This summer, Spend Matters is focusing on ESG, and particularly sustainability in the procurement context, as a discussion topic with the industry, with vendors, buyers and suppliers. This will take the shape of in-depth analyst-written PRO articles, podcasts with procurement professionals, panel discussions and more — all accessible from the Spend Matters site. Why? Because we think it’s time to take a look at the bigger picture, from different angles.
To discover what sustainability means; what ROI can be expected from a sustainability focus; what the tech landscape looks like and why we need ESG-enabled technology; the implications for e-procurement and how procurement can influence the ESG agenda, read our PRO series here.
As our technology analyst Bertrand Maltaverne puts it in that article and in the wake of the failings exposed by the Covid turbulence:
“Many organizations are also victims of a self-inflicted injury that jeopardized their capacity to operate during the crisis … However, it seems like Covid will be the wakeup call that the supply chain world was waiting for. As a reaction to the events of the last months, the realization that organizations need better supply assurance (and that the Procurement function is critical in achieving this) spreads among organizations and management boards. This shift in priorities and mindset is an opportunity to go beyond ensuring business continuity. It is in fact a chance for building more antifragile, and more sustainable supply chains.”
To accompany our broader look at ESG in practice, this short series captures individual views on sustainability — we’ve posed three questions to a cross section of procurement and supply chain practitioners from the worlds of consultancy, specialist organizations and forums, FMCG, retail, oil & gas, tech and so on, to get a top-level understanding of what being sustainable really means to them.
We hope this will reap a set of interesting and useful answers for procurement software vendors to take note of, and for other practitioners to consider.
In an ideal world …
How would you ensure in your organization that ‘sustainability and responsibility’ is not just a tick-box exercise?
“Corporate profits have become inextricably linked to the health of our planet and the good of society,” Gottesman said. “A company’s performance increasingly weighs not just the financial metrics but the extent its business practices help or hinder society. Progress against sustainability goals is increasingly being self-reported and disclosed to third parties (e.g., RE100, CDP).
“All of this should be core to everything a company does, but that starts with embedding responsibility and sustainability into the highest-level strategy, core values and measuring progress at every level. As the world looks beyond the current COVID-19 pandemic, the need for more resilient and sustainable supply chains heightens the focus of developing circular economy practices across direct and indirect purchasing.
“Companies that pay more than lip service will also do better financially. It’s a virtuous cycle. The more sustainable we are the more others want to work with us.”
What would help you ’embed’ sustainability and responsible practices/thinking into procurement?
“Beyond prioritizing sustainability within every supplier network the procurement function touches, CPOs must create a systematic framework to reach net zero emissions, along with reporting systems that harmonize cross-category needs and deliver a ‘single source of truth’ across many disparate data elements,” Gottesman said.
“This all starts with fueling decision-making with better data. Without timely insights, a company will struggle with weighing the impact of supplier choices; for example, as it relates to consumption patterns or confirming a supplier follows responsible practices.
“Being data-driven also enables a company to identify the best levers and opportunities for improving responsibility (e.g., reduce emissions, supplier transparency). Understanding this ‘heat map’ helps an organization put focus against the greatest area of impact. Every organization could be different — while unlikely a factor for logistics providers, such as trucking or air freight, a manufacturing company could drive a lot of its scope through emissions.
“Based on this same heat map, procurement managers can also work with key suppliers to drive co-innovation to address the greatest pain points and develop solution to forge circularity. For example, a CPG company forgoing big plastic bottles in favor of a more condensed solution. Fitting more items in one box also reduces the amount of boxes and the trucks we have on the road.”
If you could have one wish from procurement tech/software vendors (to help with your sustainability goals/supply chain visibility/operations/measurement) what would that be?
“With CPOs increasingly measured on sustainability, they’re paying even more attention to the technology that helps them drive it,” Gottesman said. “As CPOs need to understand the impact of supplier choices, emerging tech vendors that offer comprehensive sustainability performance data for the market (across thousands of companies) will make it easier for CPOs to factor that into supplier decision-making. Likewise, the software vendors that make measurement easier by tracking the impact being made as part of the existing capabilities stand to gain a big advantage in the market.”
Many thanks to Chad Gottesman and Accenture. Our analysts will take an aggregated look at all of the responses in the coming weeks and give their take on the common themes that have emerged. Look out for the other voices in the following weeks as we hear from the people who are “doing” sustainability.
If you are involved in sustainability in procurement for your organization, feel free to comment below or submit your own answers to email@example.com