In our global economy, supply chain management has proven to be a complex challenge. If your company provides goods or services to a large multi-national, you no doubt have been measured on the traditional criterias of quality, cost effectiveness, speed, and reliability. Today, sustainability has added a new dimension to the mix that poses the question: can we still create quality, cost effective, and reliable products and services that meet the needs of the present, without compromising the needs of the future generations?
The search to mitigate risks and increase efficiency have moved organizations worldwide to adopt sustainable procurement strategies. You may have noticed in your own businesses an influx of requests from customers to understand your corporate sustainability practices. You may even be wondering what has spurred this new trend, and if this is a path your company should follow as well.
To answer your questions, here are 5 reasons our customers are telling us they are engaging in sustainable procurement, and how your response could drive significantly better client relationships and increase your value proposition.
Reason 1: Brand Protection
As companies become more globalized, the supply chain becomes more complex, and risks get higher and harder to find. And in this day and age of social media, bad press can hurt a lot.
Many companies have been engaging with their suppliers in order to increase their visibility along the supply chain so that they can make sure their practices are aligned with corporate values. Ultimately, any chink in the chain can cause great damage, so there is great pressure to mitigate risks and protect the brand.
Reason 2: Increased regulatory pressure
In the last 10 years, there has been a drive towards greater regulation, making global corporations become more responsible in the extended value chain. With new laws and regulations such as the Conflict Minerals Act, UK Modern Slavery Act, and, most recently, the Devoir de Vigilance, companies and organizations are being mandated to submit reports and complete assessments in social and environmental criteria.
Reason 3: Differentiate by finding innovative suppliers
With more power comes more responsibility…. and more options. Many companies are pursuing sustainable procurement strategies in order to find innovative suppliers that will help them differentiate their product or service offering. A great example of this is Coca Cola Enterprises’ Supplier Relationship Management program. Through this initiative, Coca Cola Enterprise communicates their values and principles and work directly with their suppliers to make their companies more efficient, profitable, and of course, responsible.
Reason 4: Increased scrutiny and more advancement in data sources from NGOs
Goodbye auditors, hello internet! With the plethora of open data available, there are real time data solutions available for buyers to understand and vigilantly monitor their suppliers business practices, without leaving the comfort of their homes! From NGOs (China Labor Watch) to open data sources (OSHA, EPA), along with publicly available Labels and Standards (ISO) have changed the game completely, so clients can rely on third parties to monitor their suppliers practices.
Reason 5: Way to establish leadership and enhance the brand
Ultimately, sustainable procurement practices have moved far beyond compliance and towards creating value. Leaders in Sustainable Procurement are moving away from penalizing suppliers towards rewarding innovators. According to EcoVadis/HEC Sustainable Procurement Barometer, 97% of organizations surveyed consider sustainable procurement important or critically important to their businesses, and many companies have chosen to invest in improving their procurement practices.
Sustainability has added a new dimension and complexity to supply chain management. No longer is it just a “nice initiative”, nor just a compliance hurdle, but rather, sustainability an essential ingredient in what constitutes a successful business — engaging in sustainable procurement practices is becoming a no-brainer.
Interested in discovering some tools that your company can use to start their sustainability journey? Click here to find out