How businesses are addressing challenges in green procurement

on Monday, February 3, 2014

How businesses are addressing challenges in green procurement

Eco-friendly products have been mainstream for some time now, and many executives have spent years working toward more sustainable business strategies within their respective companies. These leaders know first-hand just how many aspects of enterprise operations need to be addressed in the effort to move toward greener procurement and production models. Distribution and manufacturing chains continue to become more complex and geographically spread out, as have companies' customer bases.

With no end in sight for this trend, how can businesses make real, measurable efforts to reduce environmental impact and at the same time communicate those successes to consumers?

Where the problems lie

A recent study by the MIT Sloan Management Review and the Boston Consulting Group highlighted some of the major issues that surround sustainable product sourcing for contemporary businesses. Recognition of the importance of eco-friendly practices is now widespread, the researchers affirmed: 86 percent of the companies they surveyed indicated that sustainability was already essential for remaining competitive or that it would be in the near future.

However, companies still seem unable to look at all aspects of green logistics with this same level of clarity. While 62 percent of all respondents said they had developed a sustainability strategy, according to the study, that leaves nearly a quarter who recognize the competitive advantage of environmentally friendly practices but haven't integrated them into their business models. Meanwhile, although nearly a third of businesses said that their efforts in sustainability had boosted their profitability, a quarter admitted that they didn't know what the relationship was between their green practices and business cost reduction initiatives.

Closing the gap

Clearly, a disconnect exists between the recognized need to move toward green procurement and companies' actual understanding of how they can achieve these goals in ways that are advantageous to the business. However, some firms are taking proactive approaches to closing this gap.

One method for moving toward a more sustainable business model is to respond directly to the specific demands of consumers. According to GreenBiz, Tyson Foods recently wrote to its pork suppliers insisting that pigs should be housed in environments that "allow sows of all sizes to stand, turn around, lie down and stretch their legs." The source noted that Tyson's note to its producers came after a wave of pressure from groups such as the Humane Society and Green Century Capital Management, which called upon the food company to terminate its use of highly constraining, two-feet-wide gestation crates.

Furthermore, Tyson's letter to its suppliers noted that the company would be making greater use of the third-party auditing services it already leverages to ensure quality and practice standards.

Companies do their homework

Tyson's strategy is instructive for the way it combines compliance with public concerns and sustainable supplier management. Often, companies must go to great lengths in order to uphold their commitment to green logistics and eco-friendly products, and this means making sure that the producers with which they partner are up to the business's standards.

WBUR, a Boston-based National Public Radio station, recently spoke with Bill Heffernan, a pig farmer from whom Whole Foods and Chipotle source some of their pork. He told the station that these companies utilize rigorous audits to ensure that his farm meets their expectations.

"First of all, they look around the property for about two hours and then sit down, and you've got this booklet to fill out like as if it's never going to end," Heffernan told WBUR. 

The process may not have been particularly enjoyable for Heffernan, but this level of visibility is crucial if companies are to incorporate sustainable practices into their business models and stake their brand image on their ability to offer environmentally friendly products.

1 comments:

LG Grace said...

Other ways to close the gap: build programs to offset the your carbon footprint. For example, Radio Flyer (headquartered near me in chicago) has teamed up with the Arbor Day Foundation to plant a tree for every toy sold on radioflyer.com: http://www.radioflyer.com/content/build-a-forest

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