The shift toward sustainability is gathering momentum. Companies of all sizes are looking at ways to make their processes more energy-efficient and environmentally friendly. A major part of this evaluation is taking place in procurement or strategic sourcing.
It’s about considering different options and evaluating supplier relationships to ensure that businesses do good for the planet, communities, their customers, and the bottom line. If you are looking for sound strategies for a greener supply chain, you’ve come to the right place.
Below, we explore a few key advantages of sustainable and ethical procurement and strategies that will help you get there faster. Let’s begin.
Benefits of Sustainable Sourcing
Procurement trends are quickly shifting to sustainability. And the reason behind this is not just compliance. It’s about a broader range of advantages that organizations can enjoy. While they are not always easy to quantify, the benefits are numerous and can significantly help make businesses more competitive. Let’s consider a few of these so that you have all the right reasons to approach sustainable sourcing from a fresh perspective.
- Maintains compliance with regulations
- Keeps risks to a minimum
- Boosts consumer perceptions of the brand
- Considers whole life costing, which controls costs
- Creates a competitive advantage across markets
- Boosts organizational valuation
- Facilitates access to capital
- Experience growth in revenue and turnover
- Future-proofs the business
- Promoted differentiation and innovation
- Improves procurement-related indicators
- Creates a greater social impact
- Addresses and serves evolving customer preferences
Strategies for Sustainable Procurement
The benefits of sustainable procurement are undeniable. But how do organizations achieve them? The answer lies in making incremental changes to their procurement processes. A few important strategies to consider include the following:
- Set out clear and measurable criteria
Procurement is said to be the heart of many organizations. As a core function, it is essential to introduce sustainable practices in your processes. But how do you do this if you are managing dozens of suppliers across different geographical and time zones? Yes, the challenge is real.
The first step starts with setting out clear and measurable criteria that you can use to create something akin to a sustainability scorecard. For some suppliers, you’ll want to ensure that they use sustainably sourced materials. For others, it may be relevant to track water usage, energy efficiency, ethical labor practices, and more.
Each of these criteria should be written down and have a quantifiable metric attached to it. While assessing vendor performance is an ongoing process, ensuring your scorecards are up to date with the most recent information is a step in the right direction.
- Develop a policy and guidelines
Once you have the metrics nailed down, it’s time to develop your procurement policy. What criteria will you look for when you choose suppliers? What factors are you willing to negotiate and which ones are non-negotiable?
Determine where your organization stands on sustainability and make sure you pen this down as a policy and as future guidelines so that everyone involved in the process, your third-party vendors included, knows what you stand behind and what standards you are not willing to compromise on.
- Get stakeholder buy-in
If you are a procurement manager, getting stakeholder buy-in from top-level management may be challenging. It may be seen as another arduous process that requires a lot of paperwork and administrative labor. Plus, it will be considered time consuming.
While aiming to convince management that a sustainability policy is necessary, be sure to point out the key benefits for the organization as a whole. When everyone supports your efforts, you and your team will be better able to administer and manage the procurement process more successfully.
- Choose partners that align with your sustainability policy
You’ve secured stakeholder buy-in. Now it’s time to ensure your suppliers are compliant. This is where you discuss your policy and guidelines with them while also showing them your sustainability scorecard.
Make sure each scorecard is not generic and applicable to all but rather that it’s tailored to each supplier’s core area of business. Look out for ethical labor practices, low water usage, energy efficiency, automated processes that reduce reliance on raw materials such as paper, and others.
- Train your teams
Another key component of your sustainable sourcing strategy should be to train your teams. It may seem obvious that sustainability is big in the modern world, but not everyone will be completely clued up on the criteria that they need to look out for or what requirements your business may have.
This is why going through your policy and guidelines will be crucial so that every team member understands the fundamental importance of choosing sustainable suppliers. It will also be important to go through your scorecard variations with them to give them an idea of what to monitor and how to go about doing so.
- Measure and monitor impact through technology
The final strategy we’d like to introduce you to as part of your organizational shift toward sustainable sourcing is to constantly measure and track your sustainability efforts using technology.
Avoid Excel spreadsheets or paper-based records. Rather, automate your processes through artificial intelligence (AI) or automation so that you have all the data in a centralized customer relationship management platform that enables you to constantly track every little change from a single source of information.
Once your process is established, you can continue to refine and tweak it so that it becomes even more streamlined as you adjust your sustainability requirements.
Conclusion
Supply chain resilience can only be achieved through sustainable methods. And this comes when your procurement processes are clearly developed in line with sustainable practices. If this is an area that your business is still struggling with, let the experienced team at StorsenDigital help.
Contact us today and get a comprehensive assessment while we develop the most streamlined procurement strategy that aligns with your business objectives. Our friendly team is at your service, ready to lend a helping hand.
