The Role of Technology in Green Procurement

Spend Matters welcomes this guest post from Zycus.

The world around us is advancing rapidly, and due to globalization, each organization’s involvement reaches far-flung corners of the globe we did not even know how to pronounce a few years back.

While researchers and innovators are focused on finding ways to make our lives easier or provide the same products at less cost, procurement is tasked with the challenge of making sure that such new technologies do not cause harm to our environment.

Green procurement, as we all know, is not just the process of buying goods and services that are environmentally friendly but also a way of providing a sustainable process that ensures the continuity of our supply chain and does not drain the Earth of crucial resources. This includes choosing suppliers that provide or use materials that are less harmful to society. Procurement needs to consider both the environmental aspects, potential social impacts and also carefully evaluate the life-cycle assessment of goods and services being acquired in order to decide upon possible “dumping” and “recycling” alternatives for each component. It also involves assessing the supply chain, going back to third- or fourth-tier vendors, to check the origins of the components being used and thus guarding the supply chain from inadvertently using conflict minerals and products of illegal sweatshops. Green procurement processes are also synonymous with frugality by ensuring accurate inventory quantities and reduction of waste.

The recent advances in technology have helped many companies in their green product initiatives. The use of supply chain management systems, such as e-procurement, e-sourcing and others, has certainly reduced the heaps and heaps of paper that resulted in unnecessary deforestation.

But these solutions are also effectively used by companies to help set up procedures and provide visibility to stakeholders to facilitate green procurement strategies. Some of the technologies that have helped in green procurement are:

  • E-Procurement systems: Good procurement processes rely on information exchange, and the e-procurement or procure-to-pay platforms are the best bet to ensure the right information is available at the right time. Since an e-procurement process is effectively end-user driven — the actual user has the power to request any item or service from catalogs — it is up to the procurement teams to ensure the catalogs are always updated with green ratings and product component information. Also, preferred and green suppliers need to be automatically suggested to the requester, in case no catalog is present. Hence it is vital to choose an effective solution partner for such a strategy.
  • E-Sourcing: Companies, during the evaluation of suppliers of any key commodity, are progressively engaging in developing scorecards to identify and investigate suppliers that use green technologies to benefit the environment. The modern sourcing solutions come with built-in processes and project management capabilities, which ensure proper due diligence and approvals at each step of evaluation in each product category.
  • Contract management: Using a contract management solution helps implement mandatory eco-friendly clauses during the authoring of the contract and tracks the milestones attached to such an agreement. For example, Ikea, a furniture and household goods retailer, has implemented a code of conduct for its 2,000 suppliers. This code of conduct focuses on environmental impact of the materials the suppliers provide and on working conditions. The supplier’s information is verified by an external body, and if the suppliers do not meet the code, they are requested to remedy the situation. Suppliers who continually breach the code can be removed from Ikea's list of suppliers.

To conclude, Green procurement gives a higher priority to materials with lower environmental impact in order to expand the market of green products, promotes the development of environmentally friendly products, and raises environmental awareness among suppliers and others involved in the supply chain. By using various technologies, which help in green procurement, we can create a recycling-oriented society.

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First Voice

  1. miriam:

    good stuff on green procurement

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