Introduction:
As businesses are under increasing pressure to adopt sustainable practices, it is essential that they include social and environmental concerns into their procurement procedures. Sustainable procurement is more than just a rule; it’s an approach that may strengthen a business’s ability to weather storms, stay relevant in the market, and run efficiently. The article goes over six points to keep in mind when creating a sustainable procurement roadmap: creating a business case, managing suppliers, defining attainable goals, making good use of data, increasing procurement maturity, and using analytics. By taking these concerns into account, businesses may develop a procurement plan that is both environmentally friendly and beneficial to their bottom line.
Sustainability is a business requirement.
Onshoring is one commercial benefit of sustainability.
Onshoring and localising boosts resilience and agility to handle disturbances. In 2022, 24% of manufacturing executives explored customer-centric operations.
Supply chain shocks and higher transportation costs from 2019-2021 can be avoided by bringing supply networks closer to home.
Goods travel less, communities are supported, and customers get shorter delivery windows. Organisations can cut carbon emissions and save money.
Global FMCG companies are pioneering sustainable supply chain management. Consumers and NGOs focus on them.
Meanwhile, more companies with sustainable products and goals are entering the market. To be relevant in business, you must incorporate sustainability into your procurement strategy.
6 sustainable procurement roadmap considerations
1. Business case development
Start by understanding your company’s demands.
- Does the company prioritise sustainability throughout?
- Do you use sustainable techniques to please customers?
- To please investors and stakeholders?
- Do you promote sustainable procurement to meet government requirements?
Align your views internally first. Determine whether country-specific requirements apply to you and which company functions are responsible.
Consider how much detail your key stakeholders expect. Clear priorities create an opportunity for sustainable procurement.
It takes time, commitment, and resources to start this. Be aware of your limits.
2. Manage suppliers sustainably
Develop a consistent supplier selection process and share your code of conduct with vendors to start supplier monitoring.
Tier 1 suppliers must be regularly reviewed for conformity with this code and environmental, social, and economic responsibility standards.
Start involving your suppliers in your sustainability strategy now. Suppliers can offer new perspectives and ideas on how to integrate responsibility into your supply chain, product development, and sourcing.
You can develop unique collaborations to implement best practices in all purchasing choices and explore beyond tier 1 suppliers as your organisation matures.
Development together is vital to successful supplier management.
Since sustainability is a constant effort and demands change, changing suppliers every time challenges arise may not lead to long-term outcomes and good partnerships.
3. Setting realistic sustainable procurement roadmap goals
Set sustainable procurement targets with optimism but realistic expectations for progress.
Set short- and medium-term economic, environmental, and social responsibility goals. What is the present state? Setting goals gives direction, dedication, and progress measurement.
Sustainable procurement targets are listed below:
- Economic: Full conformity with regulations and legislation.
- 100% anti-bribery and anti-money laundering compliance X% major suppliers in collaborative sustainability program X% diverse suppliers
- Ensure 100% compliance with industry environmental norms.
- 100% of key suppliers’ environmental impact evaluation X% reduction in energy and water consumption
- Carbon neutral by 2030 (see 5 critical stages to sustainable procurement).
- Social: 100% living wage compliance and no child labour.
- Full compliance with Modern Slavery Act and UNGPs.
- Help communities where you operate.
4. Sustainability data and information
Data drives sustainable procurement. Reliable data is needed to measure and set sustainability goals. It must be compiled, confirmed, and made into data.
There are reporting frameworks and domain experts for economic, environmental, and social reporting.
Reports have two goals:
To ensure compliance and inform future targets and sustainability initiatives.
Annual reports include sustainability reporting. Growing desire for wider and more accurate sustainability programme reporting.
5. Getting better at sustainable buying
For long-term buying success and growth, it’s important to use the same rules for all types of product and service sourcing and make them a part of daily tasks and the source-to-pay process.
Policies need to be looked at often to keep up with what the market and competitors want. So, people who work in procurement need to understand how sustainability is changing and use new ways to find suppliers and handle them.
To go big, sustainability needs to be thought about when choosing suppliers, negotiating contracts, and managing performance. This goes for all suppliers, not just the big ones.
According to McKinsey, companies can protect their supply networks in three ways:
- Finding and fixing problems in the supply line that affect sustainability
- Using the UN’s Sustainable Development Goals 2030 to link the company’s goals for a sustainable supplier chain.
- Helping providers handle the social and environmental effects of their work is good for business.
6. Sustainability and procurement analytics
New data and analytic methods are helping procurement teams assess product and service sustainability.
CSR performance development programmes and carbon footprinting on category, supplier, and product levels can be created with sustainability data and analytical tools.
These studies require dependable data sources (internal and external), automated data management, and specialised skills in merging them for useful insights to be timely and correct.
Conclusion:
In essence, integrating your company with social and environmental objectives depends on mastering sustainable buying. Emphasising the six essential stages described will help you to make your buying process more environmentally friendly and influential. Adopting these ideas immediately will enable you to satisfy consumer expectations and satisfy authorities, therefore distinguishing your organisation as a pioneer in ethical business. Beginning these actions now will help to guarantee a more sustainable and strong future for your procurement operations.
