding and managing Scope 3 emissions, noting the intricacies of supplier engagement and the importance of reliable data.

A significant portion of our discussion focused on the impact of technology, particularly AI, in transforming procurement processes. Jarrod shared his optimism about AI’s potential to curate data and generate actionable insights, helping procurement professionals manage vast datasets more effectively.

We also touched on the danger of greenwashing and the need for transparent, verifiable data in sustainability reporting. Jarrod highlighted the importance of cross-functional collaboration, especially between procurement and finance teams, to ensure that sustainability initiatives are aligned with broader business goals.

Finally, Jarrod shared some customer success stories, including Ivalua’s work with IKEA, and offered practical advice for companies at the beginning of their sustainability journey. 

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Transcript

Jarrod McAdoo: 0:03

When you're dealing with something like scope three, and you're dealing with a supply base, we talked about the numbers. It can be huge. The simple fact of the matter is as a sustainability organizations, procurement, supply chain organizations have to go deal with this. They're not going to be given an army of new people to do this. So they're really going to have to have a technology that lets them do stuff at scale.

Tom Raftery: 0:28

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Sustainable Supply Chain Podcast, the number one podcast focusing on sustainability and supply chains, and I'm your host, Tom Raftery. Hi everyone. And welcome to episode 20 of the sustainable supply chain podcast. My name is Tom Raftery, and I'm excited to be here with you today sharing the latest insights and trends in supply chain sustainability. Before we kick off today's show. I want to take a moment to express my gratitude to all of this podcasts amazing supporters. Your support has been instrumental in keeping the podcast going, and I'm really grateful for each and every one of you. If you're not already a supporter, I'd like to encourage you to consider joining our community of like-minded individuals who are passionate about sustainability and supply chains. Supporting the podcast is easy and affordable with options starting as low as just three euros or dollars a month. That's less than the cost of a cup of coffee and your support will make a huge difference in keeping the show going strong. To become a supporter you simply click on the support link in the show notes of this or any episode. Or visit tiny url.com/sscpod On today's show, I'm going to be talking to Jared from ivalua. And in upcoming episodes, I'll be talking to Katie from Avetta, Camille from Silicon Foundry, and Matthew from Settlemint. So some really excellent shows coming up. But as I mentioned today, I'm talking to Jarrod. Jarrod, welcome to the podcast. Would you like to introduce yourself?

Jarrod McAdoo: 2:00

I'd love to, Tom, and it's an absolute pleasure to be here with you. Everyone, my name is Jarrod McAdoo. I'm the Director of Product Marketing over at Ivalua. We provide source to pay solutions across a number of different areas across a number of different materials, direct, indirect, CapEx. I focus in, in my job over at Ivalua, I work particularly with our solutions, but I focus on our supplier management solutions. Our analytics solutions and also our environmental impact solutions as well. So it's a pleasure to be here to, have a great discussion today.

Tom Raftery: 2:30

Okay. And just to give people a bit of context, Jarrod, you tell us a little bit about iValua? You know, where are you based? What markets you operate in? How many employees, turnover, that kind of thing.

Jarrod McAdoo: 2:42

Sure. So, Ivalua We're a global company. We, we were born 20 plus years ago. We started out in France. Our founders are still our founders, but we've expanded globally. We have offices around the world. We also have several offices in the United States. We have a us headquarters and the preponderance of our business. It's about 50 50. I'll say about 45, 45 between the EMEA region and the North America region. And then we also have an emerging markets in, in the Asia region as well. Also with some LATAM. But you know, we've been on a very slow and steady expansion. We've been expanding thoughtfully over the last 20 plus years for these items we're up to about 900 employees now. You know, which is great. I've seen that grow about a third in the last four years since I've been there. So we're really moving along. And again, we're privately owned. The founders of the company are still the owners of the company. They started this together. So, you know, even though we're 900 strong and we're spread all over the globe, it still feels like a very close family.

Tom Raftery: 3:45

Nice, nice, nice. And in terms of, let's say global supply chains and sustainable procurement, what are you seeing as kind of the biggest hurdles companies face today in achieving sustainable procurement?

