In ten years’ time, the procurement profession and the role of the Chief Procurement Officer (CPO) has changed in many unique and profound ways. Yet, just like 2010, CPOs and other procurement leaders are entering the new decade grappling with intense challenges (some old, some new) and driving forward to achieve aggressive goals and objectives.
On that front, I’m pleased to continue with our exciting, new series on CPO Rising – “20 for 2020” which examines a broad range of CPO-driven topics. Today we continue with 20 for 2020: Key Themes for the Modern CPO’s Agenda (#15 – Sustainability), which is designed to help procurement set their organizations’ course for the critical months and years ahead. Enjoy!
20-for-2020: Theme #15 for the Modern CPO’s Agenda: Sustainability
Supply risk management is an all-encompassing category that it often overlaps with crucial aspects of running a business in today’s global economy. Sustainability is a subset of supply risk management, and it has increasingly become a critical part of procurement and supply chain operations. We’ve been hearing a lot about sustainability over the years, but what is it, anyway?
The Oxford English Dictionary defines sustainability as:
- The ability to be maintained at a certain rate or level; and
- Avoidance of the depletion of natural resources in order to maintain an ecological balance.
Put another way, sustainability connects the short- and long-term availability of resources and suppliers (i.e., Will my business have access to these materials and their suppliers, today, tomorrow and the year after?) with the greater economic, environmental, and social dimensions of doing business today (i.e., Are our business operations helping or hurting the economy? The Environment? And society as a whole?). Heavy questions to ponder, for sure.
Appropriately, sustainability falls squarely within procurement’s wheel house: after all, the business unit is responsible for sourcing the products, goods, and services that a company purchases, and it has significant control over their quantity, quality, and supplier. Of course, the nature of the business and the requirements set forth by its various stakeholders — for direct and indirect categories — dictate the kinds of products, goods, and services must be rendered. But CPOs and procurement teams that are keen on driving sustainable business practices can still influence sourcing and procurement decisions that can have economic, environmental, and social benefits.
Here are some examples of how businesses are trying to be more sustainable in their sourcing and procurement methods:
- Restaurants pledging to go “cage free” in the years ahead: Restaurants, restaurant chains, and other members of the food and hospitality industry have for many years sourced eggs from factory farms that confine chickens to so-called “battery cages” that greatly reduce the quality of the chickens’ lives. Socially conscious consumers have caught on, and have pressed many businesses in the food service and hospitality industries to source their eggs from farms that employ more humane production methods, like “cage free,” “free range,” or, ideally, “pasture raised.” Doing so is not cheap, or easy, which is why brands like McDonald’s and Wal-Mart have pledged to go “cage free” by the mid-2020s.
- Consumer packaged goods (CPG) and food industries reducing their use of palm oil: Palm oil is often considered an unsustainable raw material due to the nature of how it is harvested. Large swaths of forests in tropical climates, like Southeast Asia and Africa, are clear cut to make room for palm trees. The permanent damage done to local ecosystems, the loss of habitat for animals and humans, and the release of carbon dioxide into the environment have prompted many businesses to find alternatives to palm oil, such as rapeseed oil, soybean oil, sunflower oil, olive oil, and coconut oil.
- Cities and towns banning single-use plastic bags and plastic straws: Many communities have passed legislation that bans businesses from issuing plastic bags and straws to their customers. These measures might draw the ire of your crabby aunt or uncle, who yearn for their sweet, sweet plastic; but plastic bags and straws end up on roadsides, in ditches, and increasingly, and the carcasses of dead animals that have eaten them. More biodegradable and sustainable alternatives, like paper or plastic bags made from post-consumer recycled materials, and paper or metal straws, are increasingly being used in their place, and they’re just as effective.
- The meat and dairy industry offering more antibiotic-free products: Ironically, the over-use of antibiotics in human medicine and agriculture has put humans at greater risk of dying from infectious diseases. Antibiotics used in the agricultural and meat-packing industries to combat the spread of communicable diseases among animals have made their way into humans, resulting in bacterial mutations that have become resistant to common antibiotics, like penicillin and amoxicillin. The meat and dairy industry has for quite some time now been reducing or phasing out their use of antibiotics in an effort to curtail, if not reverse, the spread of these so-called “super bugs”.
- Businesses turning to digital/electronic options to reduce paper consumption: Going paperless isn’t just good for business (think of all the money companies save on paper, ink, toner, and postage!), it’s also and perhaps as importantly good for the environment. More digital or electronic options immediately translates into less paper consumption, which is frequently for short-term use anyway. Most people would not miss paper, either (I personally have not printed anything in two months).
Final Thoughts
Consumers and business leaders have long-since woken up to the fact that the world is changing in some pretty stark ways, and that both need to change their buying and consumption habits to limit or reverse the unintended consequences of global commerce. And there happen to be solutions providers, like EcoVadis, that specialize in assessing and rating a business’s sustainability efforts and helping them to identify and mitigate these kinds of supply risks. Procurement teams that adopt sustainable business practices can do their part to address animal rights, climate change, environmental and habit preservation, and public health concerns, and hold themselves up as examples of sustainable, globally and socially conscious businesses that can still be profitable.
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