Here’s An Experienced Analyst’s Advice on Ways to Get Supply Chain Data
Data is the life blood of any life cycle assessment (LCA), and with Scope 3 impacts often accounting for a substantial portion of the overall total, obtaining information from suppliers to a company or organization can be critically important.
This is an area where sustainability consultants like EarthShift Global play a valuable role, because confidentiality concerns typically make it impossible for a company to directly obtain supplier information. Consultants can get the data under non-disclosure and share it in an aggregated form — but doing so successfully often requires some special skills and techniques.
We asked EarthShift Global sustainability analyst Mariana Ortega Ramirez about her experiences obtaining supply chain data; her insights provide helpful guidance for practitioners who need to create new lines of upstream communication for critical Scope 3 analyses.
Notably, although LCA is a quantitative process, the techniques Mariana describes largely depend on cultivating personal and organizational connections, and creating an environment conducive to collaboration and sharing of information. This is especially helpful in an era of complex supply chains that may span many sectors and geographic regions and contribute a substantial percentage of a product or service’s impacts.
Q: Why have you needed to get data from suppliers in the first place? What sort of situations require it?
A: Frequently during an LCA, we will find a major hotspot in a supplier input and need to dissect that piece to be able to model it. Also, many LCA clients have a broader goal of improving their supply chain, or designing it from the beginning to provide the least impactful materials available, so we want to enable them to compare the same material inputs from different suppliers. Sometimes this implies cascading because the supplier to our client’s supplier will need to provide data as well.
In all these cases it’s best to approach things as much as possible with awareness of the suppliers’ realities, their concerns and needs and constraints. That’s good for communication, and also can help everyone involved generate ideas for ways to diminish impacts. Sometimes, when the client can internalize this, they’ll come up with new concepts that can be brought to the attention of the supplier.
Q: What are some of the obstacles you’ve faced getting data from suppliers?
A: Suppliers might not be very engaged in providing data, and they might not even have the data we’re looking for. It may take them a long time to respond because LCA projects may not be their top priority, and sometimes even just initiating and maintaining communication can be hard.
Data confidentiality can be a concern as well; suppliers understandably want to be sure their data is safe and not being shared with competitors or buyers. Sometimes even mentioning the names of different suppliers can be a source of discomfort. One has to be very careful and have complete clarity on the levels of confidentiality.
It can be especially sensitive when a project calls for comparing input suppliers. I’ve seen instances where a supplier will want to get an idea of how they are doing in comparison to their competitors, and one has to be careful about inadvertently conveying something, even without saying it directly.
Q: What are some techniques you’ve used to get around those obstacles?
First and foremost is completing the supplier’s nondisclosure agreement and ensuring full compliance. The supplier needs to be confident that the data will be shared only with the consultant, and no further.
Once the discussions start, it can sometimes be helpful to get business development people or some kind of upper management on both the supplier and client sides involved. Getting a higher-level perspective, from people who might see the broader value of knowing more about impacts and opportunities for improvement, can help make everyone more comfortable with the process.
That said, I was involved in one project where having upper management involved was complicating things. When we shifted to a one-on-one, analyst-to-analyst conversation, it went more smoothly. So, really, it depends; it’s important to read situations on a case-by-case basis.
Another good technique is being especially transparent and clear, right from the beginning, explaining the proposed path for the work and ensuring strong confidentiality. As part of this, people often appreciate being shown examples of what the output of the supplier model will look like, so they get a sense of the LCA process. That can help demonstrate that our client will absolutely not have access to their bill of materials or unit process model, and that we don’t share any results until the supplier approves them. Hopefully this helps us become friends, working together to deliver something to the client we’re both supporting.
In this same vein, it’s good to offer something in return, besides just co-creating knowledge; listen to what matters to them and provide some help if possible. On one project we needed information from a plant in Mexico, and I got the impression language was a barrier. We suggested having the data-needs conversation in Spanish, and that was their preference; it made things easier.
Q: What have you and your clients learned from the process?
Commodity impacts obtained through an available LCA dataset can be quite different from the value calculated for the actual supplier. Energy sources matter a lot — I saw one case where the supplier impacts were nearly double the commodity’s LCA dataset, which translated into almost 80% higher impact for the client’s product. In another case it was the opposite: the supplier’s process was less impactful than the dataset by about 10% and this meant almost 20% less impact on our client’s product.
Actual supplier data is also important when companies are implementing innovative solutions. We’ve seen instances like industrial symbiosis agreements, where a waste stream of CO2 from company A becomes a main input for company B, or design of carbon capture and storage (CCS) unit processes for near-term implementation, along with more basic things like operating top-class energy-efficient auxiliary energy systems or producing renewable electricity. It is always better to dig into the upstream processes and ensure that key inputs are as closely aligned as possible with the actual supplier reality.
To achieve a good quality bill of materials, it’s key to have participation from the supplier engineering team. Modeling auxiliary processes together with allocation and needed system expansion can be very challenging, especially because there’s little standardization; organizations take different approaches with varying levels of detail. When the objective is a valid comparison of suppliers, it often requires time, effort, and cooperation with plant operators to get the essential information. You then have to organize it into useful and comparable form, so when these types of studies are needed, it is wise to plan for a longer-term collaboration.
Our duties also sometimes require us to review or recreate a supplier’s existing LCA models. In these cases, we sometimes see that the supplier’s LCA datasets are incorrect and need adjustments. One common issue is that they focus only on the Climate Change impact category. Other impact categories are important too, and it’s important to avoid GHG tunnel vision.
Q: What have suppliers learned from this process?
Sometimes when data is not available, learning takes place; a company can realize there’s a gap that needs to be addressed, which would give them an advantage or better visibility.
In particular, suppliers often make green claims, but to build an LCA model on them, there has to be sufficient data support. Working through the process can help everyone uncover data gaps and highlight the need to actually provide proof they are better in some way. This can be hard if the supplier depends on their own suppliers to provide data. When such data is not available, they learn they need to push their own suppliers.
I also have the impression that suppliers sometimes discover that the LCA software we use is a more effective tool than the spreadsheets they’ve been using, and they realize they want to have their own model/LCA project.
Q: Would you recommend that LCA practitioners seek out more supplier data?
Yes, absolutely. When we as a community dig for impacts, the benefits cascade across raw materials in all industries from all sectors.