Supplier Relationship Management is the heart of Sustainable Procurement

The Vital Organs

Contrary to popular opinion, I would label Procurement as your vital organs.

What is Sustainable Procurement, really?

It’s no secret that corporate sustainability and CSR have exponentially taken the forefront in the corporate strategy of global brands. This trend is, in large part, due to external consumer demands on supply chain transparency, visibility, and accountability. Consumers today want to know what they’re buying, where they’re buying it from and this increases a need for product and environmental stewardship. Sustainable business practices in global supply chains are no longer a nice to have, but a must-have.

Some key Sustainable Procurement practices are:

  • Ensuring compliance with International and Domestic Standards, CoC, Policies, and Legislation (covering various areas: environmental, health & safety, quality, human rights, child labor, anti-corruption, business ethics, capacity/contingency, GDPR, cybersecurity, etc.)
  • Supply Chain tier-mapping, supply chain visibility, and traceability
  • Sustainability Performance & Supply Chain reporting — in line with international reporting standards (GRI for example)
  • Incorporation of sustainability criteria into sourcing evaluations (Systematic within RFx, Onboarding & ongoing supplier evaluation)
  • Locating opportunities to remove harmful products, components, and/or supplier entities from the supply chain

Sustainable procurement in practice can benefit:

  • Supply Chain Resilience and Risk reduction — Ensure visibility, compliance, and governance within supplier networks to spot potential risks and avoid negative impact as a result of sourcing from a negligent supplier.
  • Decreased costs — Overhead cost savings created from better management of natural resources & better product stewardship can reduce TCO.
  • Revenue growth — Consumers support brands that adopt sustainable business practices as a part of their core business culture. This can lead to increased brand loyalty.
  • Future-proofing — “Developing sustainable procurement practices allows the organisation to future proof themselves against scarcity in supply and changes in social, economic and environmental factors” (cips.org).
  • Product and Supplier-Enabled Innovation (SEI)— Stronger and more collaborative means of communication from the beginning of a supplier relationship harnesses trust and breeds opportunities for innovation.

The Heart of Sustainable Procurement

‘Sometimes all you need is your suppliers’ brainpower, not their margins’.

Sustainable Procurement is only as impactful as the adoption level that exists in a buying organization and its supplier network. It requires stakeholder buy-in, and that means leveraging SRM practices to ensure your suppliers feel like partners and not just vendors. It’s important to spot suppliers that can be early adopters, segment/classify suppliers based upon engagement, and continue to create opportunities that increase supplier network trust. Implementing a well-oiled SRM program can serve as a vehicle for making a shift towards sustainable procurement practices; one that is a systematic and consistent proponent of positive change.

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