by Alex Saric
Sustainability in Procurement – a growing business priority
Following the global climate protests that swept the world in 2019, sustainability rose to become a business priority. As a result, businesses have become more conscious about how they can reduce their impact on the environment.
However, COVID-19 has drastically altered business priorities. In our latest study of UK-based procurement, supply chain and finance professionals, we found that 60% of UK businesses have decreased investment in sustainability initiatives as a result of the coronavirus outbreak. This is understandable, with many focusing on keeping the lights on. Yet it’s important that in the coming months and years, businesses return their focus to improving sustainability and contributing to global efforts to reduce our impact on the environment.
Lack of visibility hindering sustainability progress
The role that procurement takes here is vital, particularly when it comes to collaborating with the wider business and suppliers to address environmental concerns. But to collaborate effectively, it’s important that businesses have visibility into the supply chain and their suppliers. Despite this, our research found that an inability to gain a complete picture of all suppliers is problematic for many. Three-in-ten (30%) reported a lack of visibility into supplier risk, 28% have a lack of visibility into tier 2/3 suppliers, while 20% struggle to gain visibility into tier 1 suppliers.
Businesses today face multiple challenges in gathering the data they need to collaborate with suppliers and implement sustainable procurement initiatives. Over a third (39%) say that the biggest challenge is poor data quality, leaving them unable to draw on reliable data from which they can evaluate sustainability. The UK businesses surveyed also say they encounter difficulties when collaborating with suppliers (38%), but given the same number of businesses cite an organisational prioritisation on cost (38%) as a challenge, this is unsurprising. Being able to collaborate with suppliers on sustainability initiatives is vital for success but focusing on cost means these conversations fall by the wayside.
To address environmental concerns, businesses must be seen to be taking action, looking to build more sustainable supply chains and ensuring high standards are being applied by suppliers. UK businesses understand this can have a positive impact, with 87% saying making their supply chains greener can become a key competitive advantage.
Procurement needs to get smarter
COVID-19 will be a tipping point for a sustainability revolution and procurement is vital to driving environmental initiatives through collaboration with business stakeholders and suppliers. But to do this, a smarter approach to procurement is needed, one that utilizes eSourcing and spend management software to provide businesses with a holistic view of suppliers and their sustainability practices. This provides a solid data foundation from which businesses can assess their environmental impact in real time.
Armed with this visibility businesses can set about ensuring sustainability becomes an integral part of their culture and creates a dialogue with suppliers to identify new opportunities for innovation that will drive green initiatives and processes. Ultimately, making procurement smarter will enable businesses to react to and proactively address environmental concerns in a post-COVID-19 world.
Alex has spent over 15 years of his career evangelizing Spend Management, shaping its evolution and working closely with hundreds of customers to support their Digital Transformation journeys. As CMO at Ivalua, Alex leads overall marketing strategy and thought leadership programs. Alex also spent 12 years at Ariba, first building and running the spend analytics business as General Manager. He then built and led Ariba’s international marketing team until successful acquisition by SAP, transitioning to lead business network marketing globally. Earlier, Alex was a founding member of Zeborg (acquired by Emptoris)where he developed vertical Procurement applications. He began his career in the U.S. Cavalry, leading tank and scout platoons through 2 combat deployments. Alex holds a B.S. in Economics from the U.S. Military Academy at West Point and an international M.B.A. from INSEAD.
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