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Supply Chain News: Three Keys to Making Procurement more Green

 

Green Companies have Better Financial Results, but Is It Cause and Effect?

 
June 23, 2021
SCDigest Editorial Staff

Going green and improving sustainability have been near the top of the procurement priority list for some companies for some time now – but with no clear roadmap to get there for many other companies, and many late to the green party.

Supply Chain Digest Says...

SCDigest will note that even if the greenest firms have superior results, it is not clear on cause and effect.

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A recent report released by Procurious, a networking group for procurement and supply chain professionals, says that the top strategy for improving a company’s green supply chain performance is simply to directly collaborate with suppliers to change and improve sustainability practices.

Beyond that basic strategy, the report recommends three other practices to accelerate the move to green.

According to the SupplyManagement.com web site, those are:


1. Increasing the weight put behind sustainability criteria in supplier selection decisions, cited by 45% in a survey of 470 procurement professionals as having had a meaningful impact.

2. Adjusting procurement KPIs to place greater weight on sustainability (42%).

3. Leveraging technology to monitor sustainability risks, news and events that may impact the supply chain (32%).

The report says it is impossible to drive positive sustainability outcomes without monitoring and engaging with the supply base.

The survey also found that only 15% of companies were monitoring sustainability performance for more than 75% of their tier one suppliers, and 55% were monitoring 25% or less.


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CATEGORY SPONSOR: SOFTEON

 


Fewer than 5% were monitoring suppliers below tier 1, while the lack of visibility was cited by 66% as the biggest challenge in managing suppliers, followed by an over emphasis on costs and the inability to collaborate.

The survey also found companies that were the most green had the best financial results as well. Companies with advanced sustainable procurement programs were twice as likely to report increasing sales and improved product and service quality as those with less mature prograns. (See graphic below.)


The most advanced green company also achieved greater return on investment in many areas, including increased sales, lower supply chain costs, more innovation and reduced supply chain risk

SCDigest will note that even if the greenest firms have superior results, it is not clear on cause and effect – it could be successful firms can simply more afford pursuit of green strategies.

The full report is available here: Sustainable Procurement

Any reaction to this data or green tips? Let us know your thoughts at the Feedback section below.

 

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