When it comes to improving sustainability and optimizing operations, vendor management consultancy Vendor Centric says procurement is one of the first places to focus on. After all, it says, “the supply chain not only accounts for most costs and sources of inefficiency, but produces more emissions than internal operations typically do.”
Here are five strategies that all procurement departments can use to help their organizations operate more sustainably right now, and well into the future:
1. Identify Key Sustainability Goals
Knowing the outcomes you want to achieve is the first step in crafting sustainable development goals for your organization. “Take time to interface with the various stakeholders and departments involved in this process, from the executive team and finance department to legal and manufacturing,” writes Allison Reich in Sustainable Procurement: From Fad to Business Imperative. She highlights these common goals organizations look to achieve when implementing sustainability:
- Reducing waste in internal manufacturing processes
- Reducing water usage and impact
- Minimizing carbon footprint or emissions
- Increasing vendor diversity and equity
- Increasing use of fair market suppliers and products
2. Assess Existing Supplier Pool
Before “jumping ship” for more efficient and eco-friendly partners, evaluate your existing setup. For example, it may be better to swap merely one or two suppliers at a time, starting small. “Besides, the teams you already work with may have green initiatives in place or programs that are actively developing,” Vendor Centric points out. “It’s always a good idea to communicate your plans for improved sustainability, even just to see if anyone else is onboard.”
3. Consider the End-to-End Supply Chain
Procurement professionals should not only think and act sustainably by minimizing environmental impacts, but they should also take a broader view of safe and ethical labor practices throughout the supply chain. “The semiconductor industry is an energy-intensive segment that has a substantial environmental footprint,” says Fujiko Yamaguchi, VP, investor relations and sustainability promotion at Renesas Electronics Corporation. “By operating sustainably through procurement practices, companies can reduce greenhouse gas emissions (GHGs), minimize waste and conserve resources.”
4. Think Beyond Scope 1 and 2 Emissions
While many companies are on track to achieving Scope 1 and 2 goals when it comes to GHG emissions control, achieving targets for Scope 3 can be more challenging. Scope 1 emissions come directly from sources that are under the company’s ownership or control, while Scope 2 emissions come from the electricity, steam, heating or cooling that the company procures.
“Scope 3 involves indirect GHG emissions encompassing the entire value chain, including the extraction of raw materials, production and distribution,” Yamaguchi says. “In order to manage and reduce Scope 3 emissions, [organizations] must systematically address their environmental impact and implement sustainable practices throughout the value chain.”
5. Measure and Refine
Sustainability requires long-term maintenance to be successful and ensure the continued strength of your sustainability partners. By regularly measuring and refining their sustainability goals, procurement professionals (and their organizations) will know whether or not they’re making progress and meeting the needs of their stakeholders. “Once your first iteration of the program is in place, commit to regular vendor lifecycle reviews to ensure your vendors meet your sustainability and performance benchmark,” Reich advises. “Conduct internal audits to ensure your brand is meeting its sustainability goals.”
