In this, the first of four guest posts, Procurement Leaders invites BSR's Tara Norton to share her views on why businesses need to reposition and rethink their approach on sustainable procurement in the context of existing value drivers.
Happy January, everyone. I've got good news. Whether you made any New Year's resolutions or not this year, you can add one: being better at procurement.
This blog is the first of a four-part blog series I'm writing aimed at helping professionals to do just that: to be better at procurement, by looking at the procurement process in a new way and likely enhancing things that they are already doing. 'Better procurement' means more efficient and informed procurement processes that result in more value to the business.
As we enter 2015, we should consider that being better at procurement is largely about understanding context. Understanding context gives procurement managers an edge because by gathering information relevant to the procurement category in addition to information that is directly related to price and quality, you will gain insights that will enable you to discover value that you might not have seen before.
First, consider the external context. Being good at procurement means having a deep understanding of the context around the category: Understanding recent and potential innovations, how and why the geographies in which things are being made are shifting, what is affecting commodity prices, evolving trade routes and options, and new pools of suppliers that are arising.
In parallel, internal context helps to ensure that what and how we buy is aligned with what the business really needs. The internal context is the context in our own businesses: Knowing how the business is growing, current and future risks, our business strategy, and what the executives really care about.
Now, here's the big reveal. From where we sit at the Center for Sustainable Procurement, a large part of this context is about the environmental, social and governance risks and opportunities, conveniently packaged in the term 'sustainability'. Sustainability, social and environmental issues, are a good proxy for areas of risk to procurement: geopolitical risk, commodity pricing, reputational risk, failure to identify potential sources, failure to identify supplier-specific risks, for example.
By considering sustainability risks and opportunities at each step of the procurement process, you are thinking about the context and making better procurement decisions. This process is known as 'sustainable procurement', a term that could easily be rebranded 'procurement in context'.
To help you understand how to apply this thinking, I'd like to share with you the following Center for Sustainable Procurement framework which shows how you can shift your thinking at each step in the procurement process.
To bring this framework to life and to help you apply it, the next three blogs will take a deeper look at three of the steps in this framework, giving examples of how it works: Step 1: Understanding the business need, step 2: Developing category strategies, and step 7: Engaging suppliers.
The best news is that you are likely already involved in procurement with context. Anytime you consider context beyond the immediate transaction, you are likely thinking about issues that affect society and the environment, weighing up trade-offs that have broad-reaching impacts. Keep it up. You're already practising better procurement.
Tara Norton is director, supply chain sustainability, BSR.