As we mentioned in our previous blog, one of the challenges that procurement and supply chain team will be facing in 2023 is addressing environmental issues, while adopting more sustainable procurement practices.
Businesses that adopt sustainable procurement practices will be able to meet their sustainability goals at both supply and procurement levels. This will reduce their impact on the environment and the risk of environmental catastrophe.
In spite of this, a number of challenges can stop procurement teams from switching to more sustainable methods despite the numerous drivers of sustainable procurement. Let’s dive into these obstacles.
What is sustainable procurement?
Using sustainable procurement methods while meeting regulations means acquiring goods and services in a responsible and environmentally-friendly manner. In addition to recycling efforts, procurement, sourcing, and supply chain teams seek to improve their environmental impact through more sustainable practices.
There are many different forms this procurement method can take, and companies can choose from the following:
- Closed-loop supply chain (CLSC)
As part of a CLSC, companies strive to practise sustainability throughout the entire life cycle of a product, from manufacturing to disposal. To reduce the environmental impact of making and buying products, companies may procure them from suppliers that use recycled or repurposed materials. Business owners can also extend their products’ lives by repairing or recycling them, or disposing of them responsibly.
- Triple bottom line (TBL)
Environmental, societal, and financial factors are considered when procuring under TBL. It combines the focus of many procurement teams to find a procurement approach that reduces costs and optimizes the company’s effects on the planet and its employees.
- Reverse supply chain
The reverse supply chain, also known as reverse logistics, is a cycle in the CLSC in which products are returned to their suppliers for repairs or recycling. Companies that use a reverse supply chain encourage people to repair their products rather than throw them away. They also encourage customers to return unwanted items to the company in order to keep these items out of landfills.
- Ethical procurement
Procurement departments use ethical procurement to monitor and evaluate the compliance practices of their suppliers in order to help them meet their own goals. Policies such as unsafe working conditions or corruption within the supplier’s company may conflict with a procurement team’s moral goals, prompting them to seek a more humane supplier. Conditions for ethical procurement can include labour and human rights policies.
A range of options for sustainable sourcing allows companies and procurement teams to find the best fit for their profit and sustainability goals.
Thinking about the use of sustainable procurement for your business, there is a series of steps you can take to start enforcing greener purchasing habits:
- Address where you can apply sustainability measure
When choosing to acquire products sustainably, procurement teams need to first have a look at product utilisation throughout the enterprise and decide regions in which they are able to apply extra eco-conscious practices. This would possibly suggest swapping contemporary gadgets for reusable alternatives or ones crafted from recycled materials. Identify any regions of excessive waste and brainstorm how sustainable procurement would possibly help there.
- Determine your sustainability requirements
After you’ve decided where sustainability fits into your business, figure out how those green practices will work with local government standards and your operational needs. Set both minimum and desired requirements so that you can use that information to guide your evaluation of supplier performance.
- Assess the performance of potential sustainable suppliers
Next, use the sustainability model you created in step 1 and compare the requirements to providers to see which ones meet your requirements.
- Receive feedback and updates from suppliers
After selecting providers, it is critical to obtain records from them on a regular basis to ensure they are meeting the requirements you requested of them. You can request these records in annual or quarterly reviews, or whenever it is convenient for your operations.
- Reflect on and improve your sustainability habits
While ensuring supplier performance is critical, you should also evaluate your own data on a regular basis to determine how well you are meeting your sustainability goals. This allows you to identify any areas where you are meeting your minimum or below-minimum requirements and continue to strive for your desired levels of sustainability.
You can track and publish your progress as you evaluate your performance so that others can see how you are actively working to become a more sustainable brand.
Last but not least, advancements in procurement technology solutions have made it possible for companies to easily track all these steps and ensure they remain on track with their sustainability goals.
If you want to learn more about how to incorporate sustainability into your procurement process and how procurement technology can help you achieve these goals reach out to us at [email protected].