Read this blog post to understand the difficulties of implementing Sustainable Procurement
As supply chains become more complex and globalized, responsible sourcing risks such as labor exploitation, environmental pollution, and unsafe working conditions increase, making sustainable procurement even more difficult. Many organizations have implemented sustainable procurement policies. However, the question is to what extent they are capable of adhering to these policies. Only the implementation of a set of due diligence activities, such as supplier risk assessment, supplier self-assessment, audits, ESG risk performance information from third-party tools, and so on, can ensure compliance with these policies.
Some of the most common challenges that organizations face when implementing such responsible sourcing initiatives are as follows:
- It is possible that sustainable supply will be more expensive.
- It is difficult to monitor and enforce sustainability initiatives.
- It becomes difficult to assess and manage a large supply base.
- It is difficult to manage misalignment between sustainable sourcing goals and procurement metrics.
What role does technology play in your sustainable sourcing strategy?
According to Gartner survey data, 75% of organizations have a formalized sustainable program in place. Many of these organizations, however, limit the scope of their responsible sourcing strategy to developing a sustainable sourcing policy that outlines supplier expectations. They frequently lack the resources and capabilities to assess and verify supplier adherence to these policies, as well as to incorporate them throughout the supplier lifecycle.
Fortunately, there are numerous solutions on the market to help you with your responsible sourcing efforts. These tools can aid organizations in the collection and evaluation of supplier data. Sourcing and supplier management solutions can assist organizations in fine-tuning and integrating sustainable procurement into supplier lifecycle management, bidding, and contract management processes.
The following applications can assist organizations in ramping up their sustainable procurement initiatives:
- Applications for Supplier Sustainability
- Adoption of supplier sustainability solutions is still limited, but it is expected to accelerate as companies increase their investments in ESG initiatives. Many organizations that are interested in scaling their responsible sourcing programs are increasingly deploying supplier sustainability and ESG risk monitoring solutions to monitor their suppliers’ responsible sourcing performance in order to reduce risk exposure and drive improvements. These solutions enable organizations to collect and assess supplier performance on ESG-related responsible sourcing requirements
These solutions typically provide suppliers with a supplier sustainability score based on a predefined set of parameters used to assess the supply base. While some solutions address a broad range of regulatory compliance issues, others focus on specific issues such as workforce conditions, greenhouse gas emissions, and so on. Some also provide scores based on customized assessments on various ESG topics based on your company’s needs. EcoVadis, Benchmark ESG, Source Intelligence, iPoint, and other well-known solutions are available.Sedex and EcoVadis, for example, provide solutions for virtual audits and supplier development, as well as the ability to provide supplier feedback.
Sources of ESG risk data and monitoring solutions
Based on a variety of data sources, these solutions monitor supplier performance and risks in real-time. Aside from ESG, vendors in this space frequently focus on broader supply chain risk indicators such as cybersecurity, financial, geopolitical, and other topics. Resilinc, Interos, and Prewave are examples of vendors that provide risk-monitoring solutions.
Employee engagement tools
These applications enable direct communication with workers at your supplier factories, allowing you to collect feedback on any issues or concerns they have. These solutions enable a bottom-up approach to addressing and verifying sustainability issues in the supplier’s workplace. These solutions also allow you to provide training materials to improve worker rights awareness among your suppliers’ workforces and facilitate raising concerns via hotlines or other reporting channels.
Solutions for Supplier Relationship Management
One of the most important aspects of effectively managing a sustainable sourcing programme is the ability to effectively manage your supply base and embed your sustainable procurement policy throughout the supplier lifecycle. Supplier Relationship Management platforms automate and streamline your supplier management processes, from onboarding to ongoing performance management and collaboration. Supplier relationship management (SRM) solutions allow you to manage the entire supplier lifecycle, including supplier data, workflows, hierarchies, risk, performance, and compliance. Many SRM solutions, such as MeRLIN, also include useful features for incorporating responsible sourcing, such as supplier evaluation surveys, rule-based workflows for supplier onboarding that require and verify supplier certifications and other documents, a real-time collaboration platform, analytics and reporting to monitor supplier performance, and so on.
Solutions for sourcing
Integrating responsible sourcing requirements into the sourcing and supplier selection process ensures that the organization has a more comprehensive understanding of responsible sourcing risks before entering into a relationship with the supplier. As a result, fine-tuning your sourcing events by including a detailed overview of the responsible sourcing policies in the RFQ pack and gathering the necessary information from suppliers to evaluate them based on your responsible sourcing criteria, in addition to other parameters such as cost and quality, is critical.
eSourcing solutions can help to streamline the entire process of identifying and selecting suppliers based on sourcing criteria, as well as significantly shorten the sourcing cycle through workflow automation and faster decision-making.
Tools for reporting and analytics
Analytics solutions enable businesses to report and analyze data from assessments using user-friendly dashboards. This enables companies to easily report to internal and external audiences on social compliance, human rights, and sustainability performance within their supply chains.
Learn more about what EffiGO has to offer to its customer base to make a significant influence in the procurement business, by skimming through some more blog posts.