Jarrod McAdoo: 4:04

Yeah, I think it's, it's sort of two things and you know, it's one of these answers, you know, Tom that I'd have probably given you a different answer six months ago and six months from now, I'll probably even give you a different answer. But I think starting you know, when we started looking a couple of years ago, it was really coming out of the pandemic. We really had the same thoughts. that everyone else was having regarding to resilience within the supply chain. Knowing who our supply chain was. We saw our customers facing the same problems as everyone else. I really don't know who my supply chain is, how deep I can go to them for the risk part. Then once we started to come through the pandemic and in the issues with the resilience there, then you really started to see ESG come back full circle and those initiatives pick up, especially when we start seeing requirements like CSRD, CSDDD, the German Supply Chain Act you know, those type of legislations coming through and start to reach the date where it's really becoming a concern for this. So it really became the first problem we saw is understanding who our supply chain is from the standpoint. And now we're transitioning more into, all right, how do I really start to eat this elephant? Because when we talk about something like looking at emissions in our own plants, yeah, you might have a couple dozen plants. But when you start talking about looking deep into your supply chain, you're talking about tens of thousands of entities. So, it's that prospect of understanding who they are, and then crossing that threshold on who's material. How do I make sure that I'm doing those assessments and gathering that data? So it is a lot to there. And I think those are the challenges right now. I think everyone's dealing with it from the the supply chain, the procurement side is, you know, really. How do I start parsing out the importance when I'm looking at tens of thousands of suppliers on this? So it really moved from a, an understanding, to a data issue, to a prioritization issue. Hopefully six months from now, it'll be something different that will get tackled. But you know, we are starting to work through these problems.

Tom Raftery: 6:00

Right. And I mean, when, when you're talking about suppliers there, you're talking really about scope three missions, for example, as one of the things, correct?

Jarrod McAdoo: 6:09

Yeah, absolutely. And I don't want to downplay scope one and scope two because obviously it's extremely important for organizations. And in a lot of cases, it's some of the most important things you can start with because they're under control. We focus a lot on scope three because you know, we are a supply chain sourcing provider. But we also understand that because of the numbers I told you and because they're not under your control, that can be the most difficult. So, you know, that's where we think that, you know, we'll have the most problem, we'll need the most help. And unless you get an army of people to help you, you're going to need some technology to help leverage on that front as well. So, you know, that's, that's sort of, how we frame the problem in terms of our business and with our customers to help.

Tom Raftery: 6:52

Okay. But the SEC are backing away from requiring companies to report on scope three. So is it really important anymore?

Jarrod McAdoo: 7:04

Yeah, you know, isn't that funny? It's you know we sorta come full circle on that. You know, if we take the SEC out of it and, and even before, we got that news, I would probably, if you and I were having this discussion, I would say it is important and, you know, I'll give you some very, I hope thoughtful points coming out of this is, there's no escaping even after the pandemic. We talked a lot about reshoring, nearshoring, doing a lot of things. We're still a highly global economy. We can't avoid that. There's no going back from that. When you look at the regulations that are coming out from the European Union, you have CSRD, CS triple D. There's a lot that's going to be need to take in into consideration there. You might be naive to think it's only going to apply to European companies. But step two is it's going to apply to those individuals who want to sell into the European Union. And a lot of companies want to do that. So right now that does become, because right there that's one of the largest markets, that does become a global issue whether you live there or not. Now when it comes to the United States, we can say, okay, well if I'm in the United States, then the SEC is backing off some of those. But we still have that lingering little state out there in the west, California which is a large portion of the economy in the United States. They're driving their own requirements when it comes to this, and I guarantee you if I'm in the United States, even if I don't think I'm a global provider, I probably want to sell to California. So, between just some issues like that, you can't escape the global economy. Even in an isolationist view, you can't really escape a big economy and a big customer base like somewhere like California. So, whether or not they take action on it right now, whether it comes 18 months, it will come at some point. You really need to be considering this if you're an organization so you can stay ahead of it. Because otherwise, you'll be abdicating some very large markets, and I don't think that's smart for anybody's business.

Tom Raftery: 8:53

Sure. Sure. No, that makes sense. However, though a lot of organizations will have competing priorities, for example, cost saving, quality, risk management, sustainability, how can companies effectively balance these conflicting goals?

