Sustainability is one of the most critical players in driving the efforts to reverse climate change – the biggest threat to life in the 21st century. For years, consumers were thought to be pseudo-moralistic in their demands for more sustainable products. However, the sustainability market is predicted to be worth $150 billion.
Additionally, an increasing number of businesses have started to improve the sustainability of their procurement activities to contribute to the fight against climate change. According to a recent study by NYU’s Stern’s Center for Sustainable Business, it was found that sustainably marketed products grew 5.6 times faster than those that were not.
In this article, we’ll be discussing the different measures you can take to improve the sustainability of your overall procurement management process.
Are There Any Benefits?
Driving sustainable procurement isn’t only good for the environment, but for your business as well. It’s a good marketing strategy and will boost your company’s reputation. Sustainable procurement management practices are also suitable for attracting talented employees looking to work in a compliant company when it comes to environmental regulations.
Similarly, sustainable procurement management also focuses on streamlining procurement processes to enhance efficiency and reduce waste. As a result, it can drive down overhead costs and save companies a lot of money in the long run.
Steps to Improve the Sustainability in Procurement Processes
Incentivize Suppliers to Improve the Sustainability Quotient
Buyers have room for adjustment in procurement policies for suppliers. And contrary to popular belief, many suppliers’ welcome negotiations and discussions. So, you can start by incentivizing suppliers who engage in sustainable practices to motivate their healthy habits. The practice will also generate competition among suppliers to boost sustainability and trigger a cascading effect of increased sustainability in your community.
However, if you cannot motivate suppliers, choose someone that will make procurement management more efficient.
Devise a Strategy for Procurement Management
Devising a strategy is one of the best ways to improve the sustainability of procurement practices. Business companies come in different shapes and sizes, so there isn’t one standard strategy for driving sustainable change across organizations.
Procurement teams and business leaders need to identify priorities and high-risk areas to formulate a robust and sustainable strategy. It would be best to strike a balance between business success and sustainable procurement practices. A smart way is to identify which areas of the supply chain will benefit the most from driving sustainable change.
Moreover, it would help if you always aimed to improve the sustainability of current procurement practices instead of starting from scratch. Strategies that focus on improving efficiency and reducing waste are good for starting the journey towards more sustainable practices.
Procure from Suppliers that Share Your Goals
Selecting suitable suppliers is an integral aspect of good procurement management practices. Business owners need to review and hire suppliers that align with their end goals. After establishing a plan to improve the sustainability of procurement practices, you need to find those suppliers who are willing to accommodate your organization’s new needs.
Similarly, another good way is to procure from local suppliers. In fact, it’s one of the best ways to reduce your organization’s carbon footprint. This is because locally sourced material is not delivered over long distances. Therefore, you can indirectly reduce greenhouse gas emissions and burn less fossil fuel by sourcing materials from local suppliers.
Choose Unprocessed Raw Material
If you’re a manufacturing company, consider sourcing unprocessed raw material to improve the sustainability of procurement practices. When materials are processed, lots of dangerous effluents and poisonous gases are released into the environment, which can negatively affect the environment and ecosystem. Choosing to buy unprocessed raw material can help avoid that.
Define Procurement KPIs for Sustainable Practices
KPIs have an integral role in efficient procurement management and help provide metrics for evaluating the supply base. These can be used to develop best practices to implement sustainable procurement practices. Key metrics should focus on sustainability objectives and measure supplier performance based on travel emissions, annual carbon footprint, percentage of recyclable material, alternative energy use, and use of plastic packaging.
Best practices can be developed after analyzing company spending and classifying supply based on the category of spending, the value of spending, and transactional volume. Prioritizing quick win tiers will help you drive sustainable change without incurring heavy expenses.
Collaborate with Suppliers
Supplier collaborations can also have outreaching benefits like incentivizing schemes. Business owners can set meetings with their suppliers to discuss ways to improve the sustainability of procurement practices. Developing a good relationship with suppliers is essential in procurement management strategies and helps implement faster changes.
You can develop sustainability metrics and an action plan. Furthermore, you can collaborate with the suppliers to develop a baseline for measuring the metrics. These can then be incorporated into supplier performance charts in procurement management software applications for monthly and annual reviews.
Go Paperless with SimplyPurchasing
Transitioning to the digital landscape is one of the best ways to improve the sustainability of procurement management practices. Cutting down on paper use can significantly reduce your organization’s carbon footprint. Technology has seamlessly integrated corporate and small businesses to bring convenient software solutions that efficiently manage different business needs.
Experts at Microsys provide small and medium-sized business owners an affordable and robust procurement management solution in the form of SimplyPurchasing. It’s a lightweight software application that is instrumental in improving the sustainability of procurement practices.
It also improves the overall process and helps you take care of sourcing, vendor, and contract management. The best part is that you can use it for purchase orders, quotations, vendor correspondence, and numerous other features without using a single sheet of paper!
We hope you learned the importance of improving the sustainability of procurement practices in modern times. If you’re interested in driving sustainable change in your business, consider buying a procurement management software application like SimplyPurchasing. Contact us today to learn more about the software and its utility from experts at Microsys!