How Sustainable Procurement Leaders are Delivering Results Today

Sustainability: once a nice-to-have, now a must-have for many, with customers expecting it, governments requiring it and our world needing it.

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While many organisations have taken baby steps, few have really driven meaningful improvements in the sustainability of their supply chains. As leaders look to accelerate results, they should look to the pioneers who have learned much from their efforts.

These leaders offer lessons in not just how to improve sustainability, but also how to do so while advancing other objectives as well. 

Sustainability need not be achieved at the expense of cost, risk or other top priorities, with the right approach. In fact, the new study by Procurious, sponsored by Ivalua, found that companies with advanced sustainable procurement and supply chain programs report experiencing greater ROI across the board, including costs, sales, brand perception, supplier relationships, innovation and more.

What does the study actually tell us?

The study also sheds light on what organisations with advanced sustainability programs are doing right, and where we all need to still improve. So, what do they do better than the rest?

1. Fight the internal battles

Supporting the notion that everything starts with people, 97% of respondents faced internal challenges, yet more advanced organisations have overcome them.

So, what were some of the key hurdles?

• budget constraints 
• a lack of expertise or processes 
• enabling tech
• procurement teams missing a sense of urgency. 

Procurement leaders must make it clear that to deliver meaningful results, talk must be backed with investments in systems and people. Otherwise, frustration is likely to be the primary result.

2. Collaborate to win

By far, the most effective strategy in improving sustainability has been direct collaboration with suppliers to drive continuous improvement. Supplier selection, including placing greater weight on sustainability factors, is the most common strategy for less advanced organisations, but not for those driving the greatest results. For them, working with existing suppliers is what delivers the greatest results. 

The key takeaway?

• 44% of advanced organisations actively collaborate with over 75% of their total suppliers to improve sustainability (and a large majority with over half of suppliers). 

This is logical, given that every organisation has a long way to go when it comes to sustainability.

3. The facts stack up with previous studies

Compare the study now with earlier research by Forrester Consulting on supplier collaboration found the following factors critical to success:

• The right incentives: Adjusting procurement KPIs to incentivise collaboration was critical and a simple, effective strategy. It impacts both supplier selection and daily engagement.

• Enabling technology: Technology is essential to support efficient, effective collaborations with more suppliers. Critical requirements of the technology included that it supported effective, secure information sharing among suppliers and internal stakeholders, and that enabled planning through action and improvement plans. 

Did you know … ?

• Information sharing: This is a key gap in many organisations’ technology footprints. Those that took a ‘best-of-breed’ approach, or leveraged suites cobbled together in silos or via acquisition, lack these capabilities because collaboration does not start and end with one step of the Source-to-Pay process. True platforms tend to enable far better collaboration.

• Trust but monitor: Collaboration is key, but progress must be tracked. Advanced organisations leverage technology to actively monitor sustainability performance and risk, and course correct as needed, creating a virtuous cycle of collaboration and monitoring. This involves requiring ongoing disclosures from suppliers and leveraging third party data for an objective view.

4. Sub-tier suppliers are still being overlooked

While a subset of today’s organisations are performing far above their peers when it comes to sustainability, significant room to improve remains for all. One weakness stands out head and shoulders above the rest – sub-tier suppliers. 

The key takeaway?

• The majority of organisations are monitoring the sustainability performance of less than 5% of their sub-tier suppliers. Yet this poor showing represents a significant opportunity to improve.

Visibility is the top challenge, but there are now ways to improve it. Spend management technology can support supplier reporting of sub-tier suppliers. By enabling suppliers to provide that information, organisations can then match it with third party data to assess performance and risk deep in the supply chain. In doing so, they can better identify areas to improve and support their suppliers with information to drive change.

What have we learned?

During the Covid-19 pandemic, procurement teams rose to the challenge for the benefit of their organisations and society. To tackle climate change and other challenges related to sustainability, we need procurement to rise up again.

With the right tools, you can succeed. As we consider our priorities, recall the words of author Robert Swan – “the greatest threat to our planet is the belief that someone else will save it.”

Procurious’ 2021 survey and report with iValua of more than 470 professionals around the globe, showed procurement and supply chain leaders with advanced programs are more than twice as likely to report an increase in sales alongside improved product and service quality. 

That’s why this year’s Big Ideas Summit Chicago is focused on sustainability. 

Like all our Big Ideas Summits, this program shines with thought leaders and market disruptors:

• Is your carbon footprint BS? How to save the planet, one footprint at a time | Jenk Oz, the voice of Generation Z
• Calm your climate anxiety. Convert your worry into a call to action | Clover Hogan, climate activist and researcher
• Have you made the pledge? Empower your procurement team to benefit people, save the planet, and boost your profit | Thomas Udesen from Bayer
• Are you the “complete package”? Green packaging is the new black | Sarah Scudder from Real Sourcing Network
• It’s categorical. How to divide and conquer with sustainable procurement | Doug Van Wingerden from SpendHQ
• Don’t get future shock. How to future-proof your procurement practices into the next decade | John Evans at ProcureAbility

We will empower you to lead the charge to establish greener supply chains and sustainable procurement processes.

Register now to be part of this essential conversation and learn about how you can help drive change that will benefit your business, the environment, and our society.