Sustainable Procurement Supply Management Style: Part I

In June, ran a special supplement on Sustainable Procurement that had a number of good articles. In this post, I’m going to summarize a few of the more relevant points from some of the articles.

This is because sustainable procurement is part of corporate social responsibility – and corporate social responsibility (CSR) contributes positively to a company’s bottom line. According to a recent survey by Sirota Survey Intelligence, CSR is good for the bottom line, generates a greater sense of employee pride, enhances customer loyalty, attracts new customers, and minimizes the costs and consequences of regulatory activist pressures.

In Break through the barriers, Neil Jones points out some of the internal and external drivers for sustainable procurement as well as some of the internal and external barriers that need to be overcome for your firm to succeed.

External drivers include investors, industry performance, producers, standards, competitive advantage, reputation risk, supplier competence, customer requirements, and government policy. Internal drivers include buyer ability, leadership, cross-functional teams, company size, strategy, and other organizational factors.

External barriers include the volume of available information, language and cultural issues, lack of supplier commitment, and competitive pressures, including customer desire for continually lowering prices. Internal barriers include a lack of knowledge, resource limitations, weak processes, poor communication, lack of a strategy, organizational reluctance, management commitment, and purchaser’s abilities.

But these can be overcome. Knowledgeable consultants can make the volume of information manageable, language and culture can be learned, you can always find new committed suppliers, and good sustainable practices can actually give you an edge on your competition. Sustainable procurement can be learned, you have to do your homework anyway to make the right supply decision, sustainable policies can lead to improved processes, sustainable initiatives can provide a good foundation to improve communication, sustainable goals give you a strategy, sustainability provides a common goal that the organization can lobby around, and purchaser’s can be trained.

In Power to change, Kayzi Ambridge describes how E.ON UK, part of E.ON Group, incorporated sustainable procurement into part of their daily operations.

In the article, the author pointed out that when making decisions, you need to consider environmental factors, social factors, and economic factors and that it may take a few years to reach your goals, but there are always a few quick wins that you can use to get your started. You can green your supply chain by purchasing products with recycled content or, when this is not possible, purchasing products that can be broken down, partially recycled, and disposed of safely. You can also use renewable energy sources when they are available. In addition, you can choose venues that benefit an appropriate charity when holding off-site meetings.

The article also presents practical steps to get you through your first year of a sustainable procurement initiative. Start by finding out if there is support, researching the current state of sustainable procurement, and mapping out what you can measure. Then, create a baseline, determine which objectives sustainable procurement can support, and start on the business plan. Next, sometime in the second month, break down how procurement can tackle each objective on the social, economic, and environmental dimensions, start communicating with relevant internal and external stakeholders, and start tackling the small projects. Around the third or fourth month, work out what you expect from your suppliers and communicate these goals to them and implement tools to measure progress against your objectives. Throughout the year, measure your progress regularly and strive for continual improvement.

In It’s all in the mix Faiza Rasheed overviewed a seven step program to introducing supplier diversity into your business. Supplier diversity can often lead to social and economic improvements and play a role as part of your broader sustainable development agenda and is thus worth considering.

The seven steps presented in the article are the following:

  • Establish Sponsorship and Governance
    A senior level sponsor to provide credibility and direction is key.
  • Create a Strategic Plan
    Define a clear scope and identify the diverse suppliers to be targeted. Then document a business case outlining the importance of the program and how it aligns with HR and existing diversity policies.
  • Design Standards, Processes, Tools, & Templates
    Establish a standard set of four to six supplier diversity standards that can be incorporated into contracts and then create processes, supported by tools and templates, which facilitate the application of these standards.
  • Execute the Implementation Plan
    Remember to work with the professionals who own the contracts to ensure supplier diversity requirements are applied. Formulate “best practices” and communicate them.
  • Train People and Communicate Internally
    Teach your suppliers about your program and use existing channels to raise awareness internally.
  • Engage Suppliers and Communicate Externally
    Publish your goals, policy, and requirements to demonstrate your organization’s commitment and generate positive PR.
  • Develop Systems and Monitor Progress
    Ideally, the system that captures the relevant information and measures the appropriate KPIs should be driven through the organization’s primarily enterprise system.