State of Green Business
3 tips to win over the corporate procurement team
This article is the second in a new series by BSR that will explore how corporate sustainability pros can work across departments on shared goals.
More than half of corporate sustainability professionals view their company’s supply chain/procurement function as the one that their team needs to work with most closely to make "substantive progress" on sustainability in their companies, according to the 2017 BSR and Globescan State of Sustainable Business (PDF) survey.
The procurement function was the most commonly cited functional partner to sustainability — outranking the CEO’s office, operations, product development, risk management or any other part of the company.
However, most respondents also reported that efforts to address the most critical sustainability issues in their company’s supply chain are only "fairly effective." This lukewarm endorsement is emblematic of what we see across BSR’s 250 member companies: While most companies have established a working relationship between sustainability and supply chain, few have found ways to work together to deliver the outcomes that both teams would like to see.
What is going on here?
There is — and has been since the birth of the field — a mandate for sustainability practitioners to build relationships with procurement teams. Since the development of the first supplier codes of conduct in the 1990s, the procurement function has been integral to advancing sustainability within companies. This is especially true for consumer-facing brands in industries such as apparel, food and consumer electronics, whose supply chains represent the greatest share of those companies’ environmental and social impacts and are often the locus of scrutiny by non-governmental organizations (NGOs) and consumer activism.
This supply-chain imperative has catalyzed the development of various internal management structures to enable collaboration between sustainability and procurement. Many companies have created teams devoted to responsible or sustainable sourcing, sustainable procurement or supply-chain sustainability. In some companies, the links between procurement and sustainability are so close that both functions report up to a single chief procurement and sustainability officer. Examples include Anheuser-Busch InBev, Mars, and McDonald’s, among others.
Despite this mandate to partner, and the existence of governance models that bridge sustainability and procurement, sustainability practitioners with whom we work often lament the challenges of influencing procurement. Meanwhile, their counterparts in procurement often see sustainability as insufficiently versed in what procurement does, leading many companies to feel that their overall progress on supply-chain sustainability falls short of their ambition.
Collaboration between sustainability and procurement can be improved in three ways:
Understand your procurement team’s priorities
Design for standardization and integration
Translate trends into supply-chain insights
1. Understand procurement’s priorities
First, working effectively with procurement requires an understanding of the business priorities that guide your procurement team. As BSR described in our primer on the Future of Supply Chains, the top priorities that are shaping the function’s mandate today and into the future include a focus on reducing costs, consolidating the supply base and improving risk prediction and management.
Your procurement team may have a slightly different set of goals and pressures that guide its day-to-day work. Ask it what these are, and then reflect on the ways in which your sustainability strategy and goals can help to deliver on procurement’s priorities.
While some may see procurement’s top priorities as being at odds with those of the sustainability team, the creative and tenacious sustainability practitioner will find areas of overlap. For example, supporting procurement to digitize supplier sustainability assessments and engagement can support many of procurement’s interests, such as improved process efficiency, more decision-useful information and better tools to identify and manage potential supply-chain risks. Working with procurement to identify hot spots of climate risk in your supply chain can also help the team manage risks, and in the longer term can mitigate price volatility or costly disruptions in supply linked to physical impacts of climate change.
2. Design for standardization and integration
Procurement teams operate on standardization and process. Gaining traction and influencing change within the procurement function requires an approach that builds on and integrates with existing procurement systems and processes.
This means developing a clear picture of your procurement team’s process, from establishing sourcing and/or category strategies, to supplier selection and onboarding, to ongoing supplier management, development and performance tracking. As a sustainability partner to procurement, if you want to see your recommendations implemented, they should be practical, replicable, supplier-oriented and build on existing procurement processes where possible.
3. Translate trends into supply chain insights
If your company is tracking with broader trends in the field, your procurement leaders are likely taking on a more strategic role within your company. However, they may not have the capabilities within their current teams to maximize this opportunity. A 2018 CPO study conducted by Deloitte found that most procurement leaders do not believe that their teams have the skills needed to deliver their procurement strategies, and most procurement organizations spend less than 2 percent of their budgets on team development and training.
These gaps in procurement-team skills and in development opportunities are a concern, as we see CEOs increasingly looking to chief procurement officers to not only reduce costs and manage risks, but also to take on challenges such as leading procurement through a digital transformation, advising the business on implications of global trade negotiations, changing supply-chain labor dynamics and enabling differentiation in the marketplace through innovation with suppliers.
As the procurement team’s mandate shifts toward a more strategic, externally focused and futures-oriented business function, the sustainability practitioner can be a welcome partner to fill skills gaps and provide a window into the business relevance of global developments. By embracing and developing their roles as value creators and futurists, sustainability teams can offer procurement teams complementary skills and knowledge, such as a technical environmental background, business-relevant insights from external stakeholders and subject-matter experts, and an understanding of the changing nature of responsible business.
Sustainability and procurement are already linked in many companies. Now is the time to deepen the collaboration across these teams to meet the scale and scope of the supply-chain challenges and opportunities ahead.