The forces powering procurement today are often highly concerned with efficiency. New technologies that will automate key analysis and alert teams to money-saving opportunities are setting the discussion for the next generation of sourcing. However, there are other motives at play, ones that may determine the future success or failure of companies' outreach to their customers and the maintenance of their brand images.
The sourcing of sustainable goods and careful choice of suppliers could become part of the essential supply chain playbook in the years ahead. This move toward responsible business practices is driven by forces such as governmental regulations around the world and the shifting preferences of plugged-in young consumers. The movement toward sustainable sourcing has begun, and it's a worthwhile exercise to check in on its progress.
How are companies doing?
Spend Matters recently delved into the results of an academic paper in the Proceedings of the National Academy of Sciences. The research was based on determining how far business have gotten in addressing sustainability. The data painted a picture of a movement in its early stages. Firms have not universally adopted sustainable sourcing best practices, and when organizations don't deal directly with consumers, or reside in lower tiers of the supply chain, progress tends to be especially
Among the sample of 449 companies, approximately half now use at least one of the researchers' list of 16 ways to make supply operations more sustainable. Creating a supplier code of conduct is the most fundamental of these undertakings. Among firms that have adopted one of the 15 other practices, 82 percent have set conduct rules for their supplier networks.
It appears pressure from consumers is one of the main factors influencing companies' moves toward more sustainable practices. The researchers observed that carefully managed supply chain practices are more common at firms that have public-facing operations and are therefore more likely to receive direct input and pressure from their customers. Thus far, more efforts to make companies more sustainable have been concerned with first-tier suppliers. Going further down the chain reveals companies that are not yet subject to strict oversight.
For an example of a company deciding to embrace sustainable practices, it's instructive to look at Bridgestone's recent announcement. In early February, the company announced a new procurement policy for its global operations based on evaluating suppliers' practices and determining their suitability for selection.
The company's CEO, Masaaki Tsuya, stated that the policy is part of Bridgestone's social responsibility. The organization sees the move as having industry-wide implications - due to its role as the largest tire and rubber corporation, its decisions will undoubtedly reach many other businesses.
Bridgestone's policy breaks down into four pillars. Transparency will ensure the movement of goods is visible and traceable. Compliance programs are designed to make certain the company is in line with the laws in all the many countries it serves. Quality, cost and delivery measures alongside innovation programs will keep the supply chain functionally strong while its sustainability improves.
Finally new internal company rules will directly address questions of environmental and human rights protection. Such priorities will likely surface at major companies of all industries in the near future.