A connected process makes it easier to integrate commercial and sustainability aspects into the same purchasing process; it is important for modern procurement decisions.
The procurement decision can have an impact on so much more than the purchase price. A range of important factors including supplier, materials, delivery, packaging and payment options can impact on waste, resource usage, supplier responsibility and business costs in the longer-term. As organisations come to understand these factors, sustainable procurement isn't just more environmental but is becoming more integral to the standard day to day purchasing process. Connecting the information for these decisions into a single comprehensive workflow with a digital source-to-pay process can help.
Procurement Decisions Have Wider Effects
Think of a business that is buying packaging materials for an expanding range of products. One of the first things the procurement team might compare the suppliers by is price, quality and delivery period. But issue questions could still include recycled content, packaging waste, shipping lanes, certifications and the working practices of suppliers.
When procurement information might be communicated in emails, in spreadsheets, in supplier documents and through separate systems, these factors can be hard to keep an eye on. A connected process makes it easier to integrate commercial and sustainability aspects into the same purchasing process.
This does not imply that gross environmental assessments should always be performed. Rather, companies can determine the categories that could have the biggest impact on their business and incorporate the appropriate criteria into their sourcing choices.
Moving Beyond Price-Based Purchasing
Though there is importance given to price when it comes to procurement, it is just a single aspect of the entire procurement story. The value of the lower quality product could include costs associated with transportation, maintenance, longevity, etc. and/or disposal fees.
A wider procurement thinking does take into account the value added during the procurement process. product reliability, durability of product, use of resource, compliance etc., may all impact the choice of supplier, as relation the operational costs.
This change demands consistent supplier/purchasing information for procurement. Having sustainability data collected in conjunction with commercial data provides a solid foundation for evaluating various alternatives.
Connecting Sourcing With Purchasing
While purchasing and sourcing are considered two distinct processes, decisions made in sourcing will ultimately impact purchase orders, supplier relationships, invoices and payments.
A connected source-to-pay software environment can link these stages together. A procurement record can be a continuous document, such as supplier selection, supplier negotiations, contracts, purchase requests, purchase orders, invoices and payment processes.
This is a link that can ensure that the neediness determined during sourcing is not lost as soon as the purchase phase starts. If, for instance, a particular supplier has been chosen due to specific sustainability measures, this can be maintained throughout the entire supplier relationship.
Giving Sustainability a Place in Supplier Selection
The supplier evaluation is one of the most tangible fields in which to embed sustainability. The procurement team can set the requirements according to business needs and categories.
These criteria may encompass material sourcing, waste management, energy consumption policies, certifications, packaging, logistics or compliance documents, all of these, depending on the purchase.
The key is to be consistent. When it is clear what sustainability expectations are expected, vendors will respond to these that they can. Procurement teams can then compare the relevant details along with the price, quality, capacity and delivery promises.
Making Supplier Data Easier To Track
The information gathered about sustainability may not generate any value if it is only collected then does not move past the initial collection. Business needs may shift and supplier situations can change, and certifications may expire.
Structured digital procurement processes can include a centralised source of supplier information and supporting documentation. This information will be valuable to procurement teams when they are onboarding, during sourcing events, supplier reviews, and at contract management stages.
This brings about a more unbiased method towards supplier control. Instead of sustainability being a stand-alone questionnaire, organizations can incorporate suitable information into their continuing supplier management procedure.
Measuring Progress with Better Data
Compliance with sustainability goals is more challenging when the organization does not have the ability to measure the products it is buying. The supply chain data can be helpful for visibility of suppliers, categories, purchases made and purchase patterns.
For instance, the organisation could be interested in the proportion of its procurement that is sourced from suppliers in meeting environmental and/or social criteria. It can also be interested in tracking the use of recycled materials or packaging changes.
These measurements must be relevant to the organization and based on solid data. A digital procurement environment can help gather and analyse information to make it easier for teams to keep track of advancement than counting on occasional manual reports.
Reducing Waste in Procurement Operations
Sustainable procurement also doesn't just apply to products being procured. The procurement process can cause unnecessary admin. and consumption of resources.
All these data entry, duplicate supplier data, paper approval, disconnected spreadsheets, manual invoice data can all cause inefficiency.
Some of this is mitigated with digital workflows, which link requests, approvals, supplier records with purchase orders and receipts, and invoices. This not only increases the amount of visibility of processes but can also decrease repetitive manual processes.
Making Sustainability Part of Everyday Buying
Getting sustainable procurement to bring about practice requires being made to look like part of regular purchasing. This includes employees initiating requests, procurement teams assessing suppliers, managers authorising purchases and finance teams handling invoices.
Sustainability requirements which are not integrated with these mundane workflows can get lost. If they are part of the sourcing criteria, supplier records, contracts and purchasing processes, they are easily managed consistently.
This is where connected procurement technology can come in handy. By establishing a smooth handoff between strategic sourcing initiatives and transactions, a source-to-pay software can help organizations stay in the know throughout the procurement process.
Conclusion
The procurement function is directly related to the utilization of resources, procure from suppliers, spending control and supply chain management of an organization. This should therefore make it easier to make responsible purchasing a normal fact of business life when sustainability issues are incorporated into sourcing and procurement.
Digital solutions can help enable this shift by integrating the sourcing process, supplier management, purchase process, contracts, invoices and procurement data into one process. For organizations seeking to do just that, Procol offers procurement capabilities to integrate procurement and purchasing processes and help teams gain visibility over the entire procurement lifecycle.
(The views and opinions expressed in this guest article are solely those of the author and do not necessarily reflect the views of Eastern Mirror)