With the COP26 conference in Glasgow coming to a close, SAP and The Hackett Group hosted a hybrid breakfast event with a dozen Procurement heads to talk about Sustainability.
Start Small but Start now
It’s easy to roll ones eyes at what seem to be small initiatives such as eliminating single-use plastic from the staff canteen. But the observation was made that this is a way to get started, and to build credibility for the much harder tasks down the road.
Reducing Carbon in the Value Chain
It’s often procurement teams who manage supplier relationships who are best placed to work with suppliers on how to do this. In one example, a company knowledgeable in electronics brought electrical components that they purchased into one of their labs, stripping them down and evaluating how much carbon was used in their manufacture. This was then used to engage with suppliers on how reductions might be possible.
For example if a rubber company knew that it’s tyres would eventually be ground up to make roads once they had reached their end of life—as one mining company does—then they might share details of the best way to extract the steel belts, or even consider a re-formulation to make this process simpler and cheaper.
Align with Industry Groups to support smaller suppliers
Suppliers are getting snowed under with all sorts of compliance requests, as each company asks more and more questions about sustainability and diversity. This has the perverse side effect of reducing diversity in a supply chain, as smaller companies just can’t keep responding to 1200 line RFPs.
A practical tip shared was to formally allocate a percentage of the score for an RFP to “social value”, 10% was suggested as a start. At the same time, work with others in your industry, even your competitors, on standardisation of questions, so smaller suppliers get a fair opportunity. If you are not familiar with how to do this, this Government Guide to using the Social Value Model is suggested. An example of an industry which has already made a start is the UK Defence Sector with the JOSCAR Hellios initiative.
The old Purchasing mantra about supplier consolidation, “Fewer, Bigger, Better” needs to be re-visited. A side effect of being willing to consider more suppliers is in business continuity, as spreading demand across a dozen smaller companies will provide more resilience in the case of the Next Black Swan.