For years, procurement functions have worked hard to establish themselves as trusted advisors to their organisations. As many procurement teams are still on this journey, sustainability provides a new opportunity to drive closer internal stakeholder engagement.
With sustainability becoming a strategic priority for organisations, it is up to procurement to educate their business on the supply chain’s impact and how procurement can drive improvements that support the organisation’s sustainability ambitions. So how can sustainable procurement help position procurement teams as trusted advisors?
To become a trusted advisor, procurement needs to align with their organisation’s business strategy. This means understanding the business objectives and ensuring that procurement activities support those objectives.
For example, if a business’ sustainability strategy revolves around carbon and waste, procurement can focus on identifying suppliers who have the greatest carbon and waste impact in their operations, as well as collaborate with current suppliers to find more sustainable solutions such as waste recycling and reuse opportunities.
Procurement needs to leverage data and analytics to enable themselves to make informed recommendations to their stakeholders. These include trends on sustainability developments in the market, supply chain due diligence insights, and supplier performance.
For example, procurement can use scope 3 emissions data to identify which spend areas and suppliers should be prioritised for carbon reduction initiatives and how effective these carbon reduction efforts are. Similarly, insights from data can be used to help stakeholders understand the short and long term impacts of different materials used, which in turn determines the specifications for the tender.
A common pitfall procurement functions must overcome to effectively engage with its internal stakeholders is to stop speaking procurement lingo. Procurement should change the narrative from costs savings and procurement processes towards value and benefits. Moving from cost savings to maximising the value from the budget, and from RFIs and RFPs to finding suppliers who best align to the organisation’s values and can best deliver on the needs specified by the stakeholder.
As sustainability is of strategic value to all functions, procurement can use this to start speaking the language of the business.
For functions that are tasked with waste reduction, procurement can join the conversation by talking about reuse and recycling of packaging through suppliers and collaboration initiatives with suppliers to identify material alternatives. For processes and projects with a high volume of sensitive data processing, procurement can ensure suppliers have cyber security accreditation, such as ISO 27001, in place to mitigate risks.
To become a trusted advisor, procurement must show their involvement leads to strategic value. This means measuring value by tracking key performance indicators (KPIs), such as supplier sustainability performance and risk management, and communicating those KPIs to stakeholders.
For example, procurement can track what portion of their supplier base is diverse (Owned by individuals from traditionally excluded or under-represented groups), and what the impact of the business awarded to these organisations is. Similarly, electrification of fleet can measure value such as fuel costs saved and carbon emissions reduced, which should then be communicated internally.
Positioned between the organisation and the supplier market, procurement has a unique view that can be used to advise the organisation on the strategic value available in supplier markets. By focusing on sustainability value, procurement has an opportunity to more closely align to the strategic priorities of the business and advise on best next steps using data-driven decision-making.
However, to reach that level of ‘trusted advisor’, procurement must build trust. This requires the function to speak the language of the business, and importantly, to measure and communicate the value of these sustainable procurement efforts.
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