Volkswagen reduces supply chain sustainability risk with AI
With a mission to develop an intelligent sustainability radar for the supply chain, Volkswagen, Porsche and Audi together are using artificial intelligence (AI) to identify sustainability risks in the supply chain, risks such as environmental pollution, human rights abuses and corruption at an early stage.
“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. Since 2019, we have checked compliance with our standards as part of the award process. 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,” commented Ullrich Gereke, Head of Procurement Strategy for the Volkswagen Group.
An intelligent sustainability radar for the supply chain
The new monitoring system, developed by Prewave is based on an intelligent algorithm. The technology is capable of identifying and analysing supplier-related news from publicly available media and social networks in over 50 languages in 150 countries.
“Prewave enables us to manage risks in a targeted manner – even in the lower-level supply chains. For us, this is about transparency. Artificial Intelligence simplifies the complex analysis of data, allowing us to address partners directly and request improvements in sustainability. The goal is to achieve this in partnership with suppliers. In the event of escalation, however, termination of business relations is certainly also an option”, commented Markus Wagner, Head of Procurement Strategy and Sustainability at Porsche AG.
If the technology flags any indication of a sustainability risk in the supply chain the automotive manufacturers are identified, allowing their procurement functions to look at the facts and consider countermeasures. The technology provides an early warning system for breaches in sustainability requirements, supplementing traditional compliant channels.
The pilot project began in October 2020, since then over 5,000 keywords have been analysed to monitor more than 4,000 suppliers.
“The key advantage of AI 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. AI is an ideal example of how digitalisation can contribute to greater transparency in the supply chain,” added Marco Philippi, Head of Procurement Strategy at Audi.