Becoming Environmentally Sustainable Through Supplier Management
Greg Holt - April 23rd, 2014
Earth Day was this week, which means there is a lot of media attention being paid to improving our planet and addressing the issues affecting it. But driving long-term sustainability strategies in our supply chains is something that many organizations are doing year round.
For procurement professionals, making sourcing decisions and selecting suppliers that support your organization's own sustainability goals can play a huge role in greening your entire supply chain. Advanced sourcing technologies help sourcing and supply chain teams gain a deeper knowledge of their suppliers by including sustainability information as part of a sourcing event, finding and evaluating suppliers that can help meet their own unique sustainability goals.
For example, if you are sourcing transportation (something easy for all of us to comprehend from a sustainability angle), you can evaluate your suppliers' fuel consumption and CO2/greenhouse gas emissions when selecting shipping services. With this information at hand, you can decide whether shifting some of your shipments from truck to rail (or from air to sea) can help cut down on your supply chain's carbon footprint while still meeting the demands of your supply chain.
Moving a level or two deeper, advanced sourcing approaches allow sourcing teams to collect information specific to individual truckload carriers to see what they are doing on their own to reduce fuel use and decrease emissions. Examining factors such as whether or not the company is using older trucks, wide single tires, aerodynamic additions to reduce drag, or new efficient engines, all of which impact the overall efficiency of the fleet. You might want to award business to carriers that provide best emissions ratings, even though it might mean you pay a little more per shipment, but it helps you meet the sustainability standards of your organization.
Technologies like Advanced Sourcing Optimizer can be used to evaluate these and other sustainability factors during the sourcing process. For example, ASO is used to source over $1 billion in packaging materials annually, where sustainable practices can have a significant impact. Say you are considering packaging options for a product and want to ensure it contains a certain percentage of recycled materials or is devoid of a particular chemical. ASO allows you to work with suppliers to identify alternate specifications for packaging materials or manufacturing processes. The amount of recycled materials used in the packaging, or conversely, the amount of waste material that eventually ends up in a landfill, can be evaluated based on each supplier's proposal and factored into your decisions.
These are two examples, but certainly not an exhaustive list. The opportunities are nearly endless, and can reflect your sustainability strategy across many factors. Take energy use as an example. With advanced sourcing, organizations can favor suppliers based on the type of power they use to fuel their manufacturing plants to create the materials you are purchasing, favoring suppliers with a higher percentage of power coming from renewable sources such as hydroelectric, solar, or wind over traditional fossil fuels.
Rather than paying attention to your sustainability mission once a year around this time, organizations should think of ways to extend that goal throughout the year. Sourcing materials, goods and services that help meet your company's unique sustainability goals is a perfect way to help meet that end.
How does your organization use procurement and sourcing solutions to meet your sustainability goals? Join the conversation on Twitter at @SciQuest.