Do you know that emissions from many of the end products account for 80% of the total carbon emissions? A majority of these emissions occur through the supply chain due to energy usage and industrial processes.
Incorporating value-driven sustainable practices into sourcing and procurement operations has never been more compelling. Securing a sustainable supply chain is fundamental to the future growth of business and achieving a positive impact.
Creating value through responsible sourcing in imminent
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Businesses have realised that by investing and integrating value-led sustainability into procurement processes can open up a plethora of opportunities for them. Businesses are committing to work only with suppliers that adhere to social and environmental standards
Enterprises face substantial risks without responsible sourcing, including unscrupulous suppliers, brand harm, losing out to “green” competitors, higher capital costs, supply shortages, legal concerns, and fines.
More and more businesses are turning towards responsible sourcing because they know that they can resolve these roadblocks with the right approach and framework.
Source: Ivalua Inc, 2021 – a study from Forrester
Time to optimize sourcing for sustainability
Now that the companies have realised the importance of responsible sourcing, the next step is to optimise their sourcing practices. The inclusion of social, ethical, and environmental performance elements into the supplier selection process is actual sustainable sourcing.
Here are some of the ways through which companies can include sustainability in their entire supply chain:
Develop closer ties with suppliers
Businesses should remain in close contact with their supply chain stakeholders and offer them longer contract lifecycles. This will encourage them to invest capital and innovation in generating sustainable solutions
Create a supplier code of conduct
Businesses must create a supplier code of conduct with a tracking system. It should clearly describe policies, expectations, rewards, and punishments, as well as baseline supplier performance indicators and audits.
Augment human expertise with technology
There are many business practices that can be leveraging new-age technologies. Automation eliminates the need for paper-based procurement including purchase orders, requisition forms, etc. It also helps in creating a demand-driven supply chain, allowing for better visibility into demand trends. This ensures that the supplier is not wasting any excessive production material that may lead to environmental damage
Identify and use data from external sources
This will help integrate sustainability practices into strategic sourcing processes. The best way to achieve this is to look at what competitors are doing. In addition, organisations can also reach out to industry associations and standardisation bodies.
Sustainable supply chain management is becoming increasingly important to our stakeholders, including customers and investors. Investing in a value-driven sustainable supply chain will help an organisation protect and create value while also helping it accomplish its ESG goals.