By: Pierre-Francois Thaler, Co-CEO, EcoVadis
November 02, 2015
The typical procurement organization invests heavily in supplier compliance but rarely reaps the value rewards. Compliance can often feel like a revolving door, with procurement teams evaluating the same risks and under-performing suppliers over and over again and never identifying the root causes or making real progress toward sustainability. Eventually, after a multi-year investment into a responsible sourcing program, procurement finds itself past the point of diminishing returns.
The issue: organizations continue to accumulate a great deal of process baggage, brought on by emerging laws and regulations. The costs of compliance have multiplied, suppliers feel burdened, and the final outcomes are void of strategy and sustainable value. The result is a check-box approach to compliance, which produces very little (if any) gains for either buyer or supplier. With the supply chain a key strategic differentiator for most companies, the time is now for procurement to rethink its approach.
Transitioning from a compliance-driven model to a strategic approach that measures, rewards and integrates great supplier performance can have a massive impact on procurement outcomes, and deliver a substantially higher return on investment. Outside of the financial gains, there’s the added benefit of keeping suppliers motivated and invested, and ultimately, making a positive impact on the global supply chain.
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