How Microsoft Improved ESG & Sustainable Spending Decisions With AI
Smarter allocation of a company's budget can result in both financial and environmental savings. Coupa's digital platform helps global companies make smarter spend decisions using data from industry colleagues and AI.
Choosing purchases based on the bottom line versus what’s good for the planet is a struggle for all companies. Too often, executives are forced to pick between environmental, social, and governance (ESG) initiatives and supplier prices. But digital solutions, like Coupa’s Business Spend Management (BSM) platform with its Community.ai capabilities, can help lift this burden from business executives' shoulders.
“Most companies are aware that they need to make operational changes to reduce their climate impact. But we're seeing many companies struggling to actually implement these changes,” says Donna Wilczek, SVP of Product Strategy & Innovation at Coupa.
With the expectation that capital costs will rise in the next one to two years, CFOs are looking to reduce budgets and enact cuts across the board — often including ESG programs and products — in order to improve profitability. But companies can both improve their bottom line and deliver on ESG initiatives through smarter sustainable spending decisions based on community spend data, says Wilczek.
“When a platform such as Coupa is available, there's no longer any excuse. I'm proud that customers like Microsoft are not only choosing to make these changes but are also helping others succeed by sharing their data.”
Real-life example: Microsoft cuts carbon dioxide emissions by 40% through data-driven insights
The Microsoft supply chain team prides itself on managing the business using facts and figures. One example of this is when the team optimized its supply chain to cut carbon dioxide emissions by 40% using Coupa’s Supply Chain Design and Planning. Thanks to Coupa’s automated platform, they routinely bring in 500 GB of supply chain data. They then leverage this data to make real-time decisions to better forecast their needs during demand peaks (even planning three to five out). These demand peaks frequently happen for Microsoft during the holiday seasons, as an uptick of laptops and Xbox products are gifted during this time. It’s also when supply chains worldwide face increases in demand, which can lead to delays.
With the right set of data in its digital twin of their supply chain, Microsoft planned for this challenge with strategic decisions for its supply chain management operations. This, in turn, led to a reduction of its carbon emissions by 40%.
Combining $3.5T spend data to drive ESG spending decisions
Companies using Coupa’s platform for Business to Business (B2B) purchasing have spent over $3.5 trillion collectively. These transactions form the basis of what Wilczek calls a 'community data set.’
Over 2,500 Coupa customers contribute data on their spending, which is collected, combined, and anonymized for the platform. AI then provides actionable insights to help customers make better ESG spending decisions.
“Artificial intelligence allows the growing database to function as a basis for decision-making,” says Wilczek. “One thing the platform can do is suggest suppliers who are compatible with the sustainability rules in all countries in which a company has its value chain, as this type of information is shared by other companies.”
Companies like American Red Cross and Maersk are benefiting from the suggestions Wilczek speaks to. American Red Cross increased its Diversity, Equity, and Inclusion (DEI) suppliers by 35% while also saving $15 million in the procurement process. Meanwhile, Maersk saved $100 million thanks to implementing e-auction during the procurement process with Coupa. The company used those savings to help invest in a green fleet to support its ambitious carbon-neutral goals.
Developing automatic Scope-3 reporting for environmental impacts in supply chains
Wilczek explains that the platform is continually being developed in close collaboration with customers. Coupa captures customers' business-related problems and tries to find solutions that can be translated into platform functions, such as Scope-3 reporting.
“Over the next 12 months, we will be investing $200 million as we continue to develop the platform. This will include an expansion of the automatic Scope-3 reporting, which is the reporting of indirect emissions for various expenses,” says Wilczek.
An advanced Scope-3 dashboard is in the works. It will enable businesses to get a complete overview of their supply chain’s environmental impact not otherwise visible, which includes the top commodity by emission contribution, total emission over time (quarterly), top supplier by emission contribution, and more.
And while Community.ai and its expanding features may not fully transform sustainability overnight, it is a good starting point to initiate changing business as usual, according to Wilczek.
“A digital platform is not a complete solution to the climate challenge, but I'm convinced that a toolbox of digital tools can help companies achieve change more quickly.”
About Coupa Software
Coupa is a global cloud platform for Business Spend Management (BSM). The company's head office is in San Mateo, USA. The Swedish office is in Uppsala.
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