Buyer Analytics

In light of higher energy costs, companies are motivated to make their supply chains more efficient.  Reducing carbon foot print goes hand in hand with a more efficient supply chain.

How can procurement make a contribution to a more efficient supply chain?  One interesting opportunity is to evaluate how a pricing methodology impacts the environment.

A great example is provided in an article published by the Carbon Trust.  In the article, the environmental impact of paying potato farmers by the pound is analyzed. 

Think about the farmer's perspective - more water will yield a higher return per potato.  In this case, farmers are storing potatoes in a humidified shed to increase the weight. 

From the buyer's point of view more water means higher freight costs and less potato solids. It also means more process time to drive out the moisture content.

The new pricing strategy rewarded farmer's for potatoes with a lower water content. The farmer actually saves on energy costs by no longer humidifying potatoes. The company no longer needs to drive off water resulting in a lower energy bill.

Be sure to check out the article "Carbon footprints in the supply chain: The next step for business".