Jarrod McAdoo: 9:12

Isn't that just the jewel of it? You know, I know my years of procurement, and as I've sort of made my rounds in the last couple years talking to prospects and customers, and understanding the landscape of this, you know, the one encouraging thing is you're seeing this position start appear in supply chain and procurement. It's the sustainability category manager that you say, or the sustainability sourcing manager, which is, you know, really that conduit from the, the larger ESG organization into areas like procurement. So it's great to have these discussions because then you have an individual it's really framed focusing on areas like scope three. So I asked the question is. Hey, what are your goals? Well, we're committing to, a net 50 or, you know, we're going to be net neutral by 2050 or 2035. And we've set up these, science based targets and we need to drive down scope three emissions. I'm like, that's great. I was like, how about your cost savings goals? Oh, well, they didn't change. In fact, they went up because, we need to drive out some of these costs of inflation. And I say, well, how do you balance that? And that's where it really becomes the trick. You know, on this, when, when you start dealing with those individuals in procurement is, the greenest solutions for lack of a better term. I know not everybody likes using the green, but just for illustration, they're not always the cheapest, the cheapest ones aren't always the greenest. We're going to have to make inroads in both of the areas, cost savings aren't going to go out the window. So what really procurement organizations are looking to do in working with sustainability is how do we balance those and provide visibility to them? How can I instead of having a, a, a single solution, either the cheapest or the most sustainable, how can we look at an array of solutions and decide what's the trade off we're going to be? We spend a little bit more money in here, but we're going to achieve some some gains to sustainability here. Or in this category, we just can't absorb this cost. But in this category, we can so we can go with these solutions. So we're seeing the procurement. They want to gather more data. They want to get this information on products, suppliers. When they go through a sourcing process, then they can start presenting scenarios. And then it really becomes a an issue of being able to sit down with management, they'll have the seat at the table and say, here's the trade offs. We have competing goals. We need to select which one will help us move the bar you know, across maybe all of these or some of these and make some very wise business choices. And I think that's where procurement's been really savvy about this, as if they've talked about this. They understand this, you know, they've understood these, these pressures for years. You know, if you're in procurement, they always want it the cheapest, they always want it the fastest, and they always want it the best quality. So they've been receiving pressures for years, so for them, hey, you're just throwing another thing on the pile. So they've been really savvy about, you know, working you know, discussing their issues with, you know, providers like us as we work through this thing, we really need not only data, but we need insights. We need to have these scenario analysis. We need to be able to present it. So, you know, I think that's you know, starting to see the real value of there is, you know, into that sustainable sourcing, we'll just call it there for, for, for lack of a better, tagline for that is being able to go through and understand that. So, you know, I find that sort of a procurement geek. I've been doing it my whole life, but, you know, I find that that type of thought process/strategy very compelling, you know, for the data.

Tom Raftery: 12:30

And how is technology helping?

Jarrod McAdoo: 12:34

Yeah, I think that the biggest single way the technology can help you know, on this is, you'll hear me talk a lot about the the procurement person because I have my scars, I've done my time there. The simple fact of the matter is when you're dealing with something like scope three, and you're dealing with a supply base, we talked about the numbers. It can be huge. The simple fact of the matter is as a sustainability organizations, procurement, supply chain organizations have to go deal with this. They're not going to be given an army of new people to do this. So they're really going to have to have a technology that lets them do stuff at scale. Now I say stuff. And then you start asking what that stuff is. Well, there's going to be a lot of data that's going to need to be collected. Just if we look at the regulatory requirements that they're going to have to meet, they're going to have to be collecting data. Where they can't get the data, they're going to have to be calculating data. So there's going to be a lot of those items, and how are they able to do that at scale on these items? And I think that's the first, first thing technology helps them is number one, how can you collaborate with a large number of suppliers? How do you really extend that supply chain collaboration in order to get this data to be able to bring this in? And then the next challenge is how do you make it easy for those suppliers to collaborate? Now, just because you say you can collaborate doesn't mean they'll want to. Because they have a lot of customers asking the questions, too. So I think of those two main challenges. How do we deliver it at scale? And how do we make it reasonable and attractive for a supplier to do it? And there's a number of different ways that we need to consider doing those type of things. But I think those are some of the, the first couple challenges when you look at these type of items to be able to do that. And this all implies flexibility, too, because, again, Not every supplier is going to be as mature as the other. Not every organization is going to be as mature as the other. So there's got to be flexibility in how you address that as well.

