20 Aug 2015 The case for future proofing the supply chain with sustainable procurement
It’s easy to label sustainable procurement as nothing more than a buzzword. But does it hold the key to mitigating risk for your company?
Sustainable sourcing is evolving into the most important function of supply chain management. And the impetus for this evolution is how sustainable sourcing grounds itself in the future-proofing of supply chains. Future-proofing supply chains means protecting your organization’s future performance against a multitude of potential problems. Whether the future involves the loss of access to key production ingredients or logistics providers, future-proofing attempts to mitigate potential dangers.
Trending in future-proofing supply chains is sustainable procurement.
Sustainable procurement has proven that it improves efficiency, effectiveness, and transparency for organizations. Sustainable sourcing not only improves employee and supplier relationships, it also improves an organization’s reputation among the community and its customers. Sustainable sourcing can dismantle poor waste disposal practices and reduce energy waste, which improves company spend management.
Of course, beyond the business case for sustainable sourcing, ecologically friendly procurement practices are necessary for maintaining our environment.
What benefits can sustainable sourcing provide?
Amongst the numerous benefits sustainable supply chain management (SSCM) can provide, the more important benefits include aligning with a green strategy and improving market competitiveness.
A green strategy involves reducing waste management costs, trading ethically to attract ethically-conscious customers and reducing resource waste.
Improving market competitiveness involves reducing procurement delays by adequately projecting future sourcing activities against potential environmental hazards, government regulations, a shift in customer attitudes towards environmental concerns, as well as changes in supplier relationships.
In fact, sustainable sourcing practices can enhance buyer-supplier relationships through increased transparency.
Why is e-procurement often considered the best step towards SSCM?
Consider this single piece of info: “One manual purchase order can cost a company as much as $150 to process, even if the purchase order was issued to buy a $25 part”.
The cost of issuing manual purchase orders adds up when one considers the time spent sending documents back and forth between approvers, buyers and receivers. E-procurement systems have become significantly more popular as a means of removing the tedious travel time of documents.
In fact, there are three significant ways that e-procurement improves the purchasing process.
- Goodbye paperwork: E-procurement systems eliminate paperwork by generating electronic purchase orders which can be immediately routed to the appropriate person.
- Commitment to vendors: E-procurement systems can be used as a means of compelling end users to only purchase from company-approved vendors.
- Spend visibility: Although spend visibility may sound like a generic buzzword, spend visibility is an important result of e-procurement systems. Spend visibility allows managers full control of their company and department spending.
The case for Eartheasy
Eartheasy was built on the philosophy that we need to protect our natural environment if we want to keep the things we love. Eartheasy is a go-to website that focuses on providing eco-friendly products, guides and articles to its visitors. Eartheasy is a case where sustainable sourcing and procurement became an important enough issue, prompting the founders decided to share their culture with their customers.
Sustainable procurement is incredibly important for the future success of an organization’s supply chain, but also for our environment and planet. The difficulties are not unheard of when considering green procurement strategies, however, the strategic advantage that one could attain can last well into the future.
And that’s what they mean when someone talks about future-proofing their supply chain.