The Planet Price Algorithm

The heart of Planet Price is the algorithm, which analyses procurement spend and other data to produce a single metric, expressed monetarily, to help large organisations make more sustainable procurement decisions.

The heart of Planet Price is the algorithm, which analyses procurement spend and other data to produce a single metric, expressed monetarily, to help large organisations make more sustainable procurement decisions.

The Planet Price algorithm has three main elements:

  • Intelligent mapping using machine learning
  • Calculation of environmental and social impacts
  • Application of appropriate societal costs to impacts

Using the purchase of a tyre costing $100 as an example, the algorithm might calculate a Planet Price of $27 – or 27%. This surprisingly high number represents the “hidden costs” of environmental and social impacts such as: land use, water use, greenhouse gas emissions and smog. The algorithm calculates the Planet Price for every purchase allowing procurement and sustainability teams to drill into the data, identify hot spots and quantify opportunities for reducing impact. The total Planet Price, measured as a percentage of procurement spend, provides a high level KPI to monitor progress towards more sustainable procurement.

There are many complexities that need to be considered in applying Planet Price to different contexts including geography, top-down versus bottom-up calculations and categorisation rules. We are very grateful to all of the beta-testers who have helped to improve and refine the algorithm!

It’s still fairly early days for the Planet Price algorithm but our mission is to help organisations around the world better understand the environmental and social impact of their supply chains and thereby influence positive change.