Tom Raftery: 14:28

sure, sure, sure. And if I am a supplier and my customer is asking me to supply data, that's reasonably okay. And you've come to kind of expect that. But if I have a thousand customers and they're all asking me to supply data and they all have different platforms that they want me to supply the data into, then it starts to become a bit unwieldy, no?.

Jarrod McAdoo: 14:51

Yeah, you're exactly right. It's a you know sometimes we we we tend from even a, a a solution standpoint. We tend to look at it purely buyer centric. Like, I could sit down and I could talk to a buyer and say, this is what you could do. You could go ask a supplier to do this. You could send them this link to log in and fill out your questionnaire and get your data. And they're like, wow, that's exactly it. That's exactly what we want to do. But you really need to look at the supplier experience. On the other end, they're sitting there going, wow, look, another questionnaire. It's a thousand of them that we've done and they're all different. You know, on, on these type of items and then they start having to make priority decisions themselves you know, on this. So I think some of the challenge to understand is, you know, this is a very fluid market when it comes to you know, what are the standards, the best practices for gathering this information. Now there's some, there's some, some standards out there that are growing. For example, EcoVadis, they have a carbon reporting tool. CDP is, you know, recognized as one of the top a number of corporations already report information into CDP. Now the question becomes from a technology provider and for supplier is, if I've already reported this somewhere, can't you just access it? Why should I have to report it again? And that's some of the challenge too that you really need to look at is, if I go to use a supplier and you've never done this before, Can I give you some coaching? Can I collaborate with you? Can I teach you up to try to get you where you're going? But if you're a very mature supplier, can I just leverage something you've already done? Can you just provide me you know, what you've already provided? Or can I integrate with those third party solutions to get that information in? You can just validate that it does belong to you. And in the case of someone like EcoVadis, you authorize somebody to use it and leverage that. Then you become more attractive to that supplier because I have a thousand requests, but man, this one's easy. So I'm going to do this first on this. And, and, you know, I think the market will mature as we get to more best practices, more standards, more central repositories. That'll become way more obvious, but, you know, we need to take advantage of it now as well. Where there still are some of those centers of excellence out there that are starting to emerge. Start talking to them right now. See if the technology can either intake what they've provided or have a real time integration if it's necessary or available. But there's multiple different ways you can solve that.

Tom Raftery: 17:15

Okay, cool. Cool. What about the danger, though, of greenwashing? You are talking to a supplier and they say, Oh, my carbon footprint is two. You know, how, how can they trust that?

Jarrod McAdoo: 17:31

Yeah, that's always a, you know, that's always a a danger everywhere. You know, it's funny. I you know, I talk about this before is I could go out and I can look at some of the most admired companies in the world for their sustainability programs, especially when it comes to dealing with their supply base and I can find a list of companies. And then I can equally go Google, who are the biggest greenwashers and I can find those same companies you know, on there. And sometimes it really becomes a, a matter of perception. I think with a lot of these is, you know, there's this, this sense that scope three is such a large portion of any organization's carbon footprint, but it's also the most nebulous. Right now we do, we have such a, a lack of visibility into it. Some individuals take that lack of visibility or that immaturity as we're working through it, as you're hiding something. You know, on those, and that leads to accusations of greenwashing. I think what the real challenge is, is we need to approach this sort of methodically as we deal with the supply base, understand that there's going to be levels of immaturity you know, through the market. And how do we deal with this? For example, if I go to a company and instead of just immediately asking them for their admissions, you can start asking some other questions like, Do you even have a CSR program? Have you committed any science based targets? Those type of things to sort of get a gauge on where they're positioned for that. If they don't have any of those things in place, but they're willing to tell you their exact emissions numbers and say it's primary data, you probably should scratch your head you know, on those so you can really start to assess the maturity of some of those as you go through. But then you can also understand some of these organizations might just need some help. They might need some coaching, some collaboration, they might just be coming along. And then we can use other sources like factor data. Say, well, you know, we can come up with an estimate of your product based on some, you know, factor engines to sort of start setting a target and then we can start working towards more of that primary data with you. So you sort of take them along in the journey on it, but you know, it's, I think a lot of the, the, the greenwashing we see now is just, I think we just have to be honest with each other is it's a process we're working through it. Nothing's perfect at the moment. But here's how I'm tackling it. Here's this level of transparency. Here's how we're bringing this along. And then you have other companies where if you get to a primary data on a product, make sure it's a primary set of data that's been looked at, audited, done to some standards that you can have trustworthy with, because again, it's going to be a matter of your reporting this if it's going to be in a press. Do you feel comfortable with it? So, you know, there is those challenges on it. It's you want to trust, but, you know, like my old boss used to tell me in my first job, trust, but verify, always trust, but verify on this and really build methodically on this and understanding it is going to be a journey.

