Nov
1
Key differences in businesses that implement green purchasing
Filed Under Blog | Comments Off on Key differences in businesses that implement green purchasing
Corporate responsibility has recently garnered much interest amongst consumers. Of particular interest are strategies that focus on the environment and sustainability aiming at reductions in the environmental footprint of the corporation. As a result of this, the supply chain world has seen significant development of procurement strategies that support corresponding corporate goals.
However not all companies are focusing on sustainability and green buying. Does that matter? And what is the relevancy of non participation for those that work in those organizations supply chain teams.
Pressures behind corporate responsibility.
Firstly lets take a look at what drives corporate responsibility. It can be driven for a variety of reasons for example as a result of
• Philanthropy/Ethics
• Legislative
• Customer driven
• Shareholder driven
• Employee driven
Where there is not sufficient pressure in one of these (or other) areas to drive change or where there are more prominent pressures and priorities, focus on corporate responsibility or sustainability can be minimal (there may be a mission statement but little corresponding action). Where there is a lack of strategy there is likely to be minimal drive for change on the supply chain functions and in particular those of procurement.
But what are the key differences? For those companies that have adopted corporate responsibility strategies and sustainability targets they are likely to have developed
• Key targets to be achieved (i.e. CO2 reductions, recycling rates)
• Have key projects underway
• Have developed policies and processes
• Have measures in place to monitor success
• Have people in the organization who have responsibility for delivering the strategy
Buying is buying isn’t it?
Sustainability doesn’t necessarily turn procurement on its head. The key buying stages typically remain largely unchanged i.e.
• Identify the need
• Source a supplier
• Establish a contract/place an order
• Receive the goods
• Pay the supplier
However sustainability does bring with it changes on selection criteria at key stages. For example product specifications and supplier sourcing processes will place significant scrutiny and weighting on factors other than the typical Cost Quality and Delivery (QCD). Where sustainability targets exist commodity managers will need to place significant focus on
Total Life costs (as opposed to initial acquisition cost)
Establishing rules and policies?
Spotlighting suitable products (eg recyclable paper)?
Sourcing alternatives
Working closely with the end users to review requirements in line with sustainability criteria
Benefit measurement
Sustainable procurement requires closer attention to procuring against the corporate policy and rules rather than a particular focus on just cost and/or quality.
With greater significance being placed on green procurement there are understandably a greater number of roles becoming available that have an appreciation of the concept. It’s unlikely that an absence of sustainability on your resume will cause your career any detrimental effects but its probably a safe bet that it wouldn’t do it any harm to have them on it either.
Influencing your organization
Of course just because your company might not have a strategy doesn’t stop you from influencing your organization and suggesting it- there are many online tools you can use to get you started. Indeed of particular importance is the ability to use sustainability to facilitate cost reduction (check out how Indiana University saved money through CO2 reduction as an example).
Sustainability is hear to stay – sure some markets may be sheltered from this for a time but its likely that all markets will have to adopt sustainability practices to an extent at some stage in the future so now is as good a time as any to think about how your businesses will adapt.
Nov
1
Green buying strategies – saving costs and saving the planet
Filed Under Blog | Comments Off on Green buying strategies – saving costs and saving the planet
Whilst standard procurement activity attempts to match the needs for materials and services against success criteria such as cost, quality and lead time, businesses are finding increasing pressure from internal and external stakeholders to incorporate sustainability or green buying requirements into their decision making. Sustainability encompasses, in addition to standard QCD criteria, benefits that not only meet the needs of the organization but broader society by reducing the short and long term impacts to the organizations environmental footprint.
Increased awareness surrounding issues such as climate change, energy usage and ethics has meant that many companies have implemented corporate responsibility strategies that encourage green purchasing and a strategic move towards sustainability. Typically this will result in organizations reviewing commodities (for example paper, furniture, office equipment) and implementing structured processes ensuring procurement practices reflect corporate targets and that sourcing and products meet sustainable selection criteria. Importantly organizations are discovering that implementing sustainability projects does not just achieve environmental objectives but can have cost saving consequences too.
For example, Indiana state university launched a project that targeted reducing CO2 emissions from poor energy usage. Through utilizing energy management software within computer operating systems PC’s were put into deep sleep mode when not in use. This can dramatically reduce power consumption (and resultant CO2) and save energy costs for each machine that’s in use. So for example of you can save upto $25 dollars per year, and you have 1000 computers – that’s $25,000 in savings
Change can be difficult – companies need to set targets and change mindsets and processes. With clear and understandable objectives procurement teams can ably support the activity and can help make green purchasing become a habit within the organization.
This can be achieved in a variety of ways for example:
• Providing information
• Establishing rules and policies
• Promoting through life costs rather than just initial acquisition costs
• Spotlighting suitable products (eg recyclable paper)
• Sourcing alternatives
• Working closely with the end users to review requirements in line with sustainability criteria
• Benefit measurement
In order to promote sustainability especially if your organization is decentralized communication is key in both establishing and setting the message and in following it up to ensure that there is little or no maverick activity – consider instruction leaflets, briefings, and policies and regular reviews on progress against targets.
Understanding the financial impact can be a significant barrier –changes must come in that products must not be purely viewed by their initial acquisition cost but in their total cost of ownership (e.g. procurement, storage and disposal.)
Summary
Sustainability and green buying has shown garnered increasing importance within the supply chain community – it is rare to find corporate responsibility targets that do not include some form of sustainable procurement criteria. Supply Chain must be ready to support these in the form of communication, policies and in execution. Organizations should not forget that cost savings and sustainability can go hand in hand. Finally sustainability is about change and as in all change communication about the strategy and its impact is key.