Sustainable supply chain and procurement have become more important in ensuring business competitiveness. Historically strong brands can easily lose their market share if customers do not perceive them as acting responsibly in product testing, diversity, the environment and other social, environmental and governance issues.
A sustainable procurement strategy can benefit companies by reducing costs, mitigating risks and adding value to the business. According to available data, supplier diversity alone can reduce purchasing costs in the logging industry by 10%, in the radio spectrum industry by $45 million annually and in government procurement by 12%. This strategy can also improve procurement metrics and overall risk mitigation.
Another benefit of sustainable procurement is that it can future proof a company and improve its ability to cope with supply scarcity risks, emerging market demands, energy consumption, cost pressures and waste reduction regulations. It can help create new business opportunities with the development of sustainable and innovative products and services.
To ensure a sustainable procurement function, leaders must evaluate suppliers for fair labor practices, minimize carbon footprint and rethink their packaging and logistics to maximize the use of recyclables.