Tom Raftery: 20:50

Yeah, it's, it's still A very immature space at the moment. What kind of advances do you see happening in kind of standardization and accuracy of sustainability reporting?

Jarrod McAdoo: 21:02

yeah I think I, I, you know, I'll sort of start with mentioning it right now is, you know, it's one of these that, and this is what I really love about the, you know, the market when you really get into this, and we saw it a lot with supplier risk as well. And I get excited about that is whenever there's a challenge like this that we're facing, especially when we're talking about something in the supply base, you don't have to look too far before you have a number of people out there who are willing to solve it for you. You can get risk ratings. When we were seeing it with the risk supply chain risk, you see a lot of individuals in the market who had some very you know, very thoughtful and very cool solutions to help you manage those. And they're great. And similarly with sustainability and specifically with scope 3 emissions, you see a lot of people in the market. You could probably go with a simple internet search and probably find a dozen people who will give you a risk score on your supplier when it comes to sustainability on these. Now, not all of them are created equal. You have to really understand what you're getting there. So, the market is really rushing in to try to solve this problem. You know, on this, but I think what we'll see is, you know, after you get that initial push, you start to see a lot of those solutions and offerings that we either start to consolidate or they'll start to go away. You'll start to see the cream rise to the top on these, you know, for example, like I mentioned to you, you know, CDP when I look at them, you know, they're, they're recognized name. People will continue to report on those. I know there's been discussions with CDP in their partnership program about being able to have API access to their information. A lot of these things. So you really see the maturity on those growing greatly in, in order to, to get those items on that. So you'll start to see that type of information. You'll start to see the market naturally push back on what is best practices. I think if we leave it to the regulators on what best practice is, holy cow, you want a bureaucrat telling you what a best practice is, you know, that's sort of an oxymoron there. But I think the market will really start to, push back on, hey, these are really the best practices. And you'll see a lot of that sharing as we going through and I think we'll see that mature really quickly. You know, when you, when you look at the sustainability, sometimes it feels really slow.

Tom Raftery: 23:09

Yeah.

Jarrod McAdoo: 23:10

Because there is such a need in order to meet some of these goals. But when I look at the other parts of ESG, like diversity in the United States, yeah, we have a good diversity program when it comes to looking at that. It took us 50 years to build it. We don't have that type of time with sustainability, and we've really come a long way really quickly, and I think the momentum's growing. So, you know, I'm cautiously optimistic that we'll see this sort of self governing solution. I know I've already talked to a number of our customers and prospects, and they're getting together for their industry, and they're defining. Hey, when we approach the suppliers, we're going to approach them consistently. We're going to ask for consistent information. That way we can all use it. So they're starting to set those own standards. And I, I think you'll see those those pockets of excellence you know, merge up and then they'll continue to merge. And then hopefully at some point we'll have this all figured out hopefully very quickly. So I'm probably too optimistic this morning, but you know, that's

Tom Raftery: 24:09

No harm in

Jarrod McAdoo: 24:09

that what I tell myself before I go to sleep.

Tom Raftery: 24:13

And do you think it's important for procurement and finance teams, for example, to collaborate on sustainability and ESG initiatives? And if so, why?

