Identify Gaps

Review your value chain-related policies, protocols, and processes

Start by making sure your procurement performance targets are not working against your sustainability objectives by checking for any gaps or conflicts between them. Then review your procurement protocols for potential inconsistencies with your sustainability objectives. For instance these protocols may relate to supplier identification, selection criteria, contract negotiation methods, and supplier relationship management. You should also check that sustainability considerations are incorporated into your category strategy templates and that your policies are current, given the evolving nature of sustainability issues. Engage colleagues, suppliers, and customers in this review process where possible.

Finally, evaluate your procurement structure to identify who is responsible for key tasks and if different departments are making conflicting demands of suppliers. Consider whether a more centralised or decentralised procurement process best serves your sustainability objectives. For instance, centralisation allows for a more consistent approach and data aggregation. While decentralisation enables more local control and agility.

EXAMPLE: Schneider Electric's recognises that its supplier productivity target could undermine its sustainability goal

Schneider Electric had an explicit target to increase supplier productivity by 3% per year. Reflecting on their sustainability goals they identified potential unintended consequences of this productivity target. While the target sought to promote energy or material use efficiencies; it also directed the procurement team's focus to short-term cost savings. This was in conflict with making the longer-term investments needed to achieve the company’s goal of a carbon-neutral supply chain by 2030.^{1, 2}

EXAMPLE: Regular assessment of practices at Adobe

Adobe integrates the assessment of sustainability and procurement practices into its Enterprise Risk Management Framework.³ This entails a semi-annual process of identifying and evaluating climate-related risks and opportunities across its operations, supply chain, and products. The company also actively engages industry organisations, customers, and suppliers to monitor emerging risks and evolving stakeholder expectations.

EXAMPLE: GAP relieves buying pressures

Through its participation in the Better Buying initiative, the GAP has worked to reduce the buying pressure it places on its suppliers. For instance, it has developed systems to help its procurement teams avoid placing orders that put unrealistic expectations on suppliers regarding timing, capacity, and cost.⁴

Consider external perspectives on your practices

Support your sustainability efforts by considering your value chain partners’ perspective on your procurement practices. You can start by reflecting on the values and narratives your procurement team communicates through its actions and decisions. Consider how your buying practices might place undue pressure on suppliers and how you can work collaboratively with suppliers to alleviate this.

To best understand external perspectives, it is necessary to also engage directly with your suppliers and other value chain partners. You can do this by conducting listening exercises with past, current, and prospective suppliers; and seeking anonymous supplier feedback. This can help you gain insights into supplier pain points and sustainability performance challenges, as well as potential solutions.

EXAMPLE: Mars seeks external stakeholder perspectives⁵

Mars engages with its value chain partners through regional stakeholder dialogue events. Its first Asia Pacific event dialogue convened government officials, NGOs, academics, and business leaders to share perspectives and co-create regional sustainability priorities for the year ahead. Mars also conducts surveys to gather feedback on the company's procurement policies and practices and the impact of these policies on suppliers.

EXAMPLE: Annual supplier events at Walmart⁶

Walmart's annual Global Sustainability Milestone Summit invites associates, suppliers, and NGOs for sustainability progress discussions and best practice sharing. Suppliers give feedback on Walmart's sustainability goals, initiatives, and procurement via surveys and meetings, which are used to enhance sustainability practices. The summit covers topics like sustainability reporting and supplier sustainability scorecards.