I LOVE PROCUREMENT because we can impact the society and environment

Impact on supply chain

You can make an impact!

Procurement work is much more than just securing the right products in right quantity and quality to a right place… Let’s think wider. More holistically.

Procurement decisions you take every day influence not only your direct suppliers. Think about it – one line in the order to your supplier generates so much movement in so many places.

Creating the order to your supplier you influence much more than you can imagine:

  • the workers at supplier, who get their jobs,
  • families of those workers, who depend on that income,
  • entire community around your supplier gets the extra income in form of taxes,
  • environment around the supplier is affected by producing your order: maybe negatively if there are some sorts of pollution involved, maybe positively (e.g. recycling or reusing of other resources by your supplier),
  • and this is only the beginning!

Think about the subsuppliers, raw materials producers, component suppliers, packaging and transportation companies, all the logistics involved and so forth… And of course think about the customers, and about the final consumers of the goods from your supply chain.

supply chain

So if you are taking it really holistically – you can understand that your Procurement decisions has a big impact on the environment, society… and on our Planet!

Make such exercise and try to count how many companies and people are involved in your supply chain? And how big environmental impact do you make by your Procurement decisions.

You will be amazed, I guarantee!

How can we monitor so complex Supply Chains?..

As I have written in my recent blog post, Supply Chains are becoming more complex than ever, but handling of Supply Chains is not getting more complicated. Think about the great things we have today:

  • Great ERP systems to monitor each link of Supply Chains,
  • New modern ways of communication to keep in touch with our suppliers and other links (videoconference and teleconferences, instant messengers, emails…)
  • Cheapest travels ever, so that we can physically visit any link of our supply chains if we need…

There are so many links in any Supply Chain. But you can really have a good overview of it, and you can make a difference to the world around us by your work.

How can we make a difference?

The most important is your mindset. If sustainability issues are on a high agenda for your company – then it will be much easier to pursue other stakeholders. Add sustainability into your company strategy (and organization strategy),monitor it on the top-management level of your company and you will start seeing the changes.

There are four basic stages where we as Procurement organizations can make the positive impact to the world around us.

Stage 1: Learning and observing

Here you are looking around your industry or category trying to find the best practices, good examples and some inspiration. And I guarantee that you will find a lot of great cases of good environmental, social and sustainability impact for any area and any category.
Great idea would be to involve some measurable indicators for your sustainability progress. For example, carbon emissions, water footprint, share of renewable energy used for manufacturing or recycled materials used for the products…

Stage 2: Informing and aligning with our partners

Once you have selected the focus areas and KPI’s for your sustainability progress – you should actively involve your suppliers into sustainability work. Include the relevant points to the meetings you have with them, make the special events to explain your plans and ambitions regarding “more responsible way” of doing business… or at least send them the email with your sustainability agenda.

supplier relations
P.S. One more great idea. Make the list of unacceptable business practices! This can be a short list where you will have Zero tolerance. Where the only reaction from your side will be stopping the business relations with your partner. As an example such list can include use of child labour, forced labour, paying below minimum allowed wages, hazardous pollutions to water, soil or air, bribing of different kinds…

Stage 3: Including “responsible business practices” to selection criteria

This stage is a deciding one. Because here we can show how serious we are about our intentions to evolve sustainability into our strategy.

When you include sustainability parameters to your RFI/RFQ – suppliers will really start to change.

Say, there are three suppliers with the same prices, service and quality conditions. You can use some of sustainability parameter to make the final choice. This is a good motivation for suppliers to develop in-line with your inputs.

Most likely we also will lose some attractive offers from the inappropriate suppliers (be ready for that as well!). But in the long run this will help us to avoid risks connected to those suppliers. For example reputational or environmental risks…

­ Stage 4: Auditing

In order to maintain the high standards and to ensure that your requirements are understood correctly – you can organize audits for your partners. The audits can be regular (done every year or every other year), or unplanned and ad-hoc.

This will help you to keep a proper attention to your sustainability agenda for your partners.

Bottom line

I want to leave you here with just two simple messages:

Procurement and Supply Chain professionals can make a real positive impact to society and environment!

Responsible sourcing is more profitable in a long term. Period.

 

 

 

Read other article on this topic:

Supply Chain Management

7 questions from Supply Chain Management student before starting a career

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Article by Robert Freeman

Procurement expert and coach at Future Procurement

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You can learn more about Procurement and Supply Chain Management at our web-site www.futureprocurement.net

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