Jarrod McAdoo: 24:22

Yeah, I think it's always important. So if we go back to some of the basics is procurement tenants that we have there. So before this procurement is always measured on issues like cost savings and cost avoidance. You know, those type of things, you know, the worst day you can have as a procurement person is if you're not aligned with finance and you're trying to meet those goals. You know, in order to have those right definitions in there to, to do that. So, you know, I think a lot of us learned the lessons in the past. How do we find savings? How do we find goals to make sure items are achievable? We can trace those to hard business benefits. And it's going to be the same thing with sustainability. There's eventually going to be a cost of carbon that people are going to use. Either because they want to use something internally for this or the regulations are just going to be requiring them to do this, especially when we look at the European Union, and we're going to have to be in touch with finance on those to make sure that we're aligned as we go through these. So if we're doing this good work in the supply base, how does it translate? Also, when we talked before about trade offs, like I can't have the cheapest solution, I can't have the greenest solution. There's got to be somewhere in the middle, you know, those, those those finance teams, those controllers at the plants. If I go back to my days you know, looking at material, they have to be involved in the process so they can start helping you prioritize those items because it's going to be, you know, a team effort when it comes to those type of things to make sure everyone's aligned. Again, not dissimilar to back in the day, you know, when we used to see the same things on, on cost savings, cost avoidance, cashflow improvements, all those type of things to make sure you're pulling the value lever. It's going to be critical you know, that they're involved. We hear a lot about the sustainability teams. I think you were very astute to you know, point this out. We hear a lot about the corporate sustainability teams, the procurement and supply chain teams, but finance is always there. They're always going to be involved in this and they need to be involved in this because they'll, they'll help realize, prioritize, and evangelize you know, these type of programs as we start to see success on them.

Tom Raftery: 26:19

Cool. Great. Interesting. you have any big customer success stories you can point to any wins where companies have, you know, successfully reduced emissions, for example using your platform?

Jarrod McAdoo: 26:34

Yeah, so, you know, it's one of those, it's a, you know, I'll sort of caveat this, that it is a work in process when it comes to a lot of the things we're doing. And, and I'll say that in a sense is we released our new product, which is our Environmental Impact Center, which really focuses on looking specifically at the environmental impacts of your supply chain. You know, we focus a lot on scope 3 because that's the hot item. But you can also do items like water stress, waste, those type of things. You can measure those as well and have that collaboration. So that's a new product for us. You know, we've been out over the last year selling it to our customers, working with our customers. We've co developed it with a group of about 18 customers. We continue to develop based on feedback from our customer base and we're in the process of implementing a lot of them. But we do have customers who over the years who we've been able to work with just even out of our base solution. You know, there's some information, especially if you want to check out on our website that we've done items with IKEA, which is, in my mind sort of the gold standard of where, a corporation wants to move to with their sustainability program overall. We've done a lot to work with them to make sure that we're enabling their IKEA Way, their sustainability program, gathering their information across those materials, and we continue to look for opportunities to collaborate with them as well. So, we're very proud of what they're able to accomplish. We're very proud that we can even be a small part of that to help enforce their vision. So they've done a lot there, and that really becomes a lot of what we've done with their solution is that supplier interaction being able to engage the suppliers, understand requirements, transmit information, have those type of items in order to do that. So that's how we've met you know, the, the call that way. And of course we have a number of other items in process right now with customers, specifically with our environmental impact solution. So, fingers crossed, you and I have this conversation in a couple months after we have the opportunity to go live and start running some data. I'd love to be able to share some more material numbers with you as well, but we're sort of fast and furious working with a lot of prospects and customers as CSRD reporting starts next year to enable them to get the information they'll need and, you know, work on setting up their programs, supporting double materiality, those type of items.

Tom Raftery: 28:49

Looking ahead what kind of emerging trends or innovations do you believe are going to significantly influence supply chain sector in the next 5 to 10 years?

Jarrod McAdoo: 28:59

Yeah, I think, you know, it's the one thing that I'm most concerned about, most optimistic about is, you know, and this probably won't surprise you when I say it is, you know, AI is everywhere. AI is everywhere when it comes to procurement. And I think we're just starting to scratch the surface on the use cases. You know, for these you know, as we look into this right now a lot of providers are telling the market, here's the use cases where you can use the AI. I think there's going to be a natural maturation where the market's going to come back and say, here's the use cases I want for AI. You know, on those type of items. And I'm very eager to see how we can take that to the next level. And when you really start focusing in on areas like sustainability being able to, you know, with a click of a button you know, we can ask AI to do a lot of things, but imagine a quick a, a a click of a button. If you were to go ask an AI chat bot to say, Hey, can you model my spend with regards to emissions? To start doing some very, you know, you know, some calculations and pulling in some of this data so you can start those materiality assessments. I think that's a very compelling use case and I, I don't think it's far away. In fact, I think if somebody focused on it right now and, and, and started looking at some of the, you know, the factor engines and available things, you could probably get those type of items. Being able to scrape items off the internet and gather CSR policy, science based targets, those type of things. Again, it's a, you know, this, this wealth of information that we're going to need for this, I really see the application of AI being able to come through there. And I think you'll start seeing some of those other providers as well in the market, be able to say is, Hey, you know, we use AI to gather a lot of this information. We curate it for you within your business case, and we can expose some insights. So I, I'm really intrigued by, by the application there on this is, you know, I'm keeping that healthy sense of skepticism about AI, but, you know, the more use cases I see, the more time we get run under the belt, the, the, the more optimistic I, I am about being able to see some of those solutions in place in order to help this and, and forecast hotspots and where we might need to you know, sift through this data. So yeah, sort of a long answer there, but I think, AI is a big opportunity to make the procurement person's life easier by curating data and making a gigantic data set, something that's actionable.

