Prioritise

Description

Prioritise among value chain actors and issues to determine the areas of your value chain that most require intervention

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Prioritisation will help you to create a clear and credible narrative around where to commit limited time and resources and why it is important to take action.

Segment and prioritise among your value chain partners

Determining whom to engage and how to engage them can be streamlined by segmenting your suppliers based on their strategic relevance. Group suppliers into high, medium, or low priority based on the likelihood and severity of potential environmental and social impacts and based on the potential risks and opportunities for your business. First, consider procurement spend and/or volume, reflecting on your reliance on specific suppliers with unique capabilities or single-source suppliers. Next, assess the severity of unmitigated sustainability risks with particular attention to suppliers and sites located in high-risk geographies or industries. Consider the full range of sustainability issues and try categorising suppliers based on the severity and likelihood of impacts. Finally, you will also want to consider the potential for creating positive impacts through collaborative work. By viewing the intersection of business, environmental, and social impacts, you can focus your resources on the most strategic suppliers and sustainability issues while adopting a more standardised and resource-efficient approach for those in lower-priority segments.¹

EXAMPLE: Mars supplier segmentation

Mars has 40,000 suppliers, which are segmented into three groups. The first group comprises 300 key sites supplying strategic raw materials in high-risk locations. This segment requires close working relationships to address risks. The second group consists of 3,000 suppliers that require less attention, but Mars wants to monitor them via supplier questionnaires. The third group consists of all remaining suppliers. These suppliers are of the least concern, and engagement is limited to sharing expectations through Mars' Code of Conduct.²

EXAMPLE: Interface prioritises 'Seven Fronts of Sustainability³

Through a materiality analysis, Interface identified seven sustainability priorities for its 'Mission Zero' plan: waste elimination, benign emissions, renewable energy, closing the loop, resource-efficient transportation, stakeholder sensitisation, and commerce redesign. They set ambitious targets within these areas, collaborating with suppliers to adopt sustainable practices and environmentally friendly products while actively enhancing supply chain sustainability through performance assessment and improvement identification.

EXAMPLE: [INDIRECT] Vancity segmenting strategic suppliers to implement living wages

The cooperative bank, Vancity, has taken measures to implement a living wage amongst its suppliers, such as its janitorial service providers. To prioritise its efforts, the bank focuses on strategic suppliers, defined as suppliers who exceed a threshold for total annual spend (> $250,000) or hours of service (> 120 hours).⁴

Use scenario-thinking to support your prioritisation decisions

Support your prioritisation decisions with scenario analysis and other future-thinking tools that challenge assumptions and consider uncertainties. These tools can extend the scope of discussion around potential outcomes, question conventional thinking, and expose previously unforeseen challenges to your value chain. One common approach is scenario analysis. This method describes contrasting yet plausible future scenarios to help you understand how various elements might evolve and interact. For instance, you could explore the physical risks of climate change, such as temperature change, extreme weather events, drought and water stress, and sea-level rise, assessing their potential effects on operations and sourcing. You could also explore different social scenarios related to growing inequality and its impact on social stability. This process prepares you for a range of possible futures and aids in developing effective procurement strategies that are better aligned with future uncertainties.

EXAMPLE: Walmart uses scenario analysis for supply chain planning

Using scenario planning, Walmart identified potential supply chain risks and opportunities, creating four plausible future scenarios with differing environmental, social, economic, and geopolitical trends, with stakeholder input. One, "Low Carbon," projected a world prioritising climate change mitigation, requiring Walmart's swift transition to renewables and sustainability initiatives to meet rising climate-conscious demands.

Resources
Embedded Strategies for the Sustainability Transition cover

Embedded Strategies for the Sustainability Transition

This guide from the Embedding Project outlines how to take a new approach to corporate strategy.

Prioritise: The section on Prioritisation (Pages 36-39) can be applied to procurement. It will help you to determine which sustainability issues are most strategically relevant to your value chain.

Commit: The Acknowledge section on pages 35-36 explains how to write effective position statements, and the Set Goals section on pages 37-45 describes how to set credible goals.

Scenario Planning: A Tool for Strategic Thinking cover

Scenario Planning: A Tool for Strategic Thinking

This in-depth article by MIT Sloan Management Review examines how companies can use scenario analysis tools to avoid tunnel vision.

The 3 Scenarios To Plan For To Mitigate Supply Chain Risk cover

The 3 Scenarios To Plan For To Mitigate Supply Chain Risk

This brief article by the Institute of Business Forecasting and Planning details how scenario planning is relevant to procurement. It offers guidance on how and when to use scenarios to mitigate uncertainty.