Crucial Factors for Sustainable Procurement

Written by Chin Pei Sze Angelene, DPSM

The objectives of the organization must be aligned such that all functions, including procurement and supply chain can work towards the same goals of corporate sustainability and not struggle with each other. This may be done at the controlling levels to drive growth, capital and risk management and provides as a universal point to get launched. It is no longer decent to have a generic CSR (corporate social responsibility) policy in the company such as having power saving elements in the plant, using low transmission delivery trucks or having your staff come forward at the local community centre.

Sustainable Procurement
Image taken from https://www.procurious.com/procurement-news/big-ideas-social-sustainable-procurement

The Transparency Factor

Being clear about the all procurement process with everyone carry out is a key factor in sustainability.All members should be mindful of their own different roles within the proceeding. They should also be kept up to date on the general goals of the inclusive project, so they can see how everybody else contributes to the bigger picture. Transparency also demonstrates honesty and made up trust among your partner and beneficiaries. When everybody can obviously see where they and everybody else suits into the process, it owns them to see that there are integrity and impartiality throughout. And if there are any fields where the process is suspected not to be fair or equal, this issue can be set up and treated with.

Data Driven success
Image taken from: https://www.forbes.com/sites/brentdykes/2016/08/24/data-driven-success-rests-on-the-shoulders-of-a-strong-executive-sponsor/#580b0fde2233

 The Factor for Executive Sponsorship

The executive sponsorship is for organizations to build sustainability into their planning and operational objectives. In order to utilize the freedoms that sustainability could offer, companies should take a critical view of sustainability and organize them into its planning and operational objectives, and then descend them throughout the organization.By building sustainability drivers onto business objectives, the business is able to consistently seek these opportunities and setting up the business to support it.Away from the basic qualities that most rewarding managements possess, such as leadership abilities, strategic thinking, relationship-building skills, communication skills, sincerity and so on, there are certain principles that you should look for in a managerial sponsor when it comes to data-related projects or plans.

The Factor for Nature of the Sector

The nature of the sector is a great factor to look at in the implementation of sustainable procurement is the nature of the sector where it is being implemented, for details, it is no great surprise that the improvement of sustainable procurement is hugest within the private and in some countries the local and national governmental sector. It is here where developments to procurement policy are approximately easily integrated and taken up. Within the intergovernmental sector such as the UN system of organizations, carrying out of sustainable procurement principles and processes becomes more complicated, basically due to the remaining rules and regulations governing competitive demand particularly on an international basis. To carry out changes to a procurement system that can be seen as favouring suppliers from certain countries or regions simply because they are more advanced in the environmental and social performance turns out to be a very tough proposition. It is at this point that the combination of sustainable procurement has thus far been strained within the UN procurement system. Work is, however, going on to overcome this dilemma.

The Environment Factor

In order to reduce carbon footprint and strengthen sustainability, supply chains are now prioritizing reducing environment impacts by using abilities more accurately and using sustainable energy, like solar and wind energy.Another planning used is the strategic placing of a warehouse or distribution centre. This can cut down carbon footprint and reduce radiation the positive effects can be instantly be translated to cost savings and a faster delivery.By reacting to calls for renewable energy, management are able to tap into tax savings and incentives.

Air Pollution May Damage People's Brains | The Scientist Magazine®
Image taken from https://www.the-scientist.com/features/air-pollution-may-damage-peoples-brains-66473

The Accountability Factor

It’s one big puzzle and everyone is an important part. The more stakeholders are prepared mindful of the whole project and its targets and outcomes, the greater. People work greater together when they recognize what they are granting towards and what is awaited of them.By appointing stakeholders in the proceeding, they are allowed and able to hold contractors liable when key targets aren’t concluded.If there are lags or interruption, the stakeholders now recognize how this influences the full process and can handle judgment in the thing of an issue happening – making all process sustainable and more sufficient.

