With increasing pressure on companies by various regulatory agencies, it is time companies proactively work to create sustainable supply chains.
Climate change impacts everything around us, which has in turn led to the focus on sustainable solutions in every aspect – social, commercial, and industrial. Global trade, which includes sourcing and procurement, is no exception in this pursuit of sustainability. Manufacturing industries are one of the major contributors to climate change, global warming, increasing levels of air, water, or noise pollution, and the destruction of wildlife and indigenous communities. Moreover, unethical practices like child labor, and human rights violations should also be addressed when considering sustainable practices. The selection criteria for sustainable sourcing practices involve considering the manufacturer’s compliance to environmental standards and social policies rather than only focusing on lower costs while forming supply chains. To that extent, sustainable procurement is today part of strategic sourcing policies.
What are the Benefits of Engaging Supply Partners in Sustainable Practices?
Today, developed countries and many large business conglomerates have all pledged to contain their carbon footprint setting zero emissions targets by certain dates. Supply chains are an important part of this commitment, and for companies, a good starting point for demonstrating their environmental, social and corporate governance (ESG) credentials. The benefits of doing so are many, and can be enumerated briefly:
- Reducing the environmental impact is the foremost benefit as mentioned at the outset. This includes mining of raw materials, processing them into metals or bulk chemicals, and further converting them into products in an environment friendly manner.
- Improved overall efficiency- thanks to transparency and adherence to good practices. For example, companies following environmental and social norms experience overall savings when the total cost is considered.
- Improved reliability of supply chain with better supplier engagement. This leads to weeding out of vendors not adhering to the norms, which at some stage invites regulatory action that can disrupt the supply chain.
- Safeguarding organisational reputation with sustainable sourcing by avoiding any negative publicity. A vendor making news due to unfair or unethical practices is bad news, and affects the reputation of companies associated with it.
- Building better partnerships by collaborating with like-minded suppliers to work together towards a common goal. When the objectives of both the partners are similar, that engenders greater understanding between them, leading to innovative solutions.
Apart from these main benefits, there are also other aspects like better business from end customers once the sustainability credentials are established; greater scope for innovation in quest of sustainability; attracting better skills and talents based on good reputation; and better risk management. Above all, these benefits directly contribute to a healthy bottom line.
7 Tips for Engaging Suppliers in Sustainable Practices
How can companies engage in sustainable sourcing practices? This is not easy, but at the same time not impossible if there is a proper supplier engagement plan template.
Here are 7 tips for engaging suppliers in sustainable practices:
- Start with the organisation – A good beginning can be made by talking sustainability within the organisation to raise awareness about its importance in sourcing.
- Shortlisting of ideal suppliers – Most companies have a large legacy supplier base that makes monitoring difficult. Pruning it to a more manageable number makes tracking easier.
- Transparency at the outset – It is important to begin by spelling out the requirements and expectations in terms of sustainability goals and engage with vendors to achieve the same.
- Creating long term relationships – Working on a sustainable supplier engagement makes good strategy. The assurance of long-term relations works as an incentive for compliance.
- Assisting suppliers to achieve goals – Creating long term relationships cannot work if the suppliers do not share the sustainability vision. Regular follow-up and audit of facilities is a must.
- Develop training programmes – Conducting periodical training and awareness programme for suppliers by showcasing use cases and highlighting success stories helps build peer pressure.
- Joining larger industry efforts – Scaling up efforts by joining like-minded companies in framing the requirements and setting goals will also help in goading suppliers for compliance.
Conclusion: Lessons Learned
The various cataclysmic events around the world this year – the extreme heat wave in Canada, forest fires in the US and Europe, spells of heavy rains and floods in India to just quote a few examples – have shifted the focus on climate change and sustainability like never before. With increasing pressure on companies by various regulatory agencies and growing customer awareness, it is time responsible companies proactively work to create sustainable sourcing and supply chains. Emerging fields like electric vehicles and new battery technologies are creating further demands on natural resources. Questions are raised about how green is renewable energy. Like gluten free in food products, carbon free may become the norm for product sourcing. Rather than get caught on the wrong foot and suffer disruption, now is the time to engage with the right supplier partner to achieve sustainable procurement and sourcing.
ESSNPS has been engaged in the highly competitive field of equipment sourcing backed by a team of diligent, qualified, and experienced professional’s adept at establishing strategic sourcing relationships with clients and vendors by adopting seamless and transparent business processes. Talk to us today! Reach us on email@example.com