Daily Archives: July 29, 2012

Sustainability Requires Shared Understanding

A recent article on Sustainable Success over on the CPO AGenda discussed three challenges that, when addressed, can lead to success in sustainability efforts. The challenge of tools and transition to better processes is well known, and straight-forward to address. The challenge of recognizing the achievements of supply management professionals is lesser known, but there are a number of techniques that can be used to address this challenge. However, the challenge of building a common understanding of just what sustainability means and why it is relevant to procurement is often overlooked and not as easy to address.

As the article notes, first among the difficulties in getting sustainability right is making sure everyone sees the same potential benefits. This means a common understanding that goes beyond what the term sustainability means on its own, but what it means for Supply Management and the organization as a whole. As the article notes, sustainable procurement aims for the same outcomes that any buyer would wish to see in their work, and delivers some additional benefits that can go beyond the buying organization. In particular, it means seeking benefits now that do not impact the ability to seek benefits in the future. The impact of activities must be considered not just with respect to the current sourcing event, but over the lifetime of the category and any affected supplier relationships.

So how do you come up with a common definition?

As the article notes, a good way to start is by determining how a potential decision stacks up with respect to some key factors, such as:

  • customer reputation
    does it increase your net worth in the eyes of a customer (who has also embarked on a sustainability agenda)
  • risk management
    does it decrease your overall risk exposure (in terms of supply availability, reputational damage, or media exposure)
  • medium / long term value
    does it decrease costs, increase quality, or insure available supply
  • supplier relationship(s)
    will the supplier partner in innovation to reduce production costs, reduce waste, and decrease environmental impact

And then by determining how the decision stacks up with respect to concrete sustainability factors such as:

  • raw materials
    are the materials you are using renewable and can they be extracted with minimal harm to the environment
  • energy requirements
    are the energy requirements associated with your purchase (for production, storage, and transportation) minimal and can they be met with renewable resources
  • waste products
    are waste products minimal and/or reusable and/or reclaimable? can the food waste be used to feed livestock? can the metal waste be melted down and reused?
  • worker treatment
    are all workers who take part in your supply chain treated ethically, responsibly, and fairly, using standard guidelines, such as those outlined by JLP

If a supply management decision would increase customer reputation, reduce risk, contribute to medium and long term value, enhance supplier relationships, use renewable (and non-environmentally harmful) raw materials, reduce energy requirements, minimize (or eliminate) waste in production, and do all this in the context of ethical worker treatment, then, regardless of what definition of sustainability each individual on a cross-functional sourcing team is partial to, it should be easy to agree that such a decision, at least in the mid-term, is sustainable.