The benefits of “common sense” sustainable sourcing

DEFRA defines sustainable procurement as "a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment".

Previous scepticism over the benefits of a sustainable sourcing has given way over recent years to an understanding and appreciation of the value procurement teams can add by adopting such an approach. I don’t always think the word “sustainability” helps in situations like this, being a relatively divisive term which is greeted by some with rolled eyes. In many ways however sustainable sourcing is the “common sense” approach to strategic purchasing.

Here is a sample of the wide spectrum of topics that are usually bracketed under the umbrella of sustainable sourcing:

• Overall security of supply
• Managing carbon and water footprints
• Efficient use of resources
• Right shoring and local sourcing programmes
• Ensuring socio-economic standards
•  Supporting the development of labour standards and human rights

The question is how, in encouraging procurement involvement in this space, organisations will begin to realise long term benefits? I think in addressing each of these topics it is possible to split the potential benefits into three distinct areas.

• Cost savings (where else to start!)
• Increased efficiency of procurement
• Optimised resource use (e.g. energy, water, chemicals)
• Lower price of raw materials
• Reduced logistics costs
• Increased savings through collaboration in supplier performance and relationship management
• Excise appropriate tax breaks e.g. capital and enhanced capital allowances
• Revenue protection and generation
• Increase the overall security and quality of the supply chain.
• Ensure continued product innovation and development – continuous improvement approach
• Reputational management is something that is going to become more important as supply chains become more transparent and the consumer more engaged.
• Potentially further market access. Licenses to operate may be based on certain conditions being understood or met.
• Access to funding and other revenue streams from government, donors, carbon credits etc. from adoption.
• Risk management
• Reduced operational risk
• Reduced foreign exchange risk

Adopting the common sense approach, and as such embracing sustainable procurement, is a way to further procurement’s value to an organisation whilst reducing risk and waste and improving efficiency and the total cost base. Only a short blog this week but hopefully next time I can go into a bit more depth when considering how to adopt a sustainable sourcing model.