Tom Raftery: 31:17

Sure, sure. Yeah. No, AI has incredible possibilities. I think that we're just starting to scratch the surface of it. For companies that are at the kind of beginning of their sustainability journey, what foundational steps would you advise for them to, you know, head on the right path towards sustainable procurement?

Jarrod McAdoo: 31:38

Yeah I have this, conversation a lot because again, you know, especially if you're in the United States like I am you know, we're, we're not exactly. Blazing the trail here because we don't have some of the burning platforms like you mentioned with the SEC not having the rules in place versus the European Union where they have rules in place on these. And, you know, we, we we sort of, you know, have a lot of these discussions and, you know, outside of the, the framework of, you know, me trying to sell anybody something or, you know, talking about a product, but it's just a couple of procurement people talking you know, when I have this is, you know, the first thing we talk about is I think you should resist the urge for any single provider to say they have it completely figured out and they can deliver something turnkey on these. It's again, the the market's so dynamic on this is I really think you really need to focus on sort of the basics on what is our program going to be? What do I need to consider? What's going to be unique to my business? Something as simple as I mentioned, using a factor model to really start, you know, modeling your spend base to figure out where your areas of intensity are. Not all factor libraries are the same. You might be in a different industry and you might need to do a different set of factors for that. So I always sort of caution them is like be cautious if somebody comes turnkey saying I already have the factor library, everything we just sort of plug and play. Because then that gets to be sort of a, a, a copy of a copy of a copy and you start losing that fidelity. Not that there isn't something great out there, but you should really look at taking the time to engage with experts on a program. Build a CSR program, look at those type of items, and look for information thoughtfully as you sort of build those items up. And then, the second thing is, don't be afraid if you don't have great data to begin with. Again, we're talking about tens of thousands of suppliers, and if you have to start with an estimation of intensity using a factor model, We're all facing that, and it may not be perfect, but it'll get you directionally correct. And it'll start, let you sift down a very large portion of the supplier base into something that's more workable and then you can start engaging those dialogues to dial in. So, you know, right now, I, I think even for me and, and, you know, when I start having discussions and talking to my friends in procurement and other people, when I get the chance to, is, is, it seems very overwhelming. But you know, we sort of have to resist the urge to try to solve everything at once. Take some steps to go through, understand it's going to be a process. But also sort of, cheer ourselves on as you can gain momentum really quickly. As you start going over this and a lot of the things you're going to do can be repeatable. So you can really start moving forward on it. But you sort of have to resist the urge to say I have to try to solve all this at once. Go through the steps, look at your spend, come up with your program, understand what's important to you, do your materiality assessments. Focus on you know, where the squeeze, the juice is going to be worth the squeeze for your limited resources. Then start building successes, momentum, start moving on. You can start replicating those. So, you know, those are the type of the, discussions that we have you know, on these. Because again, sometimes I talk to people and they say, And I said, well, what is your plan? They said, I don't know. I just got this job. Our CEO just made this commitment that we're going to be carbon neutral by 2050 and I have no idea how I'm going to get there. And I was like, okay, wow. I said, good luck. No, but then we sit down and say, okay, well, we, you know, let's start building a plan because I know it seems overwhelming when you put it that way. But we don't want to discourage people from taking those those shots at those big goals. And I commend CEOs who do that because we need to. It's, if we're going to get there, we have to set the bar high. But it's tough for a procurement person when they have to do it.

Tom Raftery: 35:19

Exactly, Yeah, cool. Jarrod, we're coming towards the end of the podcast now. Is there any question I haven't asked that you wish I had or any aspect of this we haven't covered that you think it's important for people to be aware of?

