Our world is changing. We are becoming more acutely aware of our impact on others and on our planet. For most, what we learn may give cause for concern.
And so, it is understandable that our clients are increasingly talking to us about sustainable sourcing, and how they can integrate its principles into their procurement function and the management of their supply chain.
Sustainable sourcing refers to the procurement of goods and services in an environmentally-friendly and ethical manner. It’s about taking a long-term view, working with your supply chain partners to meet your needs in a way that generates benefits not only to your organisation but also to society as a whole, with minimal environmental impact.
Its scope covers a multitude of areas, including corporate social responsibility, the elimination of child labour and modern slavery, waste minimisation, emissions reduction, and improvements in diversity within the workforce.
In practice, it means integrating social, ethical and environmental performance factors into the processes by which you select suppliers, and considering them equally alongside the more traditional evaluations of capability, capacity and cost.
Customers, employees and investors are becoming more savvy about how businesses and organisations work, and more willing to call out those that pursue unethical and unsustainable practices. Both the public and private sector are being increasingly called upon to prove their sustainability credentials, as well as held accountable for the actions of those with whom they choose to do business.
Some of this shift is generational. Younger generations are more likely to be concerned by climate change and to notice injustices in the world around them, and also have the means through which to voice their concerns to a wide audience in the internet and social media.
People are increasingly realising that they can vote with their feet – choosing who to buy with and, consequently, who not to buy with – and organisations are having to take note. Without sustainable practices in place, they risk people no longer choosing their goods and services.
And this is filtering down to the supply chain.
Traditionally, procurement organisations looking to minimise risk and ensure quality and continuity of supply have focused on their direct suppliers but, increasingly, regulatory and consumer pressure is requiring them to look beyond their tier one or tier two suppliers and gain visibility of their entire supply chain, ensuring sustainable practices are adhered to across the board.
The good news for organisations is that their supply chain – although presenting the biggest risk – also represents the biggest opportunity for change and improvement for those wanting to become more sustainable.
In fact, research shows that addressing sustainability issues within your supply chain can deliver benefits to the tune of:
So, it is hardly surprising that sustainability has moved beyond a nice-to-have and is now being taken seriously in the boardroom.
Organisations wanting to improve their environmental and ethical credentials are, understandably, looking to procurement as a key enabler of the change required to make a difference in this area.
Sustainable sourcing may be increasingly on the agenda for organisations, but it in many ways remains an emerging area. The organisations of today are still – in the main – seeking to move on from a past into a future whereby they do things differently. The distance between that past and that future will be different for different organisations, as will their current progress along the way, but the fact remains that there is a journey to be undertaken. The journey may take some time – certainly organisations should not expect to arrive at their destination immediately – but it is one that is worthwhile.
However, it is important organisations don’t try to do it all, especially at first.
For those starting out on their sustainable procurement journey, our recommendations are to:
It is important not to overcommit, so organisations need to think about what is actually feasible for them to achieve right now. It’s easy to put your hand up and say you’re going to be carbon neutral by 2030, but you need to understand what that means in reality and whether it can be achieved. If you don’t have a certain level of maturity within your procurement function – full control of spend and complete visibility of your supply chain, for example – you’ll be trying to run before you can walk.
A good starting point is to think about the kind of targets that best lend themselves to your sector and type of organisation. Science-based targets are often best for those starting out on their sustainable procurement journey, as they are the most easily quantifiable and measurable – which will be important when it comes to establishing a baseline, reporting on progress, and demonstrating tangible impacts.
These targets should be based around the areas of greatest risk in your supply chain. If you work in an industry such as cleaning or catering, where pay is at the lower end of the spectrum, then actions around eliminating modern slavery may be appropriate. If you are in manufacturing, then you may be looking to reduce emissions or become more circular.
The next step is to set a sustainable procurement strategy to determine how sustainability will be cascaded throughout the procurement process and the different touch points – from demand capture and writing specifications, through how suppliers are evaluated, contract management and supplier relationship management – that will enable improvements to be made against your baseline measurement.
Some interventions – such as requiring tenderers to quantify the sustainability benefits they will provide, a change in the sourcing of raw materials, or a code of conduct that suppliers must sign up to – may run across all areas of spend, while others will need to be category-specific. To aid decision-making, it will be useful to prepare a category or supplier management plan to help balance sustainability with quality and cost, and evaluate where trade-offs may be required.
There will also – inevitably – be a need to work in partnership with suppliers. Procurement must recognise that sustainability as a concept is still relatively new, and so it will be important to bring suppliers along on the journey.
They may need more lead and response time to research and develop new offerings which meet higher sustainability specifications. Forums for training and knowledge-sharing on sustainability best practice can also help upskill suppliers alongside your own teams.
At eXceeding, we help organisations to translate their ambitions for increased sustainability within procurement and their supply chain into practical action plans that deliver tangible results.
Drawing on our knowledge and experience, we help organisations to evaluate the risks in their supply chain, determine sustainability objectives that are achievable and measurable, and define and prioritise the levers that will help to meet those social and environmental goals. Where preparatory work is needed to gain supply chain visibility or control of spend, our team will not only advise on what work is required, but can help to put in place the systems and processes required to make it happen.
Our category management experts have the in-depth understanding of how different categories work that enables them to advise clients on where they can gain the most value towards their sustainability agenda in any given area of spend. And we can help organisations to implement all the different activities required, from demand capture through to supplier relationship management, including integrating them within existing infrastructure and processes.
Whether you’re new to sustainable procurement, or have already started on your journey towards becoming a more environmentally-friendly and ethical business, we can help you to discover your aspirations, embed the actions that will help you achieve them, and track year-on-year progress towards your long-term goal of being a better version of yourself.
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