Sustainability in procurement: innovation via the supply chain
Sustainability is no longer an added bonus, but something that customers expect as standard. Many companies are still looking for ways to establish a position for themselves as a sustainable player that is as comprehensive and long-term as possible. One thing is certain: Procurement plays a key role as an in-house driver of innovation – because the supply chain offers a whole number of approaches in terms of ecological, social and economic sustainability.
The topic of sustainability has long been a hygiene factor in most industries: no company can survive without addressing it. It affects all hierarchical levels and departments of a company – including procurement. In addition to the aim of acting and doing business in a more environmentally friendly and socially responsible manner, sustainability is often seen as a way for a company to set itself apart from its competitors and respond to customer demands.
Strategic role: procurement as a driving force for innovation
Procurement has a particularly important role to play when it comes to sustainable development. Due to its central role, procurement is often the linchpin for innovation and change in the company. When it comes to sustainability, the focus is primarily on the supply chain – and this puts the onus on procurement. But it is about a lot more than using savings to create added value. Purchasing can, and indeed has to, actively shape the company's sustainability profile by ensuring appropriate supply chain management throughout the company and by raising awareness of the issue among other departments.
What does sustainable procurement mean?
In order to firmly establish the topic of sustainability as a fundamental principle that applies throughout the company and to ensure that procurement engages in sustainable purchasing itself, it has to focus on sustainable supply chain management (SSCM), i.e. create a sustainable supply chain. Unlike conventional supply chain management, which focuses primarily on efficient processes and cost savings, the three key aspects of sustainability play a key role in SSCM: environmental sustainability, which refers to action taken with the environment in mind, social sustainability, which focuses on human rights and social aspects, and economic sustainability, which focuses on doing business with the other two aspects in mind. This means that, specifically, sustainability in the supply chain is about keeping an eye on the origin and price of the products, materials and services to be procured and making sure that any negative impact on the environment and society at large is kept to a minimum.
New Act to promote greater sustainability in the supply chain
This principle is also being pursued by the new German Act on Corporate Due Diligence in Supply Chains (Lieferkettensorgfaltspflichtgesetz), which will come into force in 2023. The Act subjects companies to an obligation to ensure that human rights and environmental standards are taken into account in their entire global supply chain. According to the Act, this includes not only internal company processes, but also direct suppliers. As a result, the Act on Corporate Due Diligence in Supply Chains not only underlines the responsibility that companies have to ensure greater environmental, social and economic sustainability, but also emphasizes the central role played by procurement in pursuing sustainable supply chain management.
Implementing sustainable procurement in concrete terms
But how exactly can companies and procurement be sustainable in their purchasing activities? In concrete terms, greater sustainability in procurement can be implemented primarily through guidelines and corresponding control mechanisms: codes of conduct define the requirements that have to be met on both sides – purchasing and suppliers. It is important for procurement not only to set out its expectations, but also to enter into open dialogue with suppliers, and for both sides to work together to identify solutions to any challenges that arise. Here, too, procurement plays a key role as a driver of innovation within the company – but sustainability should also always be driven by the management in order to establish it as a firm component of the corporate culture and day-to-day work in the long term. In order to achieve a more broad-based position across or even within industries, companies can also collaborate with other companies to learn from each other and keep a better eye on their supply chains overall.
Sustainable procurement with Wucato
In addition to the supply chain, other aspects of procurement also play an important role in making the company more sustainable, for example tools that a department uses for procurement: Digital procurement platforms like Wucato can help procurement to be sustainable in its purchasing activities. Take ecological aspects as an example: Wucato operates a carbon-neutral website – so customers that opt for the solution are opting for an ecologically sustainable platform. Wucato also places particular emphasis on transparent processes, which makes it easier for companies to control their own supply chain: when selecting suppliers and products, companies have access to important information on the digital procurement platform allowing them to make sustainable decisions. Last but not least, Wucato allows resources to be conserved thanks to efficient and needs-based processes, for example, by bundling orders to be shipped in a single package instead of sending a large number of small ones. Likewise, there are predefined ordering and approval processes that help save internal departmental resources and free up capacity to focus on other issues – like a sustainable supply chain.
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