How green procurement practices and robust supplier risk management can help organizations build superior brand equity and drive significant business outcomes. Sustainable procurement software is the need of the hour.

The rapidly evolving regulatory landscape, changing customer needs, behaviors, expectations, and the ever-increasing cost of doing business are pushing organizations to put sustainable procurement at the top of their strategic agenda.

In the rapidly evolving sustainability focus and reporting, the EU has emerged as a front-runner. To that extent, it is making a crucial impact not only in Europe but across the world.

From the EU GPP criteria facilitating the inclusion of green requirements in public tender documents to the Environmentally Preferable Purchasing (EPP) Program helping U.S. federal agencies purchase greener products and services, the public sector has taken the lead on green procurement. However, early adopter private corporations are not behind. Instead, they have started to reap the benefits of sustainable procurement practices – mitigation of reputational risks, cost-efficacy in the longer term, and watertight compliance.

Prerequisites For Sustainable Procurement

Sustainability for the procurement function is a multifaceted approach to building a robust, resilient procurement infrastructure. It encompasses:

• Conscious e-Sourcing: Giving importance to green energy suppliers, procuring eco-friendly products/packaging, and ensuring your business supports supplier diversity.
• Responsible Contract Management: Avoiding contract renewals with suppliers who do not meet the required health and safety criteria.
• Foolproof Supplier Information Management: Preventing the onboarding of suppliers involved in child labor and unethical trading and building a reliable alert system for flagging blacklisted suppliers during onboarding.
• Comprehensive Supplier Risk and Performance Management: Monitoring risk during the entire supplier lifecycle and mitigating reputational risk through sustainable procurement software.

Read our blog: A Comprehensive Guide to Supplier Risk Management

Key Tenets of Sustainable Procurement

Sustainable procurement has evolved over the years, driven by multiple economic, political, and social environment factors. The COVID-19 pandemic has only re-emphasized the need for bolstering legacy procurement infrastructure with next-generation technologies like sustainable procurement software. It ensures business continuity, customer satisfaction, and profitability.

• Keeping up with risks:

Procurement now needs to factor in risks more than ever and deliver greater business value with limited resources. Agile companies are deploying digital-first systems that can forecast disruptions and alert CPOs to arrange alternate supply streams.

• Enforcing supplier diversity:

Humane sourcing is not just a PR exercise. It has a significant business impact, considering consumers now prefer brands that source their requirements locally and sustainably. It also helps increase customer confidence, reduces risk, and prevents compliance lapses. Today, major internationally recognized social audit standards, including the amfori BSCI Code of Conduct and SA8000 Standard, are helping companies screen suppliers effectively, and a diverse supplier base can facilitate that.

• Driving supplier collaboration and innovation with technology:

Storing all supplier information in a cloud-based central repository and deploying augmented intelligence for decision support is helping procurement teams ensure goal alignment with suppliers, access to real-time ROI tracking for senior management, accurate demand forecasting, and optimal resource allocation.

• Transitioning to a climate-neutral economy:

Leading Fortune 500 companies have reported sizable profits – both in terms of customer perception and baseline revenues – after adopting sustainable procurement software and methods. These include the likes of Tesla, Disney, Coca-Cola, Unilever, and Roche, amongst others. As the benefits of making strategic investments in sustainable procurement become more evident, companies worldwide will follow suit.

• Actioning the Smart Procurement Strategy:

The move to data-centric and AI-driven sustainable procurement can seem cumbersome at first, with businesses worrying about change management, organizational inertia, and significant digital upskilling.

How Zycus is helping enterprises adopt best practices in sustainable, cognitive procurement

Zycus is committed to building simple, intuitive, cost-effective, and highly scalable source-to-pay solutions for the future-ready enterprise.

• AI-driven technology to spearhead change

The Zycus suite of cloud-based, AI-driven, end-to-end sustainable procurement software solutions reduces supply chain costs and in-house infrastructure dependency for businesses. This makes it cost-effective even for small and medium enterprises. In addition, the suite enables autonomous procurement and interactive, actionable intelligence. Hence, this helps companies select compliant vendors with a proven track record.

Read more: Building a Sustainable Supply Chain: The Role of Procurement Orchestration

• Deep insights for informed decisions

Zycus is equipped to provide deeper insights into spends, savings, procurement contracts, and much more. As a result, measuring overall supplier performance and KPIs is no longer an arduous exercise.

• Transitioning from paper-based to digital processes

Not only does the software prioritize e-Sourcing from green energy suppliers and vendors using its comprehensive information system, but it also ensures a lower in-house carbon footprint through e-invoicing solution and e-procurement solution, without the need for physical copies for every single order.

• Holistic risk management

The iRisk module contained within Zycus is a 360-degree supplier risk and performance management system. It mitigates all kinds of risks – reputational, operational, regulatory, financial, environmental, geopolitical, and more. It does so by scouring millions of online resources regularly to present the findings in a single view. Therefore, this helps CPOs assess, manage, and monitor risks and act swiftly. Additionally, the iSupplier module manages supplier onboarding by leveraging data contained in a centralized repository and improves compliance.

Zycus source-to-pay is characterized by low-touch, high-ROI, and agile deployments that deliver transformational outcomes for organizations worldwide.

Book a demo to know more about how Zycus help you to replace the outdated SRM software with it’s unified and integrated Source-to-Pay suite.

FAQs

Q1. What is sustainable procurement, and why is it important for future-ready firms?

Sustainable procurement involves sourcing goods and services in a way that considers environmental, social, and economic impacts, thus ensuring compliance and long-term sustainability for businesses.

Q2. How can firms ensure compliance with sustainable procurement practices?

Firms can ensure compliance by adhering to relevant regulations, implementing transparent supply chain management, and regularly updating procurement policies to reflect sustainability goals.

Q3. What role does technology play in sustainable procurement?

Technology aids sustainable procurement by providing tools for better data analysis, supplier tracking, and streamlined communication, leading to more informed decision-making.

Q4. How can a firm measure the effectiveness of its sustainable procurement strategy?

Firms can measure effectiveness by evaluating key performance indicators such as reduction in carbon footprint, supplier sustainability ratings, and alignment with ethical sourcing standards.

Q5. What are some common challenges firms face when implementing sustainable procurement, and how can they overcome them?

Common challenges include lack of supplier transparency and higher initial costs, which can be overcome by fostering strong supplier relationships and investing in long-term benefits from sustainable practices.

Related Read:

1. How can Marketing and Procurement work better together?
2. 5 Ways World-Class Procurement Organizations Get Quick Results
3. Top 10 Winning Skills for Procurement Professionals
4. Start Your Cognitive Procurement Journey with Zycus
5. Webinar – All In On Analytics: Running Your Procurement Organization by the Dashboard Lights
6. White Paper – Procurement Analytics: Empowering the Future of Procurement
7. Solution: eProcurement Software
8. Watch Webinar: Sustainable Procurement Practices: People, Planet, Profits
9. Solution: Procure to Pay Software