Jarrod McAdoo: 35:34

I, I think I, you know, would be interested from, from your standpoint tom, as you get exposed to a lot of individuals as well. And I, I sort of gave you my opinion on you know, how people are looking at this from a regional standpoint, the United States is sort of a wait and see. You know, the European Union is like, you know, I've got to do it, there's requirements coming. But what do you hear from different regions as well? Or, you know, maybe if you hear any input for this on that big looming monster out there that, that you know, which is really Asia as well, is sort of how they view this as the world. I'm, I'm not as in touch there but, I'm sort of asking you the question. You're supposed to be interviewing me on this, so I think I turned it around on you, but I think it'd be an interesting dialogue is, you know, how maybe you've seen that as well and, you know, compared to how I've seen it.

Tom Raftery: 36:21

Sure, sure, sure. So what I'll tell you is a couple of things. First is I have a podcast recorded and not yet published by the time this episode goes live, it will have been published. So a couple of weeks ago, I published an episode with, with a guy called JP Stevenson and he works for LRQA. And we were talking about LRQA is Lloyd's registry. We were talking about just that, you know, because he's based out of Hong Kong and we were talking about the Asian. So what I'll say to you is listen to that episode,

Jarrod McAdoo: 36:58

Oh, that?

Tom Raftery: 36:59

Cos we talk all about Asia in that. Follow this podcast. But also Asia has woken up to this. They have, and there's a, there's a lot happening in the Asian space as well. So. To your point from, from my conversations with people, I would say if I were ranking regions, I would put Europe. Yeah, as number one. Well, maybe even California and Europe together as number one, Asia, a close second and the US coming in behind just given I, I would have, I would have ranked the US higher had it not been for that reversal in, in course with the, the SEC, you know, the initial proposal when it came out last year was very forward looking and even further ahead than Europe, but it got watered down through a lot of lobbying and pushback. The comments that came in from industry, we're very much against it. So they had to back down, which is unfortunate, but the trend is there. It will happen. It's just been pushed back. So by 2030 at the latest, I reckon all three of the major economic regions, the North America, Europe and Asia will all require scope three reporting.

Jarrod McAdoo: 38:14

I'm so happy to hear you say that because I sort of had that sense of, there was this very strong undercurrent. And it's probably just an undercurrent to me because I don't have the visibility into the region that, you know, I, I hope to have looked to develop that, you know, Asia really was starting to build momentum that they, they seem to focus on this and you know, it, it was that, so it's great to hear that and, and I do, will definitely check out that podcast now, you know, so, so thank you for that.

Tom Raftery: 38:39

No worries. No Jarrod, if people would like to know more about yourself or any of the things we discussed in the podcast today, where would you have me direct them?

Jarrod McAdoo: 38:48

Yeah, I think the best way if you want to hear any, any more about our solutions specifically take a look at maybe some of our, our thought leadership and our research on this, because we've done some research in this area, the best way would be able to go to ivalua, I V A L U A dot com. You can check out our resources there. Plus you always, always have the opportunity to connect with myself on, on LinkedIn as well. If you want to reach out to me directly. I find those interactions on LinkedIn wonderful. Be able to share some information, make some of those contacts you get some messages, we share some of those items, so feel free to do that as well. But again, check us out at Ivalua. com. We have a number of different resources there and we would be happy to you know, discuss maybe what solutions need or just discuss what your needs and perspectives are in the market as well. Because again one thing I love about procurement most and supply chain most is it all these years is our willingness to work with each other to make sure that we drive the industry forward as a whole. So, you know, please feel free to contact us.

Tom Raftery: 39:45

Great. Jarrod, thanks million for coming on the podcast. That's been really interesting.

Jarrod McAdoo: 39:49

Tom, thank you so much. It was an absolute pleasure.

Tom Raftery: 39:53

Okay. Thank you all for tuning into this episode of the Sustainable Supply Chain Podcast with me, Tom Raftery. Each week, thousands of supply chain professionals listen to this show. If you or your organization want to connect with this dedicated audience, consider becoming a sponsor. You can opt for exclusive episode branding where you choose the guests or a personalized 30 second ad roll. It's a unique opportunity to reach industry experts and influencers. For more details, hit me up on Twitter or LinkedIn, or drop me an email to tomraftery at outlook. com. Together, let's shape the future of sustainable supply chains. Thanks. Catch you all next time.