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Tag: sustainable procurement

Mars on a Procurement Pathway to Net-Zero

Posted on by dishanth
Mars on a Procurement Pathway to Net-Zero

Mars has published its open-source action plan to accelerate the drive towards achieving Net Zero emissions, including a new target to cut carbon in half by 2030 across its full value chain. The strategy also involves investing US$1bn over the next three years alone to drive climate action

The strategy incorporates an understanding of how supplier engagement, supply chain and procurement impacts their environmental footprint, as 80% of it comes from their inputs such as raw materials, packaging and logistics.

“The carbon footprint of our entire supply chain from farming through to the end of life of our packaging and everything in between is the same as that of a small country – Finland has almost exactly the same footprint,” explains Barry Parkin the Chief Procurement and Sustainability Officer at Mars Inc. “When we look at where our footprint was ten years ago, 70% or more of it is embedded in the goods or services we buy. So, procurement is therefore absolutely critical.”

This means the role of procurement, supply chain, and supplier engagement is integral to the company reaching their ambitious sustainability targets, and Parkin is acutely aware that means it is essential for them to do things differently. “Our job is to re-imagine and re-design supply chains so that they have a dramatically lower carbon footprint,” he says. “To put it another way, unless we change what we buy, or where we buy it or how we buy it we are not going to really change our carbon footprint. ”

Their roadmap involves removing approximately 15 million metric tons by 2030 and then another 15 million metric tons by 2050 when they reach net zero.  Since 2015 Mars have already reduced emissions by 8%, whilst growing the business by 60%, showing that it is possible to decouple emissions from growth and success of a business.

 

Supplier relationships 

As for any major organisation trying to address their sustainability strategy, it is impossible for Mars to make significant progress with their carbon footprint without the help and buy-in from their enormous supply networks.

“As a global company, we rely on suppliers across our value chain as essential partners in our journey to reach net zero,” says Parkin.  “Like most companies, addressing our Scope 3 emissions is challenging because of their indirect nature and our lack of direct control or visibility. Only by working with our Tier 1 suppliers can we make progress with them on their own emissions and on their upstream emissions with our Tier 2 suppliers and beyond.”

Mars was a founding member of the Supplier Leadership on Climate Transition coalition, that is a dedicated body for instigating climate action through industry-wide supply chains.  This allows companies like Mars to use their scale and influence to guide, mentor and train suppliers with emissions strategies and also celebrate their best practice.

This reflects the collaborative approach Mars is trying to adopt with all their stakeholders to reach their climate targets.  “Suppliers that demonstrate substantial progress in reducing their environmental footprint are recognised and rewarded with additional business,” explains Parkin. “This metrics-driven strategy ensures that our suppliers have a significant role in our journey towards sustainability, aligning their efforts with our commitment to addressing the climate crisis.”

To achieve this relationship, Mars sets clear expectations for suppliers regarding emissions reduction, renewable energy adoption, and sustainable sourcing. They then incorporate those climate performance metrics into some of their biggest supplier’s evaluation criteria.

 

Recipe optimisation 

For one of the global leaders in food products, pet supplies and confectionery, they are also able to leverage product design and ingredients into their net-zero strategy.  Mars describes that as ‘optimising recipes’ and procurement is again integral in making that aspect of the plan a success.

“Our procurement team actively collaborates with suppliers to identify and source new ingredients in a way which lowers emissions and advances our sustainability goals,” says Parkin. “This collaborative approach helps improve our supply chain sustainability performance, including the procurement of ingredients that have a reduced carbon footprint.”

This approach of working closely with the suppliers who provide the ingredients, allows Mars to enhance their product offerings while at the same time finding new ways to reduce the emissions associated with the recipes.

 

Buying-in to the road map 

Parkin is praising the positive reaction from their suppliers to the Net Zero Roadmap, but that is also because many of those partners have been on a sustainability journey with the company for a number of years, since setting out their first scope 3 targets for their full value chain back in 2017.

