This article originally appeared on BSR Insight.
One year after the launch of BSR’s Center for Sustainable Procurement (CSP), our first research paper captures four main insights from projects with AT&T, Best Buy, and Dell that covered a range of product complexities and supplier relationships:
1. It’s crucial to align the sustainable procurement strategy with the nature of the category and supplier relationships.
2. It’s essential to involve the right players in the sustainable procurement discussion.
3. Companies pursuing sustainable procurement must establish a clear business case for purchasing more sustainable products.
4. It’s best to start with what is measurable and scale up from there.
The CSP is developing tools and approaches for sustainable procurement that will benefit the wider network of companies interested in integrating this into their overall sustainability priorities. The pilot projects — conducted with BSR member companies selected based on their existing supply chain sustainability focus and a high level of buy-in for this work — examined how companies can make sustainable procurement decisions in specific product categories covering a spectrum of challenges:
- AT&T’s fan belts for building mechanical equipment: This simple product can be substituted to improve energy performance and thus reduce costs. But in order to perform an upgrade, the company first must be internally aligned and understand the return on investment.
- Best Buy’s in-store display units: This moderately complex category composed of several substitutable commodities (such as wood, wood composites, metals and plastics) can be changed to reduce costs if display units ultimately are redesigned for reuse. But doing so requires strategic supplier engagement to identify sustainable substitutions that still meet Best Buy’s needs.
- Dell’s notebook computers: This complex product can be redesigned to reduce embedded energy use over the total lifecycle of the device. But this requires management of long-term strategic relationships with a small number of key suppliers, called original design manufacturers (ODMs).
Lessons from the first year
We learned four main lessons from the three projects in our first year of work:
1. Align the strategy with the nature of the category and supplier relationship. In the case of a simple commodity for which many other options are available, efforts can be focused on establishing preferred business and sustainability specifications for a product, and then finding a supplier through a competitive bid process. But as products increase in complexity and the specifications become unique to the company, supplier relationships must become more strategic, and the focus should be on partnering with suppliers to build their capacity for producing products with enhanced sustainability characteristics.
Photo of shipping containers by Sakarin Sawasdinaka/Shutterstock.
Next page: Get the right players on board