Sustainable buying in the supply chain
Beaven Dhliwayo Correspondent
Procurement of goods and services is a key element of every business the world over. However, the decisions made by an organisation at the procurement stage can have wide-ranging effects on environmental resources throughout the value chain and also the quality of the manufactured product itself.
There is an increasing alertness globally of the concept of sustainable procurement which is also known as green procurement. In basic terms, it is a form of procurement of good and services with a consideration of their ecological footprint.
This process involves including sustainability criteria in purchasing decisions that an organisation makes. Whilst traditionally, companies were only concerned with buying the cheapest product and service as well as looking at aspects such as delivery time, quality and availability amongst other factors, more procurement professionals and company executives are making a paradigm shift.
Companies are now being traced by their consumers to assess their sustainability performance throughout the value chain from raw materials to the final product. A coffee-growing company, tea processing or juice manufacturing company as typical examples can be traced on their ecological footprints by demanding consumers who are concerned with whether the inputs into their processes are sustainable and risk free.
The justification of moving towards sustainable procurement emanates from the risks that can arise from making purchasing decisions that are “brown”.
Purchasing plant equipment that is energy efficient can help a company to save energy whilst purchasing less toxic raw materials can result in companies minimising occupational accidents and incidents. Companies that intend to export to developed countries know that to enter international markets, there is need to satisfy the increasing demands of consumers globally.
Every business relies on suppliers for the provision of goods and services for its operations. However, suppliers, contractors and service providers have the potential to pass on environmental, occupational health and safety and quality problems if they are not adequately controlled.
The supply chain offers opportunities of products and services, but at the same time presents environmental, safety, social and other risks to your business. Traditionally, purchasing decisions have been made based on some of the following factors — price, quality, delivery time, competence, payment terms, and location.
The tendency in many organisations has been to buy the cheapest product regardless of the risks and costs associated with its effects. This has backfired at times, for example when companies experienced explosions due to purchasing hazardous chemicals that they have limited capacity to manage as well as high waste management costs due to non-biodegradable packaging materials.
In other cases companies have had to endure high energy bills due to procuring inefficient equipment and plant. Hiring incompetent contractors who do not manage environmental impacts can result in significant damage including spillages on site as well as high waste generation.
The concept of green procurement can be implemented at various levels, including individual consumers, companies and private entities as well as public sector, also known as green public procurement.
The process of implementing sustainable procurement in an organisation has to follow a systematic approach that includes some of the following initiatives — inclusive procurement that factors input from sustainability experts not just the buyer or procurement or purchasing practitioner unilaterally making purchasing decisions in areas that require sustainability input, interaction of procurement and sustainability functions before making purchasing decisions.
Companies can also develop operational controls and company procedures and policies that govern sustainable procurement.
Green procurement guidelines are already being developed in several countries. Green procurement criteria for the awarding of tenders is also on the rise in many countries both developed and developing. The design of products by innovative enterprises is also considering the development of green products that require environmentally friendly raw materials. Firms in Zimbabwe have already started to require potential and existing suppliers to meet environmental criteria in order to be included on the Suppliers’ List.
Furthermore, there is also a growing requirement for certification to standards for example, Environmental Management Systems ISO 14001:2015, among other leading standards.
Consideration of material safety data sheets when purchasing chemicals is also being implemented.
The next time you plan procurement for a company you need to consider many factors including the aspect of the sustainability of the material you are procuring. This is what we need in order to influence the supply chain and achieve sustainable development.
In the next few years, companies that do not heed the sustainability call may face challenges doing business in the supply chain. Of course there will be resistance to sustainable procurement practices with enterprises citing capacity of suppliers, affordability or sustainability of green products as well as others who believe that the green movement is a hoax.
The environmental challenges that the world is facing will require innovative ways of doing business and for companies that want to grow to regional and global scale, it is time to adopt sustainability concepts such as sustainable procurements. Not only will this minimise environmental impact, but also offers opportunities of increased access to markets, waste minimisation, reduced risk and higher profitability.