Oct
9
Companies can win on sustainability by engaging procurement
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Many companies adopt corporate responsibility policies that within them take accountability for both understanding and managing the environmental impact of their business. Increasing levels of legislation and consumer awareness have made this move a necessity. Many companies, however, find developing an appropriate strategy to deliver on the “mission statement” complex and challenging.
Indeed, whilst many companies are keen to devise and pursue a strategy many fail to understand the key drivers and focus significantly within the business, without fully understanding the relationship between a successful environmental policy and an organizations supply chain. This failure to engage, particularly with procurement, can be a major barrier in achieving corporate responsibility targets.
The relationship between supply chain and the environmental footprint of the business is considerable. The UK National Health Service for example recognize that 60 percent of the total NHS carbon footprint is generated by procurement. (18% comes from travel and a further 22% comes from energy usage). Failure to engage procurement will make achieving environmental targets challenging if not impossible.
Once the relationship between procurement and corporate responsibility targets are well understood the staff managing the activity from the commodity managers to the buyers themselves need to become equipped with the right tools, information and processes to help deliver.
Commonly existing strategies and processes need to be overhauled – it’s not just enough to inform the buyer to “buy green”. Sustainable procurement policies must take account of social and environmental considerations ensuring they get as much visibility as cost and quality in the sourcing process. Cost concerns can become a significant stumbling block. It’s a misnomer to think that sustainable procurement means more expensive procurement. There are savings to be had whether at the time of the initial buy or throughout the products life-cycle.(e.g. storage and disposal costs).
Once an organization has decided upon its core environmental policies its imperative that the transactional team are appropriately equipped – whilst not an exhaustive list consider the following requirements:
• Policies and guidelines – these should describe how procurement functions in order to meet objectives.
• Training in standards and legislation
• Appropriate Performance measurement – deployment of key performance indicators coupled to objectives to measure progress.
• Effective material and supplier evaluation tools which includes environmental requirements as part of the decision making
• Suitable supplier contracts and agreements that encompass sustainability
• Communication to the existing supply chain of business expectations
• Commodity information such as catalogues or material specifications that facilitate the procurement of appropriate alternatives.
As organizations look for enablers to help them meet their broader strategies, sustainable procurement will become a key weapon. Buying green however is more than a mindset and requires both organizational change and suitable tools and skills. Industry is well equipped – standards such as BS EN ISO 14000, coupled with government think tanks, legislation and an increasing number of industry associations are providing the framework upon which to deliver on the promise all that’s required for business is to act.
Oct
5
Over the past decade, the growth of the “green supply chain” has been extraordinary. Driven by both increasing awareness and legislation, ensuring sustainability and minimizing the environmental impact of the company has become an integral element in business decision-making and planning activities. Environmental impact has also appeared as a key differentiator in the marketplace underpinning many companies corporate responsibility programs.
One of the challenges that many organizations face is how to address environmental management planning for their particular business. Developing a cohesive plan can be complex – after all – the environmental impact of a business has many facets making it difficult to discern exactly what should be included in the plan and how it should be prioritized.
To assist in this process, many organizations are increasingly turning to the BS EN ISO 14000 standard. ISO 14000 is a comprehensive set of standards that businesses can use as a framework to establish, measure and systematically document the environmental management system for their businesses. Included within this set of standards is ISO 14001 which represents the most well known and widely used standard for implementing an environmental management system and one in which a company can be certified by a third party.
Whilst not a management system in its own right ISO14001 provides a framework that can be used by companies looking to establish suitable controls and processes. Underpinned by thorough analysis of “waste streams” (as opposed to value streams) and a Plan, Do, Check, Act structure companies can establish their objectives, monitor and measure the success and instigate continuous improvement activities to sustain activities and targets.
Benefits of ISO 4001:
The benefits of ISO 4001 are quite significant. Benefits include
• Legislative compliance
• Increased access to customers
• Improved risk management
• Potential to reduce insurance costs
• Cost reduction
• Demonstrating comitment to stakeholders.
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How ISO 4001 applies to the supply chain
There are various ways in which ISO 4000 and Environmental management can impact the supply chain – the two key areas are:
Direct implication on working practices
The most obvious impact caused establishing a set of environmental policies and procedures is on existing working practices. Whilst the environmental policy has to be formulated after careful analysis and examination of all aspects of the business (not just the supply chain) material supply and control can be significant contributors.
There are many environmental issues that are specific to the supply chain and others that are generic and apply to the company as a whole. The supply chain can be critical in terms of reducing the environmental impact of the business, with several areas being key contributors such as production processes and logistics/transportation, material storage and even administrative overhead impacting enablers such as energy usage recycling, packaging, outputs and so on.
Implementing the management plan may have direct consequences for existing supply chain processes, which will require careful consideration and re-engineering.
Utilizing ISO 4000 as a requirement when sourcing
Material sourcing and supplier selection can be key contributors to a companies environmental impact – Whilst using standards such as ISO 4000 as a criteria when selecting suppliers can help – it has maybe not yet reached the critical mass to make this workable – however in placing either ISO 4000 attainment or insisting on key environmental management policies being in place a requirement of contracts or long term agreements (LTA’s) buyers can have a direct role in delivering against environmental management plan.
The future
Environemental management is here to stay – supply chains must adapt and consider how they impact a business utilizing tools and techniques such as ISO 4001 to help deploy a framework on which to develop and sustain suitable policies and procedures.