This NZ Business article (April 2019) looks at the relationship between procurement and sutainability, and includes the top 10 questions to ask your suppliers before your customers ask you. (The list is based on a Sustainability Question Bank for Procurers produced by the Sustainable Business Network.)
Supply chains of all sizes are increasingly targeted by the Internet-powered X-ray vision of regulators, NGOs and concerned customers. Here’s how to use it to your advantage.
Procurement is one of the key ways you can shape a business you are proud to work for and own. It expresses the values your business holds and signals the role you intend to play in the world.
Taking a conscientious approach to procurement can also help your business succeed. It can cut costs, uncover efficiencies, smooth customer relations, avoid risk, ease reporting and transparency and more.
So how can you make sure you’re not scrabbling when someone asks you an awkward question? The Sustainable Business Network (SBN) recently published a Sustainability Question Bank for Procurers. It’s based on research by Dr Sam McGlennon, in partnership with a range of businesses across the waste, cleaning and clothing sectors. It’s a useful primer to build up your own quick and easy procurement criteria.
“Your suppliers should be contributing to your business’s sustainability performance. Without deliberately choosing that path, you might find they are undermining it,” says McGlennon. “At the very least suppliers should have a good reputation and a strong set of values. They need to hold any relevant accreditations, certifications and consents. They need to be working to improve their sustainability performance, which pushes yours along too.”
An effective procurement process means you are clear about your expectations from the outset. There may be some ‘deal breaker’ questions, for example if they aren’t measuring their carbon but you are required to report on it by your customers. You may want to develop some form of open scoring system for other sustainability considerations. That way potential suppliers are being educated on what you attach the most importance to. They can also tell at a glance if they are ‘in the ballpark’ of being on-boarded – or retained – as a supplier.
“Suppliers already suffer from ‘survey fatigue’,” says McGlennon. “It’s really vital that you only ask about aspects of their performance that are truly relevant to doing business with them. It has to be shaped around a genuine intent to perform as well as your business intends to on sustainability, while bringing their strengths and opportunities along for the ride. The clearer you can be about what level of performance and evidence you are after from them, the better.
“As a procuring organisation you have to be prepared to take the time to sit down and talk through the issues with potential suppliers. And you have to follow up on these issues as you manage the contract. Otherwise the whole thing can become needlessly time-consuming and counterproductive.”
McGlennon also stresses that it’s not all about getting lost in the bewildering array of certifications that are now out there.
“Certifications can provide useful guidance,” he says. “But they are not always the only or best way to demonstrate sustainability credentials and performance. Some certifications can be excessively expensive for small suppliers. Some industries and sectors don’t have great certification schemes available. Some businesses create more genuinely innovative practices by going beyond certifications. It pays to be clear on exactly what outcomes you want suppliers to demonstrate, and start from there. You don’t want to set certification standards you don’t fully understand or that may not be relevant or achievable.”
The SBN Question Bank offers dozens of suggested questions to consider. They focus on products, materials, equipment, services and construction. This allows you to select those most relevant to your work. But here’s a selection of key things to think about:
1. Can you trace exactly where everything you supply to us comes from?
2. What social and environmental issues matter for the materials and products my company buys, and the processes that produce them?
3. How are you trying to reduce those impacts? Do you need help?
4. What could I be doing with all the stuff we buy, sell or otherwise deal with at the end of its life?
5. Specifically, how can we stop it going to landfill?
6. Are we always acting as a ‘good neighbour’ wherever work for us takes place?
7. How can I be sure that everyone involved in making all the products and services we use is well looked after?
8. What questions are you asking of your suppliers?
9. What training or information are you providing to your suppliers, or could we provide for you, to help increase alignment with us?
10. What’s an easy way for me to capture this information with a view to making it public as part of our obligations on transparency?
Ignorance is not bliss
“Ignorance is definitely not bliss in supply chains and procurement!” says McGlennon. “In fact it’s an absolute hazard. Keeping a close eye on the goods and services your company uses is a prerequisite for success.
“Businesses doing this well are experiencing significant advantages. It can break you into new markets; it can win you customers because you can confidently tell your story.”
Some of the potential features in the latest Colmar Brunton Better Futures report. It found that 86 percent of respondents agreed that “it is important for me to work for a company that is socially and environmentally responsible.”
90% of respondents agreed that “If I heard about a company being irresponsible or unethical, I'd stop buying their products or using their services.”
This suggests that competition for staff and customers is likely to be increasingly linked with greater scrutiny of resource use and pollution.
McGlennon adds: “No business gets respect when it doesn’t have its own house in order. And yes, it may take a little time to tighten up on procurement processes. But that’s a better investment than having to deal with your dirty laundry publicly.
“That kind of situation – and its very real costs to your business – can escalate rapidly in today’s hyper-connected world.”
(Source: NZ Business)