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Suppliers and sustainability: state-of-the-art monitoring with AI

1.4.2021
Suppliers and sustainability: state-of-the-art monitoring with AI

Audi, Porsche and Volkswagen have been collaborating with start-up Prewave on a pilot project that uses an intelligent algorithm capable of identifying potential sustainability risks in the supply chain.

Audi, Porsche and Volkswagen are working on a joint project to monitor all levels of their supply chain using artificial intelligence, helping them to identify potential sustainability risks involving their suppliers. Environmental pollution, human rights abuses and corruption are among the risk factors at an early stage of the supply chain – not only from direct business partners but also at the lower levels. The basis for this innovative monitoring system is an intelligent algorithm developed by the Austrian start-up Prewave.

How the algorithm works

The technology can identify and analyse supplier-related news from publicly available media and social networks in more than 50 languages and in over 150 countries. If the algorithm finds any indication of a sustainability risk in the supply chain, the brands are notified. The relevant department then looks into the facts and considers initiating countermeasures against the supplier. In doing so, artificial intelligence provides a proactive early warning system for breaches of the Volkswagen Group’s sustainability requirements.

It therefore supplements traditional reactive complaint channels such as mailboxes and Ombudspersons. Since the pilot project began in October 2020, the brands have analysed more than 5,000 keywords and have monitored over 4,000 suppliers.

Direct contact with suppliers

Prewave enables us to manage risks in a targeted manner – even in the lower-level supply chains. For us, transparency is key. Artificial Intelligence simplifies the complex analysis of data, allowing us to address partners directly and request improvements in sustainability. The goal is to achieve our objectives in partnership with suppliers. In the event of escalation, however, termination of business relations is certainly also an option,” says Markus Wagner, Head of Procurement Strategy and Sustainability at Porsche AG.

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Artificial intelligence

The key advantage of artificial intelligence is the speed at which it can recognise relevant news online and transmit this in bundled form. This enables us to find out about sustainability risks much earlier on, so we can respond more quickly,” says Marco Philippi, Head of Procurement Strategy at Audi. “Artificial intelligence is an ideal example of how digitalisation can contribute to greater transparency in the supply chain.”

Responsibility and sustainability

We are meeting our responsibility for ensuring a sustainable and fair supply chain we established sustainability criteria for our suppliers on a contractual basis as long ago as 2014. In addition, since 2019 we have checked compliance with our standards as part of the award process,” adds Ullrich Gereke, Head of Procurement Strategy for the Volkswagen Group.

By partnering with Prewave, we now have another tool to uncover and investigate potential violations, thereby contributing to improved social and environmental conditions at our suppliers’ production sites.”

Real-time monitoring

We are delighted to be working with Audi, Porsche and Volkswagen on this project. Our technology allows us to screen thousands of globally distributed suppliers for sustainability risks in real time. Machine learning and automated language processing give us a capability for analysis we could never achieve manually,” says Harald Nitschinger, CEO at Prewave.

The Volkswagen Group’s sustainability requirements are summarised in its Code of Conduct for Business Partners. The Group takes well-founded reports of violations very seriously and systematically follows up on them. From 2019, the S-Rating – a sustainability rating for suppliers – has been gradually introduced by the individual Group brands as a mandatory order award criterion.

SourceVolkswagen AG