The Standards Factor

Perform standards over the board is a grant to making the procurement process more sustainable. All stakeholders need to be mindful of the requirement that is expected throughout the contract. The award of the contract does not end the procurement process, it is really just the beginning.Performing regular decisions and tracking the goods and services that are delivered right from the start to the end of the contract is important to sustain a standard. This assure that successor’s expectations are met.To make the tracking and development of the process as simple as possible, set measurable standards. Don’t just measure what is easy to measure; chose what can be measured that is important to the development of the process.

The Procurement Factor

The other critical factor is to check how organizations set up their procurement activity. Procurement is seen as the creation of the supply chain, with procuring of raw materials, equipment and indirect purchases that supports the business.Many procurement functions also make the common social responsibility goals and demands for suppliers to support to a code of conduct covering workplace surrounding, diversity and fair wages.Their requirements make demand of goods and services and in turn resolve the way suppliers doing their business. This organizes a pull towards bringing more sustainable products and services. Another push towards sustainability would be running the supply chain risks risked by organizations.

Procurement often manages supply chain interruption by transforming their suppliers and developing the risk. By deciding to work with suppliers who are able to meet transmission standards, sustainable waste and water management etc. or avoiding supplies from high struggle zones, as there is a decreased risk of supply interruption. These suppliers are less likely to be requested to stop production by the authorities or even being refused by customers.

A case in point is Apple. One of its contract manufacturers in China, Foxconn, that manufactures the popular iPhone, was informed to have a high number of employee suicides. Subsequently, the media disclosed on low wages and poor working situations of the factory workers. As a repercussion, Apple customers portended to cut off the iPhone based on their sub-contractor’s actions.Apple now requires all suppliers to agree and sign a code that instruction all suppliers worldwide to offer fair wages and meet their workplace condition standards. Obviously, this is not easy to bring about for an organization without their large purchasing power and influence, but such is the power and reputation to all their suppliers in the supply chain.

A tree in a forest
Image taken from: https://sig.org/blog/sustainable-sourcing

Conclusion

Integrating sustainability improvement goals into the supply chain desires a long term and integrated approach. The seven factors considered in this article bring a good start for any organization to examine the maintenance of sustainability. This entrance could signal the creation of a process to unlock the value that can be brought about.


References

Kissflow. (2020) “Procurement Management Process’’ Retrieved from https://kissflow.com/procurement-process/ accessed  17/6/2020.

Chin Ting Boon, DPSM. (2019). “Five Crucial Factors for Implementing P2P System”. Retrieved from SIPMM: https://sipmm.edu.sg/five-crucial-factors-implementing-p2p-system/ accessed  18/6/2020.

Advertisements
Supply Chain Ads

WinkyLim, ADPMM. (2017). “Ensuring Sustainable Practices in Procurement for Effective Supply Management”. Retrieved from SIPMM: https://sipmm.edu.sg/ensuring-sustainable-practices-in-procurement-for-effective-supply-management/  accessed  18/6/2020.

Lynn Lai,GDSCM. (2017).“The 5 Critical Factors to be Considered for building a Sustainable Supply Chain”. Retrieved from SIPMM: https://sipmm.edu.sg/the-5-critical-factors-to-be-considered-for-building-a-sustainable-supply-chain/accessed  18/6/2020.

Oxford College of Procurement and Supply, (2020). “3 Factors That Make a Sustainable Procurement System’’ Retrieved from https://www.oxfordcollegeofprocurementandsupply.com/3-factors-that-make-a-sustainable-procurement-system/accessed  18/6/2020.

Interagency Procurement Working Group (IAPWG) (2012) “Sustainable Procurement’’ Retrieved from  https://www.ungm.org/Areas/Public/pph/ch04s05.html accessed  18/6/2020.

About the Author Chin Pei Sze (Angelene) has several years of experience in the field of procurement, specifically in ship supply sourcing and procurement tender. She is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Angelene completed Diploma in Procurement and Supply Management (DPSM) on June 2020 at SIPMM Institute.

Top