The Intergovernmental Panel on Climate Change reported that the risks of climate change are so profound that they could result in food shortages, plant and animal extinctions, and other dangers if greenhouse gas emissions aren’t curbed by 2050. They said this in a very stark language. The challenge is that our economies motivate people and businesses to consume to such a degree that the planet is unable to regenerate itself. However, we have the opportunity to re-think the way we do business.
The question is: how does that affect procurement in 2015 and onward?
Procurement Addresses A Sophisticated Agenda
In order to understand the future, we need to understand the history. First of all, driving out costs has often meant driving risk in. The last 30 years has reshaped business models and the business landscape. Globalization coupled with rapid developments in the new information technologies are changing the way we work and live.
This evolution of supply side management has placed procurement at the strategic heart of many organisations. The procurement function must address an increasingly sophisticated agenda in meeting the needs and demands of modern business. The procurement function must add something which is value adding to the business.
To deliver this new value creation imperative and meet the needs of business today implies a different role and set of responsibilities. They will have access to smarter systems and increase responsiveness. This will automate many processes, and reduce some needs for human intervention, but accentuating the need for those interventions to be creative, strategic and well-informed.
It will require that procurement leaders become bimodal, analytical, strategic thinkers, collaborators and orchestrators who optimise complex networks of global capabilities. Procurement will from their position be they who will have the mandate, and the ability to enable a delivery to the business.
According to the white paper published by Optimum Procurement “The Dawn of Procurement’s New Value Proposition”, procurement faces the following challenges, to be:
- Increasing complexity demands greater focus and creativity
- Technical competency will be increasingly complemented by soft skills
- Procurement will become the attractor of innovation
- Category managers will be entrepreneurial, commercial and leadership focused
- Procurement will become more aligned to strategic business goals
- Supply management decisions will be much more rigorously validated
- Increased analytics and modeling will help improve evaluation
- Previously unattainable levels of analysis will be achievable in addressing a dynamic set of risks and constraints
- Procurement professionals will need to be internal and external networkers
- They will need to integrate across the whole organization
- Job rotation will become an essential learning tool for them
- They will be strong team players capable of overcoming functional, national and virtual boundaries
Now that we have touched upon the overall agenda affecting procurement it’s also important to address tendencies which is affecting the Sustainable Procurement agenda.
Many of the world’s natural resources are threatened, some are less obvious than others. Hence companies have to adapt to the fluctuations in commodity and energy prices. Companies, which rely on the availability of plentiful and inexpensive natural resources, are living on borrowed time. Our economies have up until now used a “take-make-consume and dispose” pattern of growth – a linear model, which assumes that resources are abundant, available and cheap to dispose of.
A circular economy, and in Circular Procurement takes into consideration that valuable materials are leaking from our economies. Our society can benefit economically and environmentally from making better use of those resources and hence, applying circular principles.
Circular Procurement could be the answer to one of the worlds biggest challenges.
Going Beyond Compliance
Another trend is that sustainability is becoming an even more core part of a company’s core way of doing business. Procurement is playing a vital role in that transition, as they have to contribute to secure continuous access to resources and strengthen the company’s reputation and competitiveness. This means going beyond compliance.
Going beyond compliance means creating real changes within the environmental, social and economic agenda – which has a bottom line impact. It’s not just about following mainstream by developing a code of conduct or sending out a supplier survey. It’s about thinking: how can my business reach new markets, innovate new solutions or accelerate growth grow from a Sustainable Procurement approach?
If you work in procurement 2015 will be the year where you focus on becoming bi-modal, analytical, strategic thinkers, collaborators and orchestrators who optimize complex networks of global capabilities. Think Circular (Economy) and go beyond compliance management – then you will be able to take the stage in 2015.
Author: Alis Sindbjerg Hemmingsen
First published in the Sustainable Supply Views blog from EcoVadis
EcoVadis is the CSR rating platform for supply chains spanning 150 sectors and 99 countries of Global-500 enterprises like Verizon, Coca Cola Enterprises, Johnson & Johnson and 100 others. EcoVadis Scorecards make it easy to understand, track and improve suppliers’ environmental, social and ethical performance. www.ecovadis.com