Ensure Green Purchasing thru Green Technology
Green purchasing has shown excellent resilience during current tough economic time and delivered value through sustainable cost savings thereby breaking the myth that – It’s a social obligation and so you have to necessarily pay an extra premium. There are three most important aspects to be considered while detailing out policy for green purchasing – social obligation, environmental impact & economic benefit. Of these the latter – which is directly related to the cost equation needs to be broadened for life cycle costing approach , so the cost equation not only need to capture cost for energy, waste and duration but also additionally include cost for repair & maintenance, disposable effort, health & safety compliance thereby offsetting any potential financial and environmental risks to the organization in today’s increased regulatory world.
We have noticed that most of the organizations assessment of carbon footprint is mostly limited to ‘organic buying’, ‘local buying’, ‘eco friendly or 'energy star certification’ and reason for this is that there’s no universal criterion which can be applied to every situation. Buyers need to define green policy for each spend category keeping following broad criteria in mind:
- Look for energy efficiency
- Avoid hazardous, toxic foot print in the product or services
- Conservation for heat, light, water and other natural resources
- Look for refurbishment and recyclability
- Easy disposability like bio-gradable
- Leverage technology automation
This brings us back to the most debated aspect – How compliant your purchasing processes are?
Unless organization leverage technology to embed green policy into its purchasing processes- like green specification & standards, green selection criteria, life cycle costing approach, green clauses in contracts at an enterprise level, it is difficult to comply with green purchasing commitment. It is extremely important for organization to leverage the green technology – eSourcing, eProcurement and eAccount Payable (which avoid paper heavy manual processes – saving tones of paper) thereby making its purchasing processes not only more effective & efficient but would also ensure complying with green purchasing policies at an enterprise level.
Comments
You've managed to describe the path outsourcers needs to take in a few brief paragraphs. You've nailed this on - Platform BPO alone is a play for cheap processing services tied to commodity ERP implementations. Vendors need to be much smarter about the value they bring to the table - and you've done a great job highlighting this here,
Posted by: business process outsourcing | September 15, 2009 3:58 PM
Thanks. While I understand that Green Purchasing is a small step in the overall scheme of big Green challenge we are all facing today, I believe that as a procurement professional we can certainly do a small bit from our side by taking a sound environmental buying decision wherever possible.
Posted by: Gurjeet | September 16, 2009 1:30 PM
This is a new and interesting view to look at the Sustainability initiative. Green procurement can certainly benefit the company and the environment. There are a couple of thoughts that come to mind as to how Procurement divisions can drive Green behavior.
1. Procurement divisions can start asking suppliers for their green behaviors, plans, strategies and initiatives in their RFPs, even if they do not intend to give a very high percentage to this criteria today. This question would force many suppliers to start taking this seriously and start thinking hard/ innovating to come out with cost effective green products in the future.
2. Procurement organizations can and should ask the vendors to quantify their carbon footprint, but not only for their own manufacturing operations, but also for the carbon footprint of their raw material, and the transportation and logistics inbound and outbound.. E.g., in the case of bottled water, vendors might have a low carbon footprint in bottling, but a heavy footprint in logistics.
Posted by: Aditya Mittal | September 21, 2009 7:06 PM
Aditya – Thanks for your comments. You are absolutely right about #2 - that organizations necessarily need to assess carbon footprint from end-to-end supply chain perspective rather than limiting to just preceding manufacturing operations & final product content. If someone is incurring huge transportation effort on organic buying than it beats the green buying purpose and it may also not be cost effective, and that’s the reason why ‘local buying’ has gained so much of momentum in the food retail chain during last few years. As a supply management professional I see immense value delivered by green procurement approach as it forces you to take decision from both environment & total cost perspective and hence sustainable in the long run.
Posted by: Gurjeet | September 23, 2009 5:25 PM