18 Must-Have Negotiation Skills For Procurement Professionals
Sustainable Purchasing — The Ultimate Guide
Sustainable purchasing might be a term that many people are not familiar with. However, this kind of purchasing is important, especially in the supply chain.
In this article, we will talk about what sustainable purchasing is. We will discuss its importance and the benefits it can bring to your company. Additionally, we will tell you ways in enhancing sustainable purchasing strategy.
Once you are done reading this article, you will have a deeper understanding of why companies are adopting sustainability not just in purchasing but also in the supply chain. Thus, allowing you to gain benefits from having a sustainable supply chain.
What is Sustainable Purchasing?
Sustainable purchasing is often confused with sustainable procurement but they are different from one another. Sustainable purchasing refers to the acquisition of goods that are made from recycled content.
These recycled goods are environmentally preferable products and services. This can include bio-based products, energy and water-efficient products, alternative fuel products, products using renewable energy, and alternatives to hazardous chemicals.
Sustainable purchasing evaluates goods and services in a much broader context that goes beyond the costs. It identifies ways to maximize value and minimize the environmental and social impacts throughout a product’s entire life cycle.
It is also concerned with acquiring goods and services that have reduced effects on human health, society, and the environment when compared with competing products or services that have the same use or purpose.
What is Sustainable Procurement?
To clear up the confusion, we will have a brief discussion of sustainable procurement. Sustainable procurement refers to the process of implementing ways that can help the environment, economy, and society.
To simplify, it aims to reduce the environmental impacts of its procedures in the supply chain. It helps to create procedures that aim to reduce adverse social, environmental, and governmental impacts of the acquired goods and services.
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The Importance of Sustainability in Purchasing
All goods that a company buys have social and environmental impacts throughout their life cycles. Embracing sustainability in purchasing helps advance sustainable development and the benefits extended beyond the environment, economy, and community.
Sustainable purchasing can also be a wise business decision. By reducing, reusing, and purchasing sustainably, you can conserve the resources of your company and reduce carbon emissions.
Benefits of Sustainability in Purchasing
1. Economic benefits
- Stimulates a strong local economy by supporting local vendors
- Decrease operation, maintenance, replacement, transportation, and waste disposal costs.
- Promotes innovation as more organizations demand and seek sustainable alternatives.
2. Environmental Benefits
- Supports international labor rights and standards worldwide.
- Foster workers’ safety, wellness, and health.
- Supports vendors that promote accessibility and diversity in the workplace.
- Foster the development of local social enterprises
3. Social Benefits
- Supports waste reduction, water conservation, and energy conservation.
- Decreases greenhouse gas emissions.
- Reduces pollutants and toxins released in the environment
- Supports products and services that respect biodiversity.
Ways to Starting or Improving Sustainability in Your Purchasing Strategy
1. Find your allies in your company
Talk to your co-workers and senior executives about sustainable purchasing and how it can benefit the company. Support from co-workers, especially the executives, is critical.
You can try to form a committee or cross-functional working group that meets regularly to talk and influence them on sustainability purchasing initiatives.
2. Tap into key resources
Not all have the privilege to have the time and resources available to them at work to conduct original research. You can search on the internet for some networks or solutions that can help you get reliable and current information about sustainable purchasing.
3. Create a draft of a policy statement
Making a policy that you can implement in place is an important step, especially for big companies that may have a culture that is policy driven and oriented.
A policy is a formal notice inside and outside of your organization that sustainability in purchasing is a priority.
A good policy must clearly state what sustainable purchasing means and what qualities you are looking for in the goods or services you want to acquire.
However, you must ensure that you understand your organization’s spending and consumption patterns to know how to align them with your policy. Identify the organization’s single point of accountability to execute your policy and plan.
4. Negotiate sustainability with your suppliers
Try to start talking about sustainability in purchasing with your suppliers. You can share your company’s interests, needs, and policies.
Think about your most strategic suppliers and their products, services, and operating practices. You may want to draft up a simple survey on sustainable practices and ask your current suppliers to fill it out and return it to you.
This will give you an idea of where to start and it can help you find social and environmental performance areas that you can suggest to your supplier to improve.
You can also outline the expectations you have for your suppliers and how they will be assessed. This will ensure that they can put in the procedures that are needed to fulfill their obligations.
5. Find ways to use less of what you have
A simple way to do when starting your sustainable purchasing journey is to be more efficient in how you use what you already have. You can try to squeeze a bit more out of products before you entirely dispose of them.
6. Select new suppliers committed to sustainability
You can use the opportunity to identify the sustainability performance of prospective companies if you are going to look for a new product or service. You can create a questionnaire for potential suppliers to know their sustainability standards.
Once you have the answers, try to determine how you will use them in your process of selecting a supplier. You may also want to ask potential suppliers to complete a questionnaire describing their environmental and social impacts and practices.
Doing this can help you find new suppliers that are aligned with your organization’s social and environmental priorities.
7. Use the Total Cost of Ownership (TCO) approach when buying
You have spent a lot of time on purchasing, now you can take a few more minutes to consider the life cycle of the goods or services you acquired.
A total cost of ownership assessment adds the financial costs over a product or service’s life cycle. With this, you may find that the product that looks more expensive upfront is much cheaper over the life of a product.
8. Set your goals
You may ask yourself, what does your organization really want to achieve? Clear sustainable purchasing goals accompanied by measurable targets are helpful to determine your goals.
Once you have goals in place, you must ensure to have a regular schedule to track your performance and make improvements where you fall short of your expectations.
9. Communicate your achievement
Spreading the word of your success in sustainable purchasing is a powerful way to promote your company’s product or services within and outside of your organization.
Communicate to all levels why these efforts are done, what will be measured, and how you are going to attain sustainability in purchasing.
+ What is sustainability in purchasing?
Sustainable purchasing refers to the acquisition of goods that are made from recycled content which are environmentally preferable products and services.
+ What is sustainable procurement?
It finds ways in reducing the environmental impacts of its procedures in the supply chain.
+ What is the importance of sustainability in purchasing?
By reducing, reusing, and purchasing sustainably, companies can conserve their resources and reduce carbon emissions.
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