Speaker: Julio Peironcely, Danone's Global Head of Insights and Analytics, hosted by Fergal Byrne, The Sustainability Agenda.
The Sustainable Value Chains podcast series features senior sustainability experts and executives who explore a wide range of environmental, labor and human rights, ethics, and sustainable procurement issues and looks at how companies can develop more sustainable value chains.
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The journey of adopting digital solutions and AI technologies has been transformative for Danone, prompting the company to explore various avenues of innovation while addressing ethical and legal considerations. In this podcast, Julio Peironcely, Global Head of Insights and Analytics, shares insights on the make-or-buy decision, the intersection of AI and sustainability, the potential for collaboration with tech startups, and the broader legal challenges and opportunities AI brings to the table.
Insights, Analytics and Sustainability
Over the years, Danone's sustainability initiatives have been driven by a range of factors, including risk mitigation, compliance, meeting corporate sustainability commitments, and enhancing value creation. The company's mission of "One Health, One Planet" is a testament to its dedication to sustainability. Moreover, their sustainability goals are increasingly geared toward managing supply chain disruptions and reducing greenhouse gas emissions.
The Insights and Analytics team, meanwhile, focuses on building data products and technological solutions to help drive sustainability initiatives. These solutions span across different categories, including packaging, spend analytics, and category-specific solutions, and are developed either internally or procured from the market.
The Digitial Transformation Journey
Over a decade ago, Danone made a crucial decision to centralize its procurement function, aiming for economies of scale and better global negotiations. As a result, standardized processes have been established with master data compiled, laying the groundwork for further digitalization. Four years ago, Danone took a major step toward professionalization by creating front, middle, and back offices, each equipped with the right technology. The company revamped its source-to-pay backbone and adopted best-of-breed digital solutions. This digital transformation not only streamlined processes but also generated valuable data for advanced analytics and AI applications.
AI and Sustainability
AI plays a pivotal role in Danone's sustainability initiatives. By harnessing AI-driven tools and data analytics, the company gains valuable insights into its environmental impact, enabling it to predict outcomes, optimize supply chain processes, and work toward sustainability goals. The ability to forecast emissions and simulate various scenarios empowers business leaders to make informed decisions that align with their sustainability objectives. Julio Peironcely believes that by utilizing AI-driven tools, companies can gain better insights into sustainability data, which will help predict outcomes, simulate scenarios and optimize supply chain processes. AI's capability to predict emissions and identify drivers for sustainability goals can significantly impact the decision-making process for executives.
Identifying and Assessing AI Projects
Danone follows a well-defined methodology to identify and assess potential AI projects in procurement. The company engages in regular brainstorming sessions, capturing ideas and needs from various departments. These ideas are then evaluated based on their feasibility and value impact. To proceed with a project, Danone requires a clear business case, including a designated product owner, measurable results, and a positive return on investment.
Balancing In-House Development and Market Procurement
The make-or-buy decision for AI solutions poses challenges for any organization. At Danone, the process involves careful consideration of various factors, such as data feasibility, technical requirements, and strategic advantages. While procurement typically leans towards buying, there are instances where in-house development provides a strategic edge, particularly in addressing specific sustainability goals.
Ethical and Legal Challenges
However, there are also other, less-discussed aspects of AI implementation, such as the potential for new business models. Successful AI adoption can open doors to creating innovative products and services, leading to a transformation from traditional operations to profit centers. But this transformation comes with legal repercussions, requiring companies to navigate new business models, commercialization strategies, and partnerships while safeguarding data and maintaining compliance.
What Does the Future Hold?
Danone's digital transformation journey within its procurement function showcases the power of technology in driving sustainability initiatives. By adopting AI-driven tools and processes, the company has harnessed data to enhance decision-making and optimize its supply chain for sustainable practices. As AI continues to evolve, companies like Danone are poised to lead the charge towards a more sustainable and environmentally responsible future in procurement and supply chain management.
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