Sustainable procurement and future-proofing supply chains

Sustainability continues to be a hot topic in the news today, but the concept is not new to procurement and supply management professionals, says Paula Gildert.

The issue of sustainability in procurement is one that highlights much more than just the green agenda and has been around for as long as the profession itself.

Sustainable procurement reduces risk and gets your business the products and services it needs to function. That is just efficient procurement practice.

Add value for money and surety of supply and of course generating benefits for society and the environment and you have pretty much, the whole package.

There are four areas critical in sustainable procurement:

Waste
No organisation wants to waste money and valuable resources and good procurement professionals will keep this at the forefront of everyone's minds.

Environmental waste is also a consideration, as costs of disposal rise and keeping costs of production low and reducing wastage just makes good commercial sense.

Ethical trading and knowing ALL your suppliers
There is a growing realisation that understanding who all your suppliers are in every tier of your supply chain is a good way of picking up problems before they start.

Exploitative techniques by suppliers far removed from your core suppliers can have a seriously damaging effect on your brand and reputation, not to mention supply.

Having an ethical trading policy may also make you the business of choice for many customers where fair trade and good ethical practices are a commercial differentiator much valued.

Energy use
This will not be a surprise to anyone, but the world's natural resources are dwindling. With pressure from Asia and now Africa as developing countries gain traction on the world economic stage, we no longer have the luxury of unlimited resources.

Combined with ecological challenges, and climate change, new ways of thinking, and acting are needed. We still have to make best use of those remaining resources.

Sustainable procurement is all about 'future-proofing' supply chains. Whether the threat comes from environmental or man-made disaster, political unrest, changes in suppliers' circumstances or changes in legislation, keeping a close watch on potential issues will mitigate against any major impact.

That challenge can also come from soaring commodity prices, so those procurement professionals who use innovative and creative techniques to maintain sustainability and use procurement as part of the strategic goals for the business will be the winners.

Supply chains are a key component in organisational structure and in turn, the health of every economy in the world. Research conducted by the Chartered Institute of Purchasing & Supply (CIPS) in 2011 found that 55% of businesses had a sustainability policy.

One in five said their driver for the policy was to conserve natural resources, but there was also a whole range of other factors including business health. There is a clear final message here, which is become sustainable and stay in business.

Paula Gildert is the global head of development strategic sourcing at Novartis Pharmaceuticals


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