Supplier collaboration, compliance and brand reputation are among the top improvements resulting from sustainability-driven procurement, according to research.
However, a global survey by Procurious found 62% of organisations had not yet invested in supply chain sustainability or were just starting out.
“This is an alarming number considering the advantages that sustainable procurement delivers and the urgent and broad movement toward a more socially-conscious and sustainable marketplace,” said the report.
The report, Sustainable Procurement: Driving Exponential Impact Across the Supply Chain, found the top strategy for elevating performance was collaborating directly with suppliers to change and improve sustainability practices. After this, the top tree strategies with a measurable and meaningful impact on sustainability performance over the past year were:
1. Increasing the weight put behind sustainability criteria in supplier selection decisions (45%).
2. Adjusting procurement KPIs to place greater weight on sustainability (42%).
3. Leveraging technology to monitor sustainability risks, news and events that may impact the supply chain (32%)
The research, sponsored by Ivalua, involved 470 procurement and supply chain professionals globally and concluded the benefits of sustainability for businesses far outweighed the costs.
It is impossible to drive positive sustainability outcomes without monitoring and engaging with the supply base, the study said.
According to the study only 15% or organisations were monitoring sustainability performance for more than 75% of their tier one suppliers, and 55% were only monitoring 25% or less.
The report acknowledged the difficulty in establishing visibility and that the challenges grew as procurement went deeper into the supply chain.
Less than 5% were monitoring sub-tier suppliers, and lack of visibility here was cited by 66% as the biggest challenge in managing these suppliers, followed by an over emphasis on costs and an inability to collaborate.
The report said companies with advanced sustainable procurement programmes were twice as likely to report increasing sales and improved product and service quality. They realised greater return on investment across the board, including increased sales, lower costs, more innovation and less supply chain risk.
More than two-thirds (69%) of companies with advanced sustainability programmes cited improved supplier collaboration and relationships as the top area where they experienced sustainability-driven improvements, followed improved compliance with legislation and regulations (64%), and improved brand perception (58%).
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