Corporate Social Responsibility (CSR) and sustainability is all the rage with Generation Y and, in many countries, is essentially the law (where environmental protection is a key concern of citizens and law makers alike) — but are you doing everything you should (even if it is not yet legislated)?
Basically, if you procure it, and it is not used, you wasted it — and if you are not careful, it will go to a landfill, and that should be unacceptable.
However, in many companies, the focus on CSR and Sustainability is on the supply chain, and the Tier 1 (and Tier 2) suppliers as it is expected the company will comply with all laws and adhere to its own Sustainability and CSR policies, but this over-focus on the supply chain often results in drips of waste throughout the organization that, when added up, create a small pond, if not a large lake.
What do we mean by this?
Due to a lack of initiative or control by Procurement, the following happens in most organizations:
- paper, paper everywhere especially in the back office (as AP needs to print invoices that fail OCR to re-enter them, legal has to print contracts to review them, managers need their reports on paper, etc.)
- obsolete MRO inventory piles up in the stock room as excess parts for equipment replaced years ago doesn’t go with the equipment
- low-cost defective products pile up in the back of the warehouse as it’s not worth the perceived return costs for minimal cost products or low volumes
- non-recyclable packaging goes to the trash and the local landfills (and dumping costs) pile up
- broken pallets litter the corner of the yard and are left to rot
But Procurement could prevent most of this.
- demand management reduces paper especially if Procurement ensures AR, Legal, Managers, and anyone else who generally uses a lot of paper has dual monitor systems. A couple of hundred on a good extra monitor can reduce paper usage by 80% and only has to be replaced every 4 to 5 years.
- MRO management (software) either in house or third party can instantly detect when inventory is obsolete and sell it to someone who needs it before all it is useful for is scrap metal
- up-front return process definition and management ensures that defective products get promptly returned, or recycled, to make sure scrap yards don’t increase
- insistence on reusable or recyclable packaging and making it mandatory in contracts can prevent packaging waste
- better pallet acquisition can increase lifespan and a recycling/disposal policy can make sure the wood goes to good use
In other words, unless Procurement makes an effort to define its wants as waste free as possible, it will get its wasteful wants. Another point to ponder.