Procurement with Purpose Continues to Gain Pace

SAP Ariba Live

We attended the SAP Ariba Live event earlier this month, but we couldn't make the Sustainability Summit that preceded it, however, our good friend and ex-colleague Peter Smith came to the resuce and wrote this post-event summary.

It goes by different names, but “Procurement with Purpose” or “sustainable procurement” has shot up the agenda in recent years. A sign of that was the recent SAP Ariba Sustainability Summit, held the morning before the opening of the firm’s European “SAP Ariba Live” conference in Barcelona.

While the extraordinary main event had around 4000 registrations, the Summit was a smaller, interactive morning session with around 50 procurement leaders and opinion-formers, chaired by Justin Sadler-Smith, Head of UK & Ireland for the firm. But it was also fascinating to see how much of the sustainability agenda (in its broadest sense) permeated through the whole agenda for the wider conference, ranging from a keynote delivered by the amazing Amal Clooney covering human rights issues, to the “leadership and diversity” lunchtime session, which created real debate amongst the delegates.

But coming back to the Summit, it might be best summed up by Sadler-Smith’s comment that today, “doing good is good business”. While we might all want to do the right things because of our own personal views, the fact is, it also makes sense because our customers expect firms to behave in a certain way. It’s also become a factor in the “war for talent”; it is easier to attract the brightest and best staff if they can see the organisation has a worthwhile wider purpose, rather than purely a profit maximisation motive.

Those points re-occurred throughout the discussions, as did a number of critical success factors for those who want to establish a strong programme for sustainable procurement. There was a considerable amount of great content put forward in a short period of time, but three key issues I certainly took away with me were these:

Understanding - and overload

Some of the issues around “procurement with purpose” are complex and multi-faceted. One speaker was from a major airline, an organisation that faces an existential crisis, we might argue, given the emissions debate. But there are many different views and even contradictory arguments about the “best” approach to that and other sustainability issues. Is burning imported wood from the US in UK power stations really environmentally sound?  Should we just stop flying, or focus on making planes more fuel-efficient, increasing utilisation, persuading passengers to carry less luggage, and making airports more environmentally friendly (by using electric ground vehicles, for instance)? It is also vital that organisations think carefully about which aspects of sustainable procurement they want to particularly promote and support. “You can’t do everything”, was the message, so look at the options, think about where the organisation can have the most impact and what will bring value in return.

Understand your suppliers and supply base

Of course, this is not a new message or one that is particular to these issues. But if you want to implement sustainable procurement (or indeed any sort of structured and effective supplier management programme), this understanding is essential. If you don’t have a grip of this information, it is hard to see how an organisation can implement the sort of steps that are needed to develop an effective programme. And clearly, technology now plays a major part in data and information management. Supplier master data management, performance management and spend analytics all can play a role in achieving this visibility and understanding that is needed across the supply base.

Measurement and reporting are key

A successful “procurement with purpose” programme will require effective measures and reporting, in order to realise the benefits and to justify the investment (time and money) that will be needed to drive the work. This feels like an area that still needs more work – for instance, there are many standards and accreditations out there in the sustainability world. But perhaps there are too many, and as Mark Perera (founder of Procurement Leaders) pointed out at the Summit, we must be careful that this doesn’t become too much of a burden for firms. That (somewhat ironically) could increase barriers to entry and make life difficult for smaller, minority owned or start-up suppliers.  But we might hope that a more accepted and standardised approach to benefits and performance tracking and reporting will emerge as this whole field becomes more mature.

Finally, it’s worth noting that there is a real appetite amongst practitioners for information and discussion around these topics. The morning was expertly chaired by Justin Sadler-Smith, but there was no doubt that we could have gone on well into the afternoon with the discussions! Whether it is via forums like this very successful SAP Ariba session, or maybe the pure-play conference businesses picking up on this topic, I suspect we will see many more useful and enlightening “procurement with purpose” or sustainable procurement events in the next few years.

 

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