Qualiexpert

This edition of the newsletter is on an essential topic for the future of business - sustainable supplies.

Do you know how to align your organization's existing procurement processes with the sustainability, incorporating environmental, social and governance criteria?

Here we are going to cover the subject in 6 topics, based on national and international references, to help those who are facing such a challenging demand:

Relationship between Procurement and Quality Management

Quality management and procurement are not isolated concepts.

Procurement is related to Relationship Management, the focus of one of the 7 Quality principles, This is the raison d'être of Quality Management, which states:

“For sustained success, organizations manage their relationships with relevant stakeholders, such as suppliers”

Based on this principle, ISO 9001 states in requirement 8.4 that the organization must determine the controls (situations, types and extent) to be applied to processes, products and services for external providers, as well as the necessary information.

How to include sustainability in procurement

A ISO 20400 - Sustainable purchasing - Guidelines complements ISO 9001 in a valuable way.

The standard is aimed at:

“Stakeholders involved in or impacted by procurement decisions and processes and provides guidance for organizations, regardless of their activity or size, on integrating sustainability into procurement, as described in ISO 26000 - social responsibility.”

A ISO 20400 he adds:

“Every organization has environmental, social and economic impacts. Sustainable purchasing is purchasing that has the most positive environmental, social and economic impacts possible throughout the entire life cycle and that involves the sustainability aspects related to the goods or services and the suppliers throughout the supply chains.”

In addition to the guidelines, the standard cites 12 principles for sustainable purchasing (e.g. ethical behavior, innovative solutions, focus on needs), 7 main issues (e.g. governance, human rights and the environment) and 15 motivations for sustainable purchasing (e.g. competitive advantage, legislation, risk management).

Tip: See the Industry Portal document on ISO 20400 here

Benefits 

According to the same ISO 20400, the benefits of including sustainable purchasing in the company's strategy are:

• Risk management (including opportunities) for sustainable environmental, social and economic development.
• A powerful tool for organizations that want to behave responsibly and contribute to sustainable development and the achievement of the United Nations Sustainable Development Goals.
• Adding more value to the organization by improving productivity, assessing value and performance, enabling communication between buyers, suppliers and all stakeholders and encouraging innovation.

Performance Indicator

Implementing a performance indicator is the first step towards continuous improvement. At this point, the Global Reporting Initiative (GRI), which provides a framework for sustainability reporting, is an excellent choice.

O specific issue of GRI 204 - Purchasing Practices focuses on local suppliers as part of sustainability:

“By supporting local suppliers, an organization can indirectly attract additional investment into the local economy. Sourcing from local suppliers can be a strategy to help secure supply, support the stability of the local economy and maintain relations with the community.”.

The performance indicator suggested by the GRI is:

“Percentage of purchasing budget (based on invoices or obligations assumed) in major operating units spent with local suppliers “

In this sense, the organization must define what a “local supplier” and “important operating units” are:

“Local supplier is the organization or person that provides a product or service and is located in the same geographic market as the reporting organization (i.e. no transnational payment is made to the local supplier) and can include the community surrounding the operations, a region of the country or a country.”

Benchmarking

Benchmarking can provide valuable insights for improving your own sustainable procurement strategy.

By using the above GRI performance indicator, you can compare your results with those of other companies.

Several leading organizations have directed a significant part of their purchases to local suppliers:

• A AMBEV states that “through the Local Purchasing initiative we target suppliers from communities closest to our operations (up to 80 km), helping them to develop in a sustainable way. Currently 23% of our purchasing volume comes from local suppliers.”
• A Shell states that “83.3% of expenditure on goods and services was purchased from suppliers based in the same country of operation, also known as local purchases”
• A Natura states that 3.07% of the budget spent is on local suppliers. These are considered to be “those located in the same municipality as the manufacturing units (Cajamar and Benevides), supplying any Natura unit.”
• A Suzano states that “86% of the budget spent in São Paulo comes from local suppliers. Local suppliers are those with head offices or branches in the same state as Suzano's operations. For the indicator, manufacturing units, forestry units, ports and distribution centers were considered.”

Possible challenges

Implementing a sustainable procurement process is not without its challenges. Some key issues may be:

• How can we prevent procurement from becoming an excessively bureaucratic machine of records and evidence?
• What strategies can we implement to support smaller suppliers in adapting to the sustainable purchasing framework? How can we help these suppliers comply with sustainability criteria, without burdening them with complexity or prohibitive costs?
• How can we use technology to simplify and automate our sustainable purchasing processes, reducing our dependence on manual processes?
• How can we establish a working environment that encourages and rewards innovation and creativity in search of more sustainable solutions for our purchasing practices?

Conclusion

Quality, Procurement and Sustainability are increasingly going hand in hand and the knowledge management is mandatory. Review the methods, procedures and work instructions to include these new sustainability criteria and propose continuous process improvement.

In conclusion, change will not be easy, but organizations can make the transition to more sustainable and efficient Supply Management with the right knowledge and a continuous improvement approach.

Find out more with our ISO 9001 Professionals Expert Online Shop

Qualiexpert Services - Processes that add value

💡 Do you have any questions about Procurement and Sustainability? We know that the decision to move towards sustainability is a big and important choice. At Qualiexpert, we have the experience and knowledge to help you overcome challenges and implement efficient and sustainable practices. We are at your disposal to support and guide your organization in this process, always respecting your pace and your decisions. Contact us! 

Qualiexpert Community

If you like our newsletter and want to be kept up to date with the latest news, insights and exclusive resources on quality and sustainability management, join our community now and receive all our updates directly in your e-mail.