Sustainable Procurement

Steps Towards Sustainable Procurement after the Pandemic.

August 2, 2022 Uncategorized

We as a global civilization are emphasizing sustainability more and more. Environmental, social, and governance challenges are more important than ever in a commercial setting. These topics dominate most corporate social responsibility activities today and sustainable procurement is the latest to join the bandwagon.

While forward-thinking companies have long focused on these challenges from the standpoint of brand value, they are now as important in the eyes of customers.

More people are looking to purchase sustainable goods. They are curious about how using and purchasing products may affect the environment. Many customers even base their purchases on a company’s efforts to reduce greenhouse gas emissions and the effects of climate change, or they choose to make purchases that leave the smallest possible carbon footprint.

After the Pandemic, pressure on business is ramping up with the challenges in Regulations in supply chain Acts and insight into ESG impact. (Environment, Social, Governance) Companies are bound by government rules and regulations, social issues, and climate on the rise.

During the Pandemic below common issues were observed globally,

  • Labor law – Child labor.
  • Bribery and corruption
  • Worker welfare
  • Greenhouse – Gas emissions and Carbon footprints
  • Energy use management
  • Safety rules
  • Frequent lockdown rule changes by the government

Apart from this many Procurement professionals have failed to maintain Supplier sustainability while doing the Vendor Performance measurement / Vendor rating.

A few reasons are,

  • Evidence in driving progress at the Supplier end.
  • Lack of transparency, False commitments.
  • Unfollow the ESG ambitions of suppliers.
  • Mismatch in Organizational Management.
  • Financial Issues etc.  

After the Pandemic, many more Organizations are now regaining their original position where they are looking for Sustainable Procurement to increase productivity and market share.

Therefore, we should follow the below steps to strengthen our Supply Chain.

  • Monitor Procurement spend analysis and value category – Identify the spend risk.
  • Revisit the Risk assessment – Priorities the biggest risk, Severity, and Impact.
  • Increase Supplier engagement in green supply chain management and Initiative toward the global warming issues
  • Follow the government-published site for emission factors and norms.
  • Revisit the Product life cycle data
  • Climate and energy installation to support ESG Goals.
  • Collaborative initiatives
  • Engagement of Value chain Partners to achieve PQCDSM and involve the Third-party for supplier selection for a strong supplier base.
  • Set up an ecosystem & use technology for real-time data over carbon footprint.
  • Arrange critical Supplier visits frequently. Revisit the supplier clusters.  

In addition to the above, some of the initiatives should be taken on the Organization level for Sustainable Procurement

  • Make Supplier Contract secured with the above-mentioned points to reduce the liability.
  • The procurement objective and KPI should be in line with sustainable procurement.
  • Revise the Purchase policy with sustainable Procurement for better visibility.
  • Revise the supplier manual as per Pandemic challenges.
  • Hope this will accelerate the Supply chain transformation as well as make resilient & Sustainable Procurement during the Pandemic Challenges.

By even taking small steps towards having a more sustainable approach to procurement, your business can make a significant difference.

-Yogesh Kapadne

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