We welcome another post by Alis Sindbjerg Hemmingsen from Responsible Procurement Excellence.
In the previous two blogs, I covered the need for responsible procurement and the impact it can have on your business. [Click here to read part 1 and part 2 of the series]
In this blog, I will talk about how Procurement can create an approach to Responsible Procurement which is actionable and which goes beyond compliance.
Typically the challenge for procurement is to gain insight into the more environmental part of managing Responsible Procurement. Usually they are familiar with the social and ethical agenda from working with the Code of Conduct or perhaps from having signed up with the Global Compact or other frameworks.
Best practices in Responsible Procurement:
- Risk avoidance and ethical buying behavior
Companies can protect themselves from potential supply chain disruptions or delays associated with suppliers human rights, labor, environmental and governmental practices by ensuring suppliers have effective approaches to risk mitigation and have an ethical buying behavior. Looking at the risks involved in the supplier base is a resource demanding exercise. But when the overview has been created it can help manage the business risks. Minimizing business disruption from an environmental, social and economic impact has an effect on the company bottom line. But it can also protect the company´s reputation and brand value.
- Life-cycle efficiency
Looking into the value streams, the products or simply the spend categories identifying the environmental costs and “hot spots” will likely drive down costs. Of course only if the potential is realized as well. Environmental areas could be: Energy, water, materials, garbage, transportation, emissions and biodiversity. Look at the entire life-cycle, do an environmental screening and execute the lowest hanging fruits immediately
- (Responsible) Procurement driven innovation
The role of procurement is fundamentally tied to the dynamics of the market place. In order to secure that all-important competitive edge it is vital that procurement teams up with suppliers across the supply base and becomes aligned with the strategic objectives of the enterprise.
Suppliers (and buyers) should be the ones driving sustainable business improvements, but procurement must also ensure the identification of innovative ideas from a range of sources. Value should be created through collaboration; not only externally but also internally. It is important to understand the needs of internal customers (within your organization or department) and spot untapped sources of value through improved connections within internal communities. Procurement can improve corporate performance in both unique and powerful ways when plugged into a wide array of internal communities.
The author Alis Sindbjerg Hemmingsen is a Responsible Procurement thought leader and owner of the company Responsible Procurement Excellence. They are specialized in helping companies around the world develop and integrate an actionable approach to Responsible Procurement. An actionable approach goes beyond compliance, has a positive effect on the reputation, cost and efficiency. Check them out at: www.responsibleprocurement.dk.
