This #ProcurementInsights report delves into an ever-growing subject in the industry – how to ensure and improve sustainable practices along the supply chain.
It is no longer enough for businesses to rely on suppliers to provide them with what they want, no questions asked. Organisations benefit greatly from getting to know their suppliers to ensure their demands are not unrealistic and that the suppliers they work with have good, ethical practices.
– Jacques Schramm, Chair, International Organisation for Standardisation
In recent years, those in the procurement and supply chain industry have witnessed a rising interest in matters of sustainability.
But it’s a complicated situation – even the most straightforward supply chains can include numerous agents and stakeholders. Here are four ways you can boost sustainability within your own procurement processes.
1. Keep up with changing attitudes
- 6 in 10 organisations are more engaged with sustainable procurement than they were two years ago.
- 33% of consumers are now choosing to buy from brands they believe are doing social or environmental good.
- 89% of companies indicate that sustainability issues could have a financial impact on their business.
- About 25% of employees don’t know how much, if anything, their organisations spend on sustainability-related initiatives.
How to keep up with sustainability issues in procurement
Health and safety laws in the UK were introduced in the 1970s – now every business has its own health and safety code. There is no reason to think that sustainable procurement won’t become similarly commonplace within a much shorter timeframe.
Sustainable procurement requires full knowledge along all parts of the supply chain. Map all suppliers (not only Tier 1) and sub-contractors to identify the challenges they face. Encourage Tier 1 suppliers to get full visibility of their Tier 1 suppliers, and of theirs… all the way down the chain.
The IS 20400 (Sustainable procurement – guidance) is the world’s first international standard for sustainable procurement. It aims to help organisations develop and implement sustainable purchasing practices.
2. Increase collaboration
- 70% of companies say multi-stakeholder collaborations are the key to more sustainable procurement and ethical supply chains.
- 78% of companies are collaborating with NGOs, industry initiatives and government.
- 20% of sustainability professionals say industry collaboration is the most exciting opportunity in the coming year.
How should your company embrace collaborative procurement?
Look to build collaboration between suppliers, agencies and other stakeholders towards a common goal of more sustainable workings. You can also look at working with other businesses, trade unions and NGOs to create unified policies where all parts of the supply chain can share good practice.
The challenges of making procurement more sustainable will vary from business to business – but organisations within the same sector will be facing similar challenges. Look to create working groups with other organisations to discuss collaborative ways to share knowledge and experiences. The Supply Chain Sustainability School for contractors is a good example of how this can work across an industry.
3. Awareness of modern slavery
- The UK government estimates there are tens of thousands of people in slavery in Britain today.
- Across the globe, modern day slaves generate $150 billion in profits through their labour each year.
- 16 million (40%) of the world’s 40 million slaves are in situations of forced labour within the private sector.
What your company can do to attain an ethical supply chain
UK procurement professionals cannot assume their supply chain is unaffected – whether or not that supply chain stretches overseas. A large-scale problem needs a series of small-scale actions. Global benchmarks can help unify efforts and create a consistent set of aims.
The UN Global Compact, for example, has guidance, tools and resources to assist companies with business practices. It calls on companies to align their operations with 10 universally accepted principles in human rights, labour, environment and anti-corruption.
Third-party certification schemes can be a great asset to companies looking to ensure a compliant supply chain. But outsourcing responsibility can cause issues as not all schemes guarantee full traceability.
4. Gain business buy-in
- Research shows that 70% of organisational changes fail – and lack of executive buy-in is a principal cause for this failure.
- Full supply chain visibility is the third most important strategic priority for companies – but only 6% of companies have achieved it.
How to gain business buy-in for sustainable procurement
Raising awareness of why sustainable procurement is vital for business can help to foster buy-in from across the business – including at management and executive level.
Create visual and written communications that explain the benefits of sustainable procurement. Distribute them throughout the company and along the supply chain.
If the supply chain stretches overseas, creating partnerships with local organisations can build the cultural connections and trust needed on the ground. A supply chain that is on board with, and informed of an organisation’s culture of sustainable procurement can see its reputation increase and customer loyalty grow.