Earth Day 2020: Leveraging Supply Chain Technology for a Greener Tomorrow
April 22, 2020 marks 50 years of celebrating Earth Day! We have been celebrating in a variety of ways over the decades: gardening, recycling, educating others about sustainable practices, saving energy, and that just scratches the surface. According to Earth Day Network, more than 1 billion people have participated in Earth Day activities since its inception, making it the largest secular civic event in the world.
What can we do as modern sourcing professionals to help celebrate Earth Day? To find out, I asked sustainability expert Celia Landesberg from EcoVadis to shed some light on the topic and heard from other passionate procurement professionals about their sustainability success stories.
Why should supply chains care about sustainable sourcing?
Sustainable sourcing practices are better for your stakeholders and better for your business. Embedding sustainability into sourcing is inching closer to the status quo, rather than the exception. Organizations currently sourcing sustainably have reaped the benefits of early adoption, whilst others are left behind. Without an effective and reliable way to measure performance in this arena, it becomes challenging to quantify missed savings and innovation opportunities, as well as the risk of real brand damage along the way. By selecting suppliers that operate with consideration for all resources – human, environmental, financial – you will have a foundation of transparency that carries all the way through to the customer.
Our ever-changing world will test us going forward. Just look at the disruptions that have already transpired from COVID-19 as an example. This compelling article, Why Sustainability is Now the Key Driver of Innovation, came back to me recently – published in 2009 following the last recession. As stated by the article, using sustainability in purchasing will impact sourcing teams ability to deliver results for the business into the future.
How can new sourcing technology improve sustainable sourcing?
Knowledge is power. We are inundated with statistics on how much data is being produced daily (blah, blah, data!) – but the critical piece is application. Sourcing technology plays an essential role in delivering the relevant data points to the end user at the time of decision making. This needs to be presented and used in context with other aspects of procurement decision criteria – such as cost, quality, and delivery. When done effectively, these technology systems allow buyers (and suppliers) to measure scenarios, quantify results, secure favorable outcomes and drive improvements over time. As sustainable business practices are constantly challenged to demonstrate value and payback, both sourcing and sustainability professionals alike will benefit from enhanced technological capabilities and integration.
What are some of the little-known reasons that sustainable sourcing is important?
There are several “off-the-dashboard” wins when it comes to sustainable sourcing. As procurement professionals, it’s easy to gravitate toward cost savings and other intuitive metrics. When you examine it more holistically, sustainable sourcing touches other areas of payback – including talent acquisition and retention, brand value, revenue gains, and lower costs of capital. For example, attracting talent to sourcing teams is increasingly difficult – including internal and external candidates – and hiring managers are always seeking ways to showcase the company’s value attributes in order to attract and retain the sharpest employees. Mounting evidence from PwC, Harvard Business Review, and others show that employees are voting with their feet. 59% of millennials (about 50% of the global workforce) stated they would deliberately seek out employers with corporate social responsibility practices in line with their own (PwC). Giving employees purpose around their work is shown to drive productivity as well (HBR). Be sure to encourage employees to speak up and keep your HR business partners involved in the conversations as well in order to maximize your impacts here.
Are sustainable vendors more expensive?
This is a common misconception held over from a decade ago. There is not a one-size-fits-all answer, so it is important to understand the costs you are comparing. Aside from one-off examples – broadly speaking – the price of sustainable alternatives has largely come down in recent years. Look at renewable energy (e.g.solar and wind) or look at single-use alternatives (think: buying fewer products that are used once and thrown away). There has been a rise in maturity of total cost of ownership (TCO) models and new business models to enable sustainable purchasing (i.e. circular economy and sustainable business loans), which makes it possible to approach these questions with a bigger tool chest.
What are the challenges posed by sustainably sourced RFPs?
I hear so often that companies want to include sustainability in RFPs. It’s a great place to start because you are at the beginning of a relationship (or a resetting point) and the supplier is most motivated to collaborate with the business outcome still to-be-determined. What ends up happening is that expectations are not clearly defined and companies do not have a reliable, defensible scoring model to use as an incentive or provide feedback. It results in a frustrating experience for both the buyer and supplier and typically doesn’t achieve the desired outcome of a deal that benefits people, planet, and profit.
Tell us a story about a sustainable initiative that turned into a success.
At our most recent annual conference, Sustain (hosted virtually this year!), we had a session on the return on investment of sustainable procurement. One of our clients shared some incredible success stories. This was a sourcing initiative that turned into a sustainability success. They were sourcing packaging materials for a product. In looking at their levers of value analysis, supplier innovation and their global sourcing footprint, they were able to identify a new plan and supplier of choice for their needs that resulted in 30% cost savings, reduced exposure on exchange rates, and a decrease in their environmental footprint by 70 tons of CO2. For this story and more, check out the presentation on-demand.
More Sustainable Success Stories
Kathleen Wong, Program Manager, Supplier Corporate Responsibility at Adobe:
Around 2012, Adobe announced a major business shift from boxed product delivery to its current Cloud offering. Just like that, my entire team (print & packaging) was made obsolete! While I was originally hired to focus on sourcing sustainable packaging for Adobe’s physical products, I maintained that a sustainable supply chain could take on a different form in Adobe’s business with the Cloud-delivery business model. Peering into my crystal ball of news articles, blogs, and research, I discovered that my larger technology peers (Facebook, Google) were under scrutiny for dirty energy consumption in their massive data center facilities. So…I started to do some digging into Adobe’s IT management. After months of internal investigating, I built up a business case to organize these teams and create focus to report, strategize, and reduce our greenhouse gas footprint with our data center colocation suppliers and cloud partners. It was clear that the renewable delivery of our cloud product was the next step in Adobe’s Corporate Sustainability Strategy. It’s been a gradual move over the years with our supplier partners maturing their processes after receiving growing demand from customers like Adobe, and I’ve seen a lot of promise with groups like the Renewable Energy Buyers Association (REBA) and Future of Internet Power (FoIP) sharing best practices. I am optimistic that with the right Sourcing leaders, we are well on our way to minimizing the environmental impact of data centers and the internet.
Miriam Brafman, Founder & CEO at Packlane:
As Packlane’s founder and CEO, I share the deep concern for the ecological footprint of packaging that many of our customers express. That’s why I am so excited to introduce the Econoflex product line, beginning with our new shipper boxes.
Econoflex is Packlane’s most economical and eco-friendly offering to date—without making any compromises on quality. We’re always looking to innovate custom packaging and the Econoflex Shipping Box sets a new standard. It meets the trifecta of high-quality printing, rapid turnaround times, and affordable prices.
Given these insights, it’s clear that sustainability has shed the “trend” label and continues to operate as a pivotal influencer in the global supply chain. If there is but one takeaway here, it’s that there exists no need to sacrifice savings for sustainability; there are solutions for our planet, for businesses, and for consumers. It is abundantly clear that well-informed, passionate leadership who place an emphasis on embracing technology in their strategic sourcing processes will position their organizations to pave the way for successful sustainability initiatives, rather than playing catch up.
Arkestro equips procurement professionals with the sourcing software tools needed to identify areas of value in their purchasing decisions. By using Arkestro, your team will demystify sustainability’s impact on your organization and enable the ability to make greener choices in regards to the products and services you offer. For more information and to see how Arkestro can help you pave the path for a greener tomorrow, visit /demo
Share your sustainable success story with us in the comments and find an Earth Day event near you, https://www.earthday.org/