Dreamstime Images
Dreamstime L 51538846

Procurement’s Role in a “Greener” Business Environment

Dec. 29, 2020
A look at the role that procurement can play in helping their companies operate in a more environmentally sustainable manner.

Download this article in PDF format.

It’s not always easy to get companies to ramp up their sustainability and “green” efforts in a world where many investments are made based on projected return on investment (ROI). And while the long-term benefits of operating in a more environmentally-sustainable manner are well documented—reduced waste, improved brand image and a healthier workplace—it seems U.S. companies still have a way to go on this front.

Green initiatives can also be cost savers for companies, which reap rewards like these:  

  • Packaging optimization results in reduction of packing materials
  • Eliminating hazardous materials reduces handling, disposal and regulatory costs
  • Alternative, sustainable or reusable materials reduce cost of production
  • Eliminating waste reduces the cost of disposal
  • Reduced shipments lead to less fossil fuel consumption

Procurement can play a role in helping companies achieve some or all of these benefits (and more). In “The Future of Green Procurement and its Role in Sustainability Initiatives,” Proxima’s Shane Rooney discusses this point and explains the critical nature of supplier relationships in the green business continuum.

Procurement specialists must ensure that upstream suppliers are adhering to environmentally friendly standards, he writes, and should also dive into developing greener outcomes—opportunities like optimized packaging and recycling depots at retail establishments to reinsert materials back into the supply chain.

“Both supplier and buyer relationships must move from being ‘transactional manufacturers’ to ‘collaborative partners’ in order to successful improve sustainable practices, design and materials,” Rooney writes.

Rooney adds that green procurement also helps companies develop and assess their future business goals in sustainability, and mainly by introducing sustainability initiatives to more companies and communities. “Procurement teams should also liaison between the supply chain and commercial teams,” he writes, “to identify what sustainability initiatives will actually influence customer purchasing habits.”

Thinking Beyond Cost

Going green doesn’t have to be a cost center. In fact, numerous companies have solidified the link between improved environmental performance and financial gains. Companies have looked to their supply chain and seen areas where improvements in the way they operate can produce profits, The Balance reports.

General Motors, for example, reduced disposal costs by $12 million by establishing a reusable container program with their suppliers.

“Perhaps General Motors may have been less interested in green issues if they were making record profits,” the publication states, “but in an attempt to reduce costs in their supply chain, GM found that the cost reductions they identified complemented the company’s commitment to the environment.”

Preparing for the New Normal

With COVID-19 altering the business landscape in 2020—and continuing to do so in 2021— Rooney notes that the green procurement model has shifted focus over to risk mitigation within the supply chain, technology as an upstream and downstream visibility tool “and a newfound focus on social sustainability due to the cost of underestimating frontline workers.

“As businesses look to successfully rebuild, restructure, and emerge from the pandemic, leaders cannot overlook the role sustainability will play in cost savings and reputation building,” he concludes. “It may decide the success or failure of a company’s future when the ‘new normal’ begins.”

Regardless of current business conditions or disruptions, organizations can often find cost savings by reducing the environmental impact of their business processes—procurement included. “By reevaluating the company’s supply chain, from purchasing, planning, and managing the use of materials to shipping and distributing final products,” The Balance points out, “savings are often identified as a benefit of implementing green policies.”

Voice your opinion!

To join the conversation, and become an exclusive member of Supply Chain Connect, create an account today!

About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.