How Procurement Can Prepare for the Inevitable, Sustainable Future

Sustainable procurement isn’t always easy for businesses, but most significant initiatives take work, and you’d be hard-pressed to find a cause more worthy than saving the planet. And with the maturation of the global economy, businesses have come to realize that collaborating with socially responsible, environmentally friendly suppliers delivers many rewards.

Greener supply chains not only lessen negative environmental and social impacts, they retain and attract similarly minded customers – and it’s a rapidly growing market. In a survey included in the Deloitte 2024 CxO Sustainability Report, 59% of respondents said their companies have started using sustainable materials like recycled and lower-emitting products. And with the same percentage increasing their energy efficiency, it’s easy to see why more companies are embracing sustainability.

Still, it’s up to chief procurement officers to untangle this web of global supply chains, dizzying individual country standards, and more in order to ensure sustainability goals are met.

4 Main Challenges

There are challenges to creating sustainable practices; however, they are surmountable. The following looks at the primary ones to expect, accompanied by some insight to help you understand and handle them.

Up-front investment: Sustainability costs more than using those traditional products and processes that harm the environment – at the moment. With the growth of sustainability, supply chain competitiveness will lower prices. Businesses should continue to press sustainability efforts in order to escalate greater savings and environmental benefits.

Tracking and measuring: Different supply chains use different tracking methods. There’s also a lack of standards when it comes to carbon output and tracing responsibility. Further, businesses measure sustainability in numerous ways, so results on a single product can vary. Keep this in mind, and when you’re buying products for a volume of clients, plan for an exponential increase in difficulty.

Navigating supply chains: Regulations differ from region to region, so navigating sustainability requirements and updates can be complex. Keep in mind that this is especially true in less mature markets, simply because the value of sustainability is not yet fully understood.

Building a culture: Most procurement is stimulated by cost savings, not carbon reduction. Businesses must place emphasis on a carbon culture, not a capital one, which will lower their consumption and footprint. When you have a culture revolving around sustainability, you can drive procurement change.

Boosting Supply Chain Visibility

Arguably the greatest issue in sustainability is a lack of visibility into the supply chain. Varied data flows, differing systems, and limited collaboration among stakeholders can all muddy the view. When systems don’t play well together and data anomalies emerge, tracking goods and operations can be maddening. Making matters worse are siloed operational units and a wariness about sharing “their” data.

An absence of clear insight into environmental and social impacts makes identifying problems and meeting standards difficult. It can also cause operational disruptions that undermine efforts. It’s vital to map out the supply chain systematically, identify data gaps, and make sure your visibility tools are up to snuff. This will allow you to better integrate systems, assure data integrity, and strengthen supplier relationships.

Those in procurement can further boost their supply chain visibility by focusing on collaboration and data exchange with suppliers. First, though, establish clear guidelines for information sharing, leverage technology with real-time data transmission, and agree on shared sustainability goals.

Get real with artificial intelligence

Emerging applications of artificial intelligence (AI) can further visibility. With analytics powered by AI, enterprises can analyze huge datasets, unearth trends, and gain insights that produce better decision-making.

For example, AI used with cloud platforms and the Internet of Things (IoT) allows real-time monitoring and traceability across a supply chain. This enables leaders to locate where operational improvements are needed. Automated data capture and classification can also bolster forecasting and optimization. And, AI systems can recommend ways to reduce disruption and fortify workflows. They can also suggest alternate suppliers, facilitate production schedule changes, and route optimization.

Machine learning can automate rote manual tasks as well. Eliminating the manual input of data also prevents accuracy issues. And when it comes to business intelligence, predictive analytics can anticipate and head-off possible high carbon impact.

Things are getting real when it comes to AI and sustainability.

The inevitable future

Sustainable procurement is the path to the future because it protects the resources we all need to actually have a future. Its continued momentum is constantly attracting customers who understand the need for sustainability, as well as consumers who are inclined to frequent and remain loyal to companies who support the planet’s health.

The demand for more “green products” will continue to grow – and their costs will decrease. As a result, more and more businesses will make sustainability a pillar of procurement. Businesses that don’t evolve will increasing fall behind competitors who have invested in what is an inevitable, sustainable future.