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The supply chain industry is deeply integrated in the vast majority of business services, creating an interconnected network of people and products. Companies can utilize this network to develop more sustainable business practices.
Procurement — the process of acquiring goods from suppliers — presents a great opportunity to make many links in the supply chain more sustainable.
While 58% of supply chain companies are confident in their ability to mitigate risk through sustainable procurement processes, many businesses are deterred from adopting more sustainable practices in fear of high costs and a lack of resources to manage such changes to their operations.
Although these concerns are valid, there are several ways to make strides toward sustainability without sacrificing profit or too many resources. In fact, companies that employ these practices commonly see a good ROI from them.
This article will outline three steps your business can take to develop a more sustainable procurement process on a budget.
Implement a Green Procurement Policy
Incorporating a green procurement policy is a great place to start your journey toward sustainability.
As sustainability continues to trend in the supply chain industry and more companies look to adopt green practices, it can be difficult to know where to begin in order to start seeing positive results quickly.
Enveloping sustainability into a formalized procurement policy will provide your company with a foundation of sustainable expectations to guide your decision-making surrounding the supply chain.
This policy, once rolled out to your staff, will showcase your transparency on the topic, encouraging all members of the team to take more actionable steps toward sustainability in their roles relating to procurement.
Additionally, while it’s important for this policy to be circulated internally, it may also be beneficial to share it publicly with consumers and stakeholders. While they likely have less of a stake in the matter than your team, they’ll also appreciate your openness in communicating your contributions to making procurement more sustainable.
Deloitte has successfully developed a sustainable procurement policy and shared it publicly. In it, they show their commitment to compliance with sustainability legislation, demonstrating a particular interest in promoting sustainability in the following areas:
- Conserving and locally sourcing resources
- Minimizing waste
- Enforcing legal labor conditions at all points in their supply chain
- Supporting opportunity for SMBs
When considering sustainability in procurement, many people’s minds jump to environmental sustainability. However, there are opportunities for growth in the economic and labor sectors as well. Companies wishing to implement a similar policy should also adopt a diversity of focus areas.
Companies that do their part in committing to sustainability in procurement and recognizing current issues in the space benefit. While taking steps to catalyze improvement, you will present yourself as a socially responsible company. Seek out the value of sustainability both for your business and for ethical credibility. Don’t let regulatory compliance be the end of your involvement with making your procurement process optimally sustainable.
Collaborate with Your Supplier
The two main players in procurement processes are suppliers and buyers. Because of the many moving parts involved with procurement, it’s essential to have a collaborative relationship with your supplier(s).
Ivalua smart procurement expert and CMO Alex Saric discussed the importance of sustainability in procurement in a recent interview, arguing the importance of your partnership with your supplier.
In the discussion, he indicates that conversations with your supplier about sustainability should be a two-way street. Sometimes, companies can get overzealous, attempting to command the partnership. While it’s important to open the dialogue, you don’t want to force your sustainability ideas on your supplier without understanding their ability to comply with your plans.
“If companies instead include green goals along with their other ambitions, and then give suppliers flexibility on how to best achieve those, great things are possible,” said Saric.
Allowing your supplier the ability to choose how they’ll meet your aims will enable you to become more sustainable together.
Another smart way to foster a collaborative relationship with your supplier is to create partnerships with new vendors that have already made commitments to sustainable practices.
If your supplier isn’t confident about implementing the same sustainability goals that you’re shooting to achieve, consider finding another vendor that can supplement your efforts.
Don’t force your sustainability ideas onto a supplier if they don’t seem receptive. Instead, look for suppliers who are able to meet your needs. A willing collaborative partner is essential in order to take steps toward sustainability.
Recognize Value Outside of Compliance Requirements
In the supply chain space, compliance with sustainability requirements is essential. It’s important to encourage compliance with sustainability standards because they bring environmental and labor-related issues to the forefront of the procurement business.
In the recent past, the percentage of companies engaging to some extent in sustainable procurement (81%) has greatly increased. This growth is largely the result of broad guidelines and rules set forth by organizations, and it’s unlikely that companies would be at this point without guidelines pushing them forward.
Of all the supply chain companies that indicated their participation in sustainable procurement, well over half (66%) cited regulatory compliance as a key reason for their developing sustainability. Following instructions provided by external parties is a start. However, companies also need to recognize the value of sustainability outside of a rule book. Abiding by rules shouldn’t be the only thing driving businesses to enhance their procurement operations.
Eventually, companies will need to see the value in sustainability for themselves. That will catalyze the drive to innovate within their own space, increasing the potential for more effective solutions that are specifically tailored to internal processes. In order to truly better the procurement industry through sustainable practices, businesses have to be able to tackle these issues creatively.
In adopting sustainable practices, executives have been met with increased support, high ROIs, and an ability to address all aspects of sustainability in the workplace.
Starting with these benefits, managers should discover not only an ethical value in adopting sustainable procurement practices but also an opportunity to grow as a business. That will aid them in their effort to discover the real value of sustainability outside of compliance.
You can be an industry leader and upgrade your business’s procurement practices. With enthusiasm, you can spark change through sustainability.
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