Sustainability is at the heart of procurement! Many companies are pushing the procurement agenda on carbon accounting and offsetting, enterprise sustainability management, supply chain traceability, transparency and reporting, and sustainability assessment.
COVID has undoubtedly acted as a catalyst for this, but it was already clear as we entered the new decade that we are at a sustainable procurement tipping point for several reasons:-
- Procurement core capabilities have been established and form a foundation for more sophisticated and targeted approaches. Combining demand, cost, category and supplier management skills behind a common set of goals, the Social Development Goals.
- Existing and new digital procurement solutions are being developed at speed, with a focus on the sustainable procurement imperative.
- Investors are fuelling this, through excess ‘dry powder’, targeting enterprise sustainable software solutions and increasingly holding themselves accountable. More broadly the return on investment in companies where objectives and results are aligned to the triple bottom line is proving to be higher.
- Sustainability has adopted more quantitative, ambitious targets to be measured on. Beyond clear targets for carbon emissions reduction by a certain date, many corporates have hard targets in other areas too e.g. reducing waste, water consumption, land usage. These targets will be measured and delivered through key supply chains with procurement.
- Increasing regulation and government involvement ‘incentives’ scale, from reporting and fines to the significant purchasing power governments possess.
- Scale and speed are being architected into new ecosystems and platforms, going beyond RPA and automation to be empowered through new interfaces and expansive integrations.
- Procurement leadership mindset shift is being cascaded through objectives, behaviours and organisational change. There is an increasing number of leaders who have responsibility for both procurement and sustainability.
- The business case and budget for sustainable procurement have now crystallised.
- Consumers, the next generation of consumers and the procurement teams themselves are demanding it and so is the planet.
“Digitalisation has already created a shift in business models, new companies, greater growth, more collaboration and innovation. Sustainability is set for a similar significant upside for those leaders and companies that can again anticipate the rapid evolution. Combined, sustainability and digitalisation will unlock vast total shareholder value for those with clarity of purpose and a drive to create momentum and determination to realise the full potential”
Procurement and sustainability leaders are already shifting from idea to action to impact in several ways:-
- Optimising cash flow through the supply chain and using supply chain financing to incentivise the use of suppliers with a positive social value.
- Remapping supply chains to reduce social and environmental impact from the carbon footprint to localisation to invest in targeted economic areas.
- Detailed component analysis and breakdown to understand and reduce the inherent carbon footprint, demand profile and social impact.
- Creating stronger relationships with vendors through tighter digital integration.
- Using blockchain-powered solutions to improve safety and regulatory compliance, incorporating IoT to reduce waste and spoilage.
- Greater sharing of data across networks, partnership and alliances will increase transparency as well as creating the basis for new commercial models and ecosystems.
- Leveraging initiatives and networks like the GreenTech Alliance, Sustainable Procurement Pledge and Race to Zero to access and accelerate sustainable procurement.
- ProcureTech is enabling smarter, faster digital procurement solution discovery and matching, powered by proprietary enterprise and cybersecurity intelligence from Craft, Security Scorecard and others.
- Building larger supplier networks with smaller, more diverse suppliers using mobile technologies built for agility to gather and share critical data.
Sustainable procurement is being propelled by the digitalisation of a process, operating models, categories and their value chains. This momentum is compounding and exciting as the same amplification that digital procurement can make in sustainability can be made across all of procurement into supplier innovation, supply chain transparency, risk reduction and beyond.
Digital procurement on purpose is unstoppable read more here
Lance Younger. CEO ProcureTech