Over the past several months, I have watched artificial intelligence…
This week, we had the privilege of sitting down with CEO and Founder, Daniela Osio!
Daniela is a procurement professional in every sense of the word. As the former Global Risk Management Leader for DuPont, Daniela created, developed, and implemented a Risk Management organization for the $4.0 billion Electronics and Imaging (E&I) Business Unit. She also led critical categories through the monumental DOW and DuPont merger, which became the second-largest merger in history.
In 2019, Daniela was named a 30 under 30 Supply Chain Star by the Institute of Supply Chain Management. One year later, Daniela merged her passion for sustainability with her love of procurement and co-founded her company, Kloopify. Today, Kloopify offers the fastest, highest quality way to understand the sustainability impact of your business’ procurement activity.
What is your background and why did you start Kloopify? What motivated you to focus on sustainability within procurement?
During the pandemic, I took inventory of my life – the way many people did. I asked myself if I was truly doing the things that I believe are important and matter. My answer was, “Not enough.”
As a result, I went on a mission to solve the largest crisis that all of humanity is facing: the climate crisis.
Solving this problem requires us to identify organizations that have already increased our quality of life and enable them to incorporate sustainability as a key criterion to success. In other words, we need these powerful companies to embrace the triple bottom line: profit, people, and planet.
Now, when you start to understand the role that procurement plays in the ability of an organization to achieve this, you realize that procurement is vital.
Up to 80% of a company's footprint can come from procurement. In other words, procurement is as important to business as health is crucial to you and me. Just like “you are what you eat,” you are what you buy.
Think about it this way: When you and I buy food, we have access to a nutritional value label to understand what we're putting into our bodies. That sheet helps us determine whether or not that food will get us closer to our health goals.
As a procurement professional, I need a nutritional or impact value label for my company. However, in the past, I didn't have that crucial data for my company. I didn't have the technology or the know-how to understand what my trade-offs were as I balanced price, delivery, and cost.
As procurement professionals, we need the data, technology, skillset, and knowledge to successfully integrate sustainability as a decision-making factor. True, we had focused on ESG risk, and the risk associated with our end-to-end supply chain, including human rights risks and sociopolitical risks or high-level ESG risks. However, we hadn't given enough data or time to the impact of the things that were procured.
Once I realized this, I left Corporate America on the mission to not only solve the climate crisis but to enable wonderful organizations to purchase more sustainable products and make sustainability a part of their day-to-day operations. Again, this is only possible by supporting procurement–the true leader in creating sustainable companies.
Until recently, the focus of eco-friendly procurement was mainly focused on environmental aspects. How has your field of sustainable procurement expanded and evolved in recent years?
I would say that the focus has been on risk and de-risking our supply chains versus environmental impact. The reality of the situation is that we need more focus on the environmental aspect of things in addition to our focus on risk and the “S” and the socioeconomic aspects of ESG.
We do need risk assessments, which I equate to credit reporting or a credit rating. It's a one-off assessment. You go through and evaluate your supply chain. You have thresholds that companies need to abide by to do business with you. However, we also need to continue to develop and strengthen our data around the impact aspect of things.
For example, let’s say we are comparing buying resin from DuPont versus resin from Covestro. We would compare the quality, the delivery, and the cost. Today, we must compare impact alongside those other metrics, which is independent of risk analysis.
It's always important to understand sustainability on two fronts: risk and impact. These fronts are sisters, but they are handled completely differently.
Risk is a one-off assessment while the other is data that needs to be incorporated into those end-to-end processes. Whether that's a five-step procurement process or a seven-step procurement process, it needs to be included in the contract management and sourcing, as well as the category management and strategy.
Having the right data to balance sustainability alongside other KPIs is essential. After all, we will not pick a supplier solely because they are the most sustainable–that is never going to happen especially if it risks delivery, quality, and many times the cost.
On the other hand, if the options are equal, we will pick the sustainable option because it may also get us closer to our impact reduction goals (i.e. being carbon neutral by 2050 or reducing our footprint by 30% by 2030).
What are the most significant challenges companies face when making their procurement processes sustainable? How can procurement leaders implement more sustainable solutions today?
The biggest challenge that people have nowadays is thinking that they need to have perfect data in order to make a decision. This need for perfection creates decision paralysis and nothing is accomplished.
At Kloopify, we tie all of our data visibility, or data clarity, with a value creation moment. We do this because the solution will never be visibility for the sake of visibility or perfect data for the sake of perfect data. Instead, we need to balance the need for greater visibility with the decisions that need to be made with that greater visibility.
In other words, better data should help you answer X questions better. Visibility should help you reach X goal.
Also crucial is aligning the incentive mechanisms of your suppliers with the effort that it takes to get that next level of data and visibility. Truly understanding what the different incentive mechanisms are of each party, and then being able to align those. Visibility alone is never enough.
Looking ahead, how do you see the role of AI and technology evolving in sustainable procurement?
AI is going to make it easier for us to work, collaborate, and get more done – but it is not the silver bullet. If we want to leverage the power of AI, we need to be really clear on the problems, opportunities, and challenges that we're trying to face. Next, we can leverage AI to solve those problems more easily.
In other words, AI will not solve the problems we are facing. However, AI will make the ability to solve or execute a goal more achievable, but you still need to understand how challenges and problems are truly interconnected. AI will allow us to process data faster and help us understand where to focus in terms of sustainability. My ultimate hope for incorporating AI is that we leverage the data it provides to support sustainable decisions!