18 Must-Have Negotiation Skills For Procurement Professionals
Sustainable Procurement Policy — The Ultimate Guide
A sustainable procurement policy is in place to help businesses. However, what kind of help does it do for businesses?
In this article, we will talk about what sustainable procurement policies are. We will discuss its benefits and steps to build your own sustainable procurement policy.
Finishing this article will allow you to create your own procurement policy that will help your company achieve economic, social, and environmental goals. Thus, your company develops further while also making the community and environment around it prosper.
What is Sustainability in Procurement?
For you to fully understand the definition and creation of sustainable procurement policy, you must first know its fundamentals. Sustainable procurement refers to the process of integrating environmental, social, and governance goals into the procurement and supply chain.
To simplify, sustainability in procurement refers to how businesses can identify and reduce their environmental impacts through their supply chain. It is a strategic decision that goes beyond the requirements of economics.
Furthermore, sustainability in procurement mandates businesses to have a great responsibility to their planet and society.
What is Sustainability in Procurement Policy?
A sustainable procurement policy is put in place to help and guide businesses when to acquire goods and services and select the products based on their social and environmental impact.
It can apply to products procurement to run the business internally and for producing the goods and services of the business itself.
Without this policy, businesses will have a hard time ensuring that all their acquired products or services can contribute to their social and environmental responsibilities. Thus, the need for a procurement policy to achieve sustainability.
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Steps in Creating your Own Sustainable Procurement Policy
1. Identify your starting point
Of course, in creating your own policy, you must know where to start. Below are the following questions you can ask yourself to evaluate and know where to begin:
- Is there already a global sustainable policy in the company? If so, how can it influence the procurement policy?
- Does the company’s higher management support the idea of a sustainable procurement policy?
- What are the main economic, social, and environmental impacts of the company’s activities?
- Does the company evaluate its carbon emissions?
- What are the products or services that have the most impact on the economy, society, and environment?
2. Find the significant areas and build an action plan
In finding the significant areas in your procurement objectives, you can consider which products or services are the most strategic in your company.
Once you have found which of them is more strategic, you need to check which of them has the most impact on the environment.
With this, you can now prioritize sustainable criteria considering your company’s industry.
In building an action plan, you must evaluate each purchasing category based on the defined criteria and classify your purchasing strategies.
3. Redesign your purchasing process
In redesigning your purchasing process to achieve sustainability, you must detail environmental factors that will be included in the specifications. Also, you can select suppliers who prioritize sustainability to compete for requests for quotations.
Furthermore, you can include sustainable choice criteria in your supplier’s offer and limit the number of purchase orders to reduce logistics and transport costs.
4. Apply both internal and external approaches
In implementing both internal and external approaches, you must communicate KPIs and provide progress follow-up. You should also involve all relevant parties by defining them your sustainable procurement objectives and action plans.
In integrating your suppliers on upstream work, you can implement improvement plans to help them transform their products into sustainable ones.
5. Measure and monitor performance
You must evaluate and report on your sustainability policy’s performance. To do this, you must define global procurement targets and KPIs such as:
- The percentage of goods and services acquired by the sustainable procurement principles
- The ratio of the local suppliers among the total suppliers
- The number of your suppliers with CSR certifications
- Reduction of usage of hazardous raw materials
- Decrease the weight and volume of packaging and introduce reusable packaging.
- Limiting the frequency of deliveries and monitoring order volumes
- The percentage of tenders with CSR criteria
The Benefits of Sustainability in Your Procurement Policy
1. Efficiency in terms of resources and procedures
Having a sustainable procurement policy instructs businesses to purchase products that consume fewer resources.
Additionally, buying from a supplier that offers products that are in eco-friendly packaging reduces your waste stream. These improvements and changes translate into cost savings for companies.
Sustainability in your policy also improves operational efficiency as it provides the procurement department with clear guidance on which products to buy.
2. Enhance employees’ health and safety
Buying certified eco-friendly cleaners to use in the workplace reduces the risk of diseases that a worker can incur from using toxic chemicals.
Also, buying locally-made organic food options is typically healthier and can make your employees feel more better and productive.
3. Employee engagement
Sustainability in procurement policy keeps employees aware of the sustainable products and habits they should utilize to help achieve the mission of the company to achieve sustainability.
Raising employee awareness can help employees to be inspired in adopting such practices in their lives.
Sustainable purchasing means evaluating your products and practices in an innovative way. Choosing the eco-friendly option for products and suppliers requires you to rethink and redesign the way you operate.
Be open to all ideas from across all levels and departments in making all your purchases, practices, and habits sustainable. In doing this, you may think of creative solutions that will help the company achieve sustainability easily.
5. Good public image
Having a sustainable policy looks good in the eyes of the public, especially customers nowadays who prefer businesses that are socially and environmentally responsible.
It allows the company to be transparent with its employees, customers, and other stakeholders regarding the products it buys, the providers it supports, and its purchasing habits.
6. Increase profitability
Having a sustainable procurement policy in place can drive higher profits in various ways. Along with the customer attraction that comes from your reputation, it yields cost savings in the form of conserving energy and reduced waste.
+ What is sustainability in procurement policy?
A sustainable procurement policy is a guide for businesses to procure sustainable materials or services.
+ What is sustainable procurement?
Sustainability in procurement describes how businesses identify and reduce their environmental impacts through their supply chain.
+ Why is sustainability in procurement policy important?
It is important as it helps and guides businesses when to acquire goods and services, and select the products based on their social and environmental impact.
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