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Sustainable procurement and the supply chain link

When a company starts out on the sustainability journey, the first step is often to reduce the energy footprint of its operations.  Soon after that, supply chain management (SCM) and procurement become key partners in the change process.

There are two main reasons for this.  One is that the products and materials a company purchases come with their own environmental footprints that have been generated in extraction, production and distribution.

Pull Quote:

“70% of a company’s  sustainability footprint comes from its supply chain.”

                               –  EcoVadis, international leader and advisor on SCM

An example of this is the carbon intensity of a product. The more fossil-fuel energy used in its production, the less it will be valued in the marketplace. The European Union is currently planning measures to place tariffs on imported products that have a high carbon content in their manufacture.

The other reason is that a company is in a strong position with its suppliers to influence them to reduce their eco-impacts. Setting sustainability guidelines and standards for suppliers, and collaborating to help meet them, will see a company’s leverage ripple out far and wide.

Consumers are becoming more interested in the origin of the items they buy and the impact they have on the planet. This is an added reason for transparency along the supply chain, about where products come from and how they are made.

Lowering impact while raising quality

Walmart, the world’s largest retail company by revenue, developed a set of sustainability criteria which thousands of its suppliers had to meet within three years or risk being de-listed. This had a massive effect on lowering the environmental impact of its products, raised their quality, and increased the reputation of the Walmart brand.

In South Africa, Woolworths has become well-known for sustainability through its Good Business Journey and has won many awards internationally for leadership in the field. One of their initiatives is the ‘Farming for the Future’ programme.  The company works closely with supplier farmers to provide ongoing training and support with organic and regenerative farming practices. This helps ensure that produce coming onto the shelves will continue to be optimal in nutrition and taste.

Collaboration and supportive relationships between a company and its suppliers also build loyalty and trust. This lowers risks in supply delivery, while improving procurement efficiencies and cost savings.

Being pro-active makes sense

For suppliers, it makes a lot of sense to be pro-active and get on board with the sustainability movement. Having a policy and implementation plan in place that aligns with customers’ sustainability objectives will bring ongoing rewards.

In the public sector, sustainable procurement and supply chain practices are also becoming more prevalent.  Provincial governments which have sustainable public procurement commitments include the Western Cape, Gauteng and Limpopo,  as have the municipalities of Cape Town, Tshwane, Gqebera, Joburg and Ekuhruleni.

Procurement in South Africa’s  state spending amounts to some 30% of all local, provincial and national budgets, so with a sustainability lens, more of this can be put to use for the betterment of communities and the restoration of  ecosystems.

Whether in the public or private sector, sustainable procurement and supply chain management are rising in priority. This marks a positive change in how the purchasing and supply of goods happens, with the same safeguards for costs and financial governance, but now with a more purposeful focus on planet and people.

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Hugh Tyrrell is a sustainable business coach and writer at www.greenedge.co.za