Most companies are claiming to follow Sustainable Procurement practices; some might think that it will impact the day to day business and hamper competitive advantages – as one will have to work only with smaller/disadvantaged suppliers. However, that is not necessarily the case, it can be followed without affecting the business and can meet the requirements as well. Sustainable procurement practices are not only about scale – it goes beyond as the company’s processes and procedures by affecting the society as a whole.
Companies are not only following these practices for the sake of it, but instead, using these as a forefront to show it to the customers that they actually care; and thereby, leveraging this as a novel practice for gaining a competitive edge (As per the ‘World economic forum : Beyond sustainable procurement’ report, helps companies increase their brand value by 15-30%). Apart from improving competitiveness and business reputation, other probable benefits of sustainable procurement include attaining dollar savings, managing waste effectively, and reducing the company’s carbon footprint. Details of why a company should consider sustainable procurement are mentioned in another article here.
Below are the key best practices that companies may consider while following sustainable procurement practices
Analyze the Existing Supply Base
It is very well known that Sustainable Procurement is not easy and also not a one-man job; and hence, companies need to provide special emphasis on this area of work. Mostly, organisations try to change their entire suppliers’ database while providing opportunities to diverse/green suppliers; instead, the company may actually evaluate the existing supply base for suppliers that are already eco-friendly.
On the other hand, the company can make it a practice to consider diversity/green status of each supplier when they are looking for a new supplier. For instance, companies may include a qualifying criteria in their RFPs to make sure that the only those suppliers with an eco-friendly certification or a green status can compete; arguably this won’t always be the most efficient way , as in most cases, cost is the most important decision-making criteria. In such cases, it may be wise to help the selected supplier follow eco-friendly practices or partner with the supplier to innovate a more eco-friendly solution.
Outline Entire Code of Conduct and Collaboration Requirements
Working with new and eco-friendly suppliers is always great, but the organisation also needs to make sure that they have complete knowledge of the company’s code of conduct; thereby, it becomes crucial to provide all the necessary details about the code of conduct to the vendors - whether they are incumbents or net new vendors before starting to work with them.
It is crucial for the vendors to understand exactly what the organisation they are selling to needs, and what their responsibilities are to avoid any mis-happenings. Deciding the quality of the goods, making them eco-friendly, and clarifying waste disbursal practices, beforehand, will also benefit the company in making sure whether the vendors selected are the best match for their business.
For instance, Shell works with its existing suppliers to implement the Shell Supplier Principles, which set out minimum standards that Shell suppliers are required to meet, including but not limited to, using energy and natural resources as efficiently as possible to minimise impact on the environment, and covering health and safety issues
Employee Trainings and Awareness
Most large companies have a separate team for Sustainable Procurement to function efficiently; on the other hand, small-scale companies do not have the resources to deploy a new team – in both cases, companies need to make sure that their employees are aware of all sustainable techniques and processes used in the business.
For smaller companies, this will be a dual-blessing, as the company can save the money that they would’ve needed to deploy new staff, and secondly, they will have more trained and educated staff that they can rely on. Such trainings can easily be conducted by just getting the employees enrolled in some online training programs and seminars for better knowledge base
Evaluating Progress of Diverse Suppliers, alike
It is not uncommon for companies to periodically evaluate their employees, the same has to be done with the suppliers to show them that they are valuable to the company; this becomes absolutely necessary in case of diverse or disadvantaged suppliers, especially if they are new to the buying company’s business.
If the organisation keeps evaluating them, periodically, and rewarding them for their progress and achievements, the company can actually motivate them to work in a better way. The best thing to do is to establish a mechanism that can help the company to audit the suppliers and keep track of all their activities.
CIPS (UK-based global professional body working for the purchasing and supply professions) offers a structured online audit process to help purchasing managers map their organisations’ purchasing systems against best practice enabling them to assess how energy efficient and sustainable their purchasing processes are.
Lastly, Spawn a Culture of Sustainability in the Company
The most important thing for doing a business is to set an example for others. If an organisation brings sustainability in their process then it will motivate others to do the same, and eventually it will help the environment and society.
Renowned MIT management professor Edgar Schein suggests that the only thing that distinguishes leadership from management is that leaders create and manage the organization’s culture and thereby, to spawn a culture of sustainability, the leadership must create sustainable practices as a shared behavior in the organization to turn them into behavioral rules in the longer run.
“A strong culture motivates people in desirable directions. You want a culture in which people feel responsible for contributing to the changes you want, feel empowered to act on behalf of sustainability and realize multiple types of rewards for their sustainability contributions.” - Tom