Main Considerations for Sustainable Procurement

Written by Huang Cheng Xiang, DPSM

by Huang Cheng Xiang, DPSM

Sustainability is one of the most important trends of our time that is set to dominate business discussions and decisions making for a long-term basis. From this point of view, a new competitive tool called sustainability emerged. It merges with important factors such as quality, cost, reliability, just in time, with flexibility and innovation for building competitive businesses. For all business organizations in the public and private sectors worldwide, the acceptance of sustainability takes time as it depends on their willingness.

Understanding the Principles of Sustainability

As we enter a new era, it is vitally important that procurement leaders understand what sustainable procurement means for both the public and private sectors. Companies can shift their methods of procurement to ensure that they are operating profitably. Sustainable procurement processes are to determine the outcome effects of procurement action in terms of good benefits for both environmentally and socially. It incorporates additional stages of monitoring and assessment. Hence, new sustainable methods are carefully inbuilt into various stages of the procurement process.

Factors for Sustainability Issues

Several macro factors are leaning companies towards sustainable procurement. Some of these factors include the following:

  • Health of our ecosystems.

We need to protect the earth natural resources like water, air and land from pollution for the sake of future economic and social needs.

  • Sustainable decision making.

Companies that are involved in making their economic decisions should plan for their future generations and not considering for current situation. For example, if present pollution continues to rise at an exorbitant rate. Thus, it poses a great danger to our future generations.

  • Renewable resources.

To research into natural energy sources like solar and wind power so that we do not need to rely on non-renewable resources.

  • To stop global warming.

We need to plan carefully for policies that will not worsen the current planet condition such as preventing  water shortages, extreme weather events and excess temperature for future generations. These factors could make living in all parts of the world very tough or not possible at all.

  • To protect species from extinction and ecological destruction.

Since medicines require natural elements within a specific plant species. Thus, it is of great importance to protect all creatures and water species from extinction.

  • Our natural resources are very valuable too

We must not just rely only on monetary value but also on our natural resources like land which has bountiful rain forests and oceans which inhibit all sea creatures.

Planning Considerations for Sustainability

An organization with sustainable procurement needs to be decisive and plan on how to collaborate with suppliers on critical sustainable issues. It also needs to have carefully planned strategies for the sustainable procurement team to act based on daily events or circumstances. Like meetings with suppliers regularly with constant updating on matters relating to sustainability issues. At the same time by educating them, monitoring their performances and building suppliers’ relationship and gaining trust. This is also to minimise misunderstandings or conflicts. It is important for an organisation to governance fairly in relating to the suppliers, consumers, surrounding environment and the community on sustainability issues. Practically such an organisation involvement shows its responsibility towards everyone with their fair sustainable practice, goof decisions making and well-organized activities.

Managing Risks in Sustainable Procurement

Managing sustainable procurement risks can be extremely challenging. Procurements need to achieve full supply chain visibility and get first-hand information on compliance risks or supplier distress. In the global supply chain, it is important to minimise any deficiency in supplier monitoring, assessment and then identification. Moreover, the size and complexity of these supply chains make it very difficult for organizations to target their audit, risk management and supplier development resources effectively.

Corporate Goals for Sustainable Procurement

The objectives of sustainable procurement are to consider for long term supply without disruption since the current world is facing shortages of food, water, scarcity of land, etc., and air pollution. Which means where do future supplies come from if shortages occurred? Hence, we should not concentrate only on a few suppliers but need to expand into global suppliers’ markets. Thus, the responsible organisation with sustainable procurement practice needs to consider their continuous supply via global suppliers and at a reasonable cost with timely delivery.

Sustainability Concept for Green Procurement

Nowadays, all Governments or most countries are doing their utmost best to clean up those polluted environment to prevent further degradation of our environment.This is to remediate the damage caused by the increasingly industrialized society. It also includes the plastic pollution in the oceans and toxic waste in rivers.Thus, sustainability concepts of green procurement will lead to improving food safety and its service quality for all human welfare.

  • All responsible organizations need to cooperate actively on sustainability issues so as to save the world.
  • Companies that invest in sustainability efforts will gain an advantage in reputation which makes them more selective for customers in pricing, technology, quality and the environmental impact of their product, service or contract.
  • Current customers or buyers are very selective for suppliers in environmentally friendly products and services which the world requires.
  • Since then sustainable procurement has been introduced to everyone and all businesses as it has become compulsory as a key element to integrate with business strategy and decision making for its competitive advantages and sustainable development.
  • An experienced procurement leader that adopts sustainable procurement would contribute to improved brand reputation as consumers are largely driving corporate demand for sustainability and quality produced products. Thus, it undoubtedly gives a positive impact on company revenue growth and protecting its brand reputation on a long term basis.
  • Yearly, bi-yearly or quarterly evaluation of suppliers’ performances should benchmark with predetermined Key Performance Indicator (KPIs) throughout the contract life cycle.
  • As supplier relationship management is to build a close relationship with all suppliers they are invited to give feedback to promote understanding, conducting training courses (if necessary) to educate them on latest best practice and knowledge.

Quality Certification Standard for Sustainable Procurement

An international standard that has specific requirements for an effective environmental management system (EMS). It is part of the ISO 14001 family of standards on environmental management. An organization can certify to integrate it with other management systems standards, such as ISO 9001 which can further assist in accomplishing organizational goals. With the ISO certification, these organizations project to the world that they are doing good for the overall environment and society. They get to increase their brand image and reputation which might lead to existing customers’ strong recommendation to other potential businesses since there is growing market for sustainable goods and services. Hence, all companies should have cooperative action to drive the change for the sake of all living beings and their benefits. Thus, those companies that inbuilt sustainability into their core businesses would be a success in many factors such as profitability, growth and employee retention.It might even achieve a worldwide award or recognition for contributing to helping to save our planet.

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Conclusion

Based on the current situation, most companies are striving towards incorporating sustainability into their core businesses to save and protect our planet for the sake of everyone else and their future generations due to drastic climatic changes. On a long-term basis, those companies that are practicing sustainability in all aspects will help to safeguard their companies’ reputation, costs saving and gain advantages.


References

American Society for Quality. (2020). “ISO 14001 in Sustainable Procurement” Retrieved from https://asq.org/quality-resources/iso-14001, accessed 15/09/2020.

Environmental Protection Department, HK. (2020). “Sustainability Concepts of Green Procurement”. Retrieved from https://www.epd.gov.hk/epd/english/how_help/green_procure/green_procure.html, accessed 15/09/2020.

Mickie FoongMee Keat, PDPM. (2019).“Key Considerations for Sustainable Procurement”. Retrieved from SIPMM: https://sipmm.edu.sg/key-considerations-sustainable-procurement,accessed 18/09/2020.

RMIT. (2017). “The Four Pillars of Sustainability”. Retrieved from https://www.futurelearn.com/courses/sustainable-business/0/steps/78337, accessed 19/09/2020.

Wee Poh Ling, DPSM. (2020). “Sustainable Procurement for Green Building”. Retrieved from SIPMM: https://sipmm.edu.sg/sustainable-procurement-for-green-building, accessed 18/09/2020.

About the Author: Huang Cheng Xiang has substantive years of experience in the F&B industry, specifically in the functions of procurement and warehousing. She holds the Executive Certificate in Purchasing Management (ECPM), and is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Cheng Xiang completed the Diploma in Procurement and Supply Management (DPSM) on September 2020 at SIPMM Institute.

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