Sustainability has never been more important to people, and the younger they are the more important it tends to be. Research shows 70% of consumers will pay more for sustainably sourced goods and services.
This means that businesses – whether they operate in a B2C or B2B market – must satisfy people’s demands for products that are responsibly sourced, both environmentally and socially. Fail to do this in today’s world and an organisation runs the risk of serious damage to its reputation, and its bottom line.
Responsible sourcing affords businesses the opportunity to combine sustainability initiatives with efficiency efforts and customer demand – but it is an evolving landscape, and many businesses are unsure where to begin the journey.
The answer is actually simple: begin with procurement. If businesses are to supply chains that are both responsible and resilient, C-suiters must first acknowledge that procurement is the first step in this journey.
“The procurement team begins the sourcing process by evaluating potential goods and materials that make up the products manufactured and distributed in the supply chain,” said SAP Chief Marketing & Solutions Officer of Intelligent Spend and Business Network, Etosha Thurman, when speaking to our sister magazine, Sustainability.
“In their evaluation, they are considering the environmental, societal, and economic impact of sourcing the materials,” Thurman added. “For example, potential risks with energy efficiency, water and land usage, and hazardous materials.”
To ensure businesses adopt responsible sourcing, leadership needs to set out clear definitions which align with the ESG goals of the organisation. Procurement professionals must also be educated about the necessary steps to ensure the goods and services under consideration meet the criteria.
Thurman stresses that, in today's rapidly evolving business landscape, technology is an ally in driving sustainability across pivotal procurement processes, such as source-to-pay (S2P) and procure-to-pay (P2P).
Through such solutions, organisations can navigate strategic sourcing, procurement, and supplier relationships, while adhering to responsible and ethical practices.
“Technology can help organisations follow sustainable practices at every stage of the S2P and P2P process,” Thurman says. “In strategic sourcing the right solutions can help analyse current and future spending, find and source from suppliers, ensure compliance and reduce risk with sustainability in mind.”
Thurman says SAP Ariba Sourcing is a good example of a solution that enables users to prioritise suppliers that align with ESG goals.
Thurman reminds organisations that, during the P2P process, it is important they use solutions “that guide you to make risk-aware and sustainable purchases” and that also “ensure contract compliance with sustainable procurement policies”
She added: “The guided-buying capability in SAP Ariba Procurement helps guide employees to purchase from sustainable suppliers.
She points out that technology can also help businesses nurture relationships with sustainable suppliers, and gives Taulia’s Sustainable Supplier Finance solution as an example.
“It allows users to reward suppliers that share their ESG qualifications with early payment incentives,” Thurman explains.
All of these solutions come down to one thing: data. To build a sustainable and resilient supply chain, businesses need strong and diverse relationships with key suppliers. They must also invest in technologies that can enhance supply chain visibility and agility, by monitoring and analysing this supplier data in real time.
Choosing the right third parties and partners to help a company along its sustainability journey is absolutely key, says Jon Willescroft, Chief Procurement Officer at G4S, the leading security and facility services company that provides security services and smart technology to deliver integrated security solutions.
G4S provides trained and screened security officers, as well as security systems such as access control, CCTV, intruder alarms, fire detection, video analytics, and security and building systems integration technology.
As a result, the company spends over a billion dollars a year with suppliers and subcontractors and, says Willescroft “it’s why it’s essential we partner with the best companies and organisations across the globe.”
In his keynote ‘Embedding sustainability in a complex organisation’ – delivered at Procurement & Supply Chain LIVE London in October 2023 – Willescroft revealed that G4S makes strategic decisions on third-party relationships with the help of a cloud-based technology platform called SourceDogg, which helps businesses embed ESG practices and carbon reduction processes by turning data into insight.
“Businesses don’t have bottomless budgets and resources,” Willescroft told his audience. “So choosing the right third parties to support your sustainability journey is really important.
“We just started working with Source Dog, as our eSourcing supply management and contract management platform. We chose it because it's a functional system but most importantly it's easy to use. It's intuitive, and I don't just mean for my internal team, but also for suppliers.”
Willescroft added: “This is a key point, because the maturity of our supplier base is mixed, and that makes it really important that we use a platform that doesn't require our suppliers to undergo training before they can collaborate and interface with us.