Sustainable procurement isn’t just a buzzword — it’s crucial to the planet, and rapidly gaining momentum in business.
With economies becoming more intertwined globally, there’s growing recognition by manufacturers and retailers of the benefits of working with eco-friendly, socially responsible suppliers.
In doing so, businesses can create a greener supply chain, improve their environmental and social impact, enhance their overall sustainability performance, and attract and keep like-minded customers. Most importantly, though, sustainable procurement ensures the availability of resources so that there will be a future to protect.
That’s not to say the task is easy. Chief procurement officers must deal with complex global supply chains and disparate country standards, simply to ensure that all involved are adhering to sustainable practices.
Following are some of the biggest hurdles that companies face today in adopting sustainable practices.
Initial investment. Sustainability carries a price tag, at least at the outset. Cost-containment is always a business priority, keeping consumption of sustainable products low, and making materials more expensive. But as sustainability becomes the norm, supply chain competitiveness will bring prices down. To re-balance costs, large businesses should commence the sustainability journey now, opening the door to greater savings and environmental value over time.
Supply chain complexity. Regulations differ from country to country, so navigating sustainability requirements, and updates in rules, can be difficult. This is particularly true for businesses working in less mature markets, because such partners have yet to see the value in sustainability.
Data controls and measures. Dealing with various tracking methods across environments can be tough. The big problem is a lack of standards for traceability and carbon output. In addition, there are many ways by which organizations measure sustainability, so you might see different results regarding the same product, depending on whom you’re talking to. And if you’re buying for many clients, the difficulty increases exponentially.
Culture and incentives. Having the right culture in place drives meaningful change in procurement. Currently, procurement functions are incentivized by cost savings, instead of carbon reduction and sustainability gains – it’s a capital culture versus a carbon one. When priorities conflict, one always gets more focus, and money still talks the loudest. Businesses must build a culture that revolves around sustainability, scrutinizing the volume of products they buy, reducing their carbon footprint.
Lack of visibility. Inconsistent data flows, varied business systems and constrained collaboration among stakeholders can cloud transparency. When there are data anomalies and systems aren’t cooperating, tracking goods and operations across the supply chain is particularly frustrating. Siloed operational units and a reluctance to share information can further muddy the waters.
Without clear insight into environmental and social impacts, it becomes difficult for companies to identify areas for improvement and adhere to standards. What’s more, a lack of visibility opens an organization to operational disruptions, raising inefficiency and carbon emissions. To overcome this, you need to look at the supply chain systematically, map it out, pinpoint data gaps and assess your current visibility tools. From there, you can develop a strategy to address issues, including integrating systems, boosting data integrity and fortifying supplier relationships.
Regarding the last, procurement pros can strengthen supply chain visibility by placing an emphasis on collaboration and data exchange with suppliers. Be sure to establish clear guidelines for information-sharing, and harness technology for data transmission in real time. Additionally, it’s imperative to hammer out shared sustainability goals to ensure efforts advance in tandem.
Technology can greatly enhance supply chain visibility, particularly new and emerging applications of artificial intelligence. With analytics powered by AI, enterprises are able to analyze massive datasets and unearth patterns while extracting insights to fuel better decision-making.
When you apply AI to internet of things (IoT) and cloud platforms, you can conduct real-time monitoring and traceability throughout a supply chain. This is the type of visibility that allows leaders to understand where they might need to make improvements in their operations and sustainability strategies.
With automated data capture and classification, AI can turn supply chains from a reactive to a proactive model. The result is better forecasting, optimization and decision-making. AI systems also have the ability to recommend ways that will lessen disruptions and strengthen workflows. They allow you to identify alternative suppliers, handle production schedule changes and engage in route optimization.
Machine learning can be used to automate manual tasks that need constant repeating. Data accuracy is improved by the elimination of manual inputting. On the business intelligence side, predictive analytics can forecast potential high carbon impact areas, so that an organization can take proactive steps to keep that from happening. In short, AI can help process information and support, accelerating the whole supply chain process and operations.
Sustainable procurement is about carbon reduction, not carbon avoidance. Obtaining materials more responsibly helps businesses cut their overall environmental impact, attracting customers who also understand and appreciate the need for sustainability.
As awareness continues to grow, demand for more “green” products” will be unavoidable. This will increasingly lead businesses to build sustainability into their procurement strategies. Those that don’t will fail to keep pace, losing out to more responsible competitors that have already invested in and are prepared for a more sustainable future.
Adam Spurdle is global supply chain partnership director at Communisis.
RELATED CONTENT
RELATED VIDEOS
Timely, incisive articles delivered directly to your inbox.
All content copyright ©2024 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp
Design, CMS, Hosting & Web Development :: ePublishing