Pro­cure­ment Trans­for­ma­tion – Sus­tain­able Pro­cure­ment Simplified

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: