Sustainability and responsibility play a key role in navigating today’s ”new normal”. These important themes form the core of Islet and are one of the most important drivers of our operations. After all, sustainability is actions.
Across industries, sustainability and responsibility have become huge trends in the past years. When your business practices are sustainable, you’re not only participating in building a brighter future, but also responding to the market requirements. Consumers and investors no longer accept specious corporate commitment, in some cases known as ”greenwashing”. Companies are expected to take real action and report on the results.
Ultimately, the responsibility for ensuring and driving company responsibility and sustainability is with the executive board, and out of all areas of operation, procurement is the one of the most impactful avenues for sustainable business practices. Procurement’s areas of responsiblity reach almost every part of the supply chain. From supplier qualification, reward systems and performance evaluation to guidelines and policies on ensuring supplier diversity and development, the leaders of procurement hold the power to decide who to buy from, and how and what to buy. This includes evaluating wether it’s necessary to further diversify or broaden the supply chain, deciding on how much is purchased locally and choosing to cooperate with innovative and diverse partners.
Main challenges of sustainable procurement
It’s typical for procurement teams to operate with traditional ways of working, in a rather slow-pace and reactive manner. An example of this kind of way of working is manual scoring and evaluation of risks that surely takes time, is susceptible to errors and ignores some market signals. Another challenge exists with do-it-yourself solutions that may solve problems on the short term, but can actually cause major risks down the line by bypassing certain processes and decreasing visibility. Supplier data is often scattered and information is ”stored” in i.e. documents and emails, making it hard to access and not up to date, resulting in even more difficulties in risk evaluation.
Another very obvious issue is the utilization of high risk suppliers. Your business is only as sustainable as the business of your supplier. It’s one thing to recognize the need to monitor and measure certain sustainability factors, but without a universal benchmark for sustainability metrics, some respectable goals can suddenly turn out impossible to reach. In some organizations, additional issues lie with heavy and time-consuming bureaucratic processes, that only hinder development, supplier qualification and supplier onboarding.
Together we can make the world a better place
The current state of the world has brought to surface how fragile our supply chains actually are. Procurement leaders have been given a unique opportunity to respond to crisis’ and build sustainable and strong supply chains that fullfill both the customer’s as well as the employee’s needs.
So how do we go about building a sustainable supply chain? Firstly, your organization must observe and consider the social impact of the suppliers you utilize and cooperate with, to ensure their commitment and compliance to socially sustainable business practices. To achieve this, your organization should deal with audited suppliers from a global community.
Another central aspect to a sustainable supply chain is it’s diversity. With SAP Ariba procurement solutions your organization cooperate with and source from a diverse network of suppliers, including i.e. minority-owned and environmentally certified suppliers.
One cannot discuss sustainable supply chain without considering climate change, that has and continues to cause disruptions. When the supply chain is managed in an integrated solution, the effects of disruptions can be forecasted and minimized in accordance with your organizations sustainability goals and policies. In practice, your organization can lessen your carbon footprint through market signal based, close and transparent cooperation with your suppliers. Keep less buffer stock and minimize excess transportation of goods, through joint warehouse planning with your suppliers.
How can SAP Ariba support sustainable procurement?
Although the topic of sustainability is quite complex, the answer is rather simple. SAP Ariba allows your organization to add visibility and traceability to procurement. When the necessary, valid and up-to-date data is readily available, procurement teams and leaders can make informed procurement decisions and operate in accordance with the values of responsilbity and sustainability. Additionally, your organization can empower and encourage other market participants to operate more sustainably by prioritizing sustanable suppliers in your own procurement. With the SAP Ariba solution, procurement teams can turn sustainability challenges to opportunities, strengthen the brand, and answer to their customer’s and stakeholder’s requirements.
Check out our procurement solutions and services offering here.
Turn your company’s course towards more sustainable supply chains and contact us:
Jenni Lonka
CBO, Sourcing and Spend Management, Isletter
jenni.lonka@isletgroup.fi
+358 40 567 5037