“Suppliers have expressed their appreciation for the transparency and specificity of our roadmap,” explains Parkin.  “It has enabled them to better understand our expectations and how their contributions fit into the broader picture of achieving net zero emissions. The roadmap’s emphasis on collaboration and collective responsibility has resonated with our suppliers, fostering a spirit of partnership in our shared journey towards sustainability.”

The partnership allows procurement partners to take proactive steps in their organisations and strategies to address their emissions, and be part of a collective responsibility to finding both a sustainable future and a productive business relationship.

Aside from the influence such an ambitious net-zero strategy has on the culture and direction of a company like Mars Inc, it also creates a larger impression on other companies in their business ecosystem as other brands and businesses look to follow their lead.

Barry Parkin is aware of the value of that influence, and how their procurement and supply chain can help lead others to greater sustainable achievements.

“Global companies like Mars play an important role in shaping sustainability standards and advancing climate action at scale,” he explains. “Our influence extends across the globe, allowing us to inspire change on a wider scale. When companies set high sustainability standards, it encourages others in their industries to follow suit.”

He adds: “Companies like Mars have the resources, expertise, and innovation capabilities needed to pioneer sustainable practices and technologies.

“We can invest significantly in research and development, pilot groundbreaking initiatives, and implement sustainable solutions beyond the reach of smaller organisations. This proactive approach not only benefits the environment but also builds a positive reputation with environmentally conscious consumers and attracts like-minded partners.”

If a globally recognised brand like Mars can leverage their sprawling supply and procurement network for better environmental outcomes, it can only help to bring others on the same journey. “This ripple effect fosters industry-wide transformation, promoting a more sustainable future,” finishes Parkin. “If a business such as Mars can halve it’s footprint by 2030, that matters.”

 

 

 

Source   Sustainability

Sustainable procurement doesn’t have to be a headache – here’s how your business can benefit

Posted on by dishanth
Sustainable procurement doesn’t have to be a headache – here’s how your business can benefit

For business leaders, environmental, social and governance (ESG) goals are very much front of mind. More than 70 countries, including China, the US and the European Union, now have firm pledges to reach Net Zero, and the UK is committed to hitting this by 2050. Businesses of all sizes are increasingly aware that they have to be part of the solution, rather than add to the problem.

Procurement leaders are uniquely positioned to drive positive change and broader business impacts on ESG goals. While organisational sustainability efforts have historically been grounded in ensuring compliance with regulations, a comprehensive, proactive approach to sustainable procurement can reduce risk exposure (such as reputational, brand safety or regulatory), create savings, and improve brand value for the enterprise.

Procurement departments are certainly aware of the need to thoroughly assess the provenance of the products they purchase. But while this may be possible with core purchases – usually involving large amounts of money where there is a direct relationship with the supplier – it is simply not possible to vet every single product, particularly in categories such as IT purchases, catering items and health products, where the overall spend may be lower but individual purchase volumes are higher.

A trusted smart business buying solution, such as Amazon Business, can help operationalise and scale a responsible purchasing program. As well as other benefits, including access to business-only pricing, a familiar user interface, and Amazon’s reliable delivery network, buyers can select more sustainable products across business-relevant categories, specifying from over 40 certifications covering a wide range of credentials.

This allows businesses to set specific requirements, and even set preferences, ahead of employee product searches. These out-of-the-box buying policies can direct your team to products and sellers that can help satisfy your organisation’s purchasing goals, and would make products with certain sustainability certifications the preferred product in a buyer’s search results.

Clear labelling of products with sustainability certifications frees up time spent finding, validating and growing a base of suppliers that can help you meet your organisation’s responsible purchasing criteria, using an interface with which employees may already be familiar. In turn, business leaders can access pre-built reports (for example, orders, shipments, returns, refunds, reconciliation, related offers and the credentials report which contains product sustainability details), or build custom reports to identify purchasing patterns and track spend toward more sustainable products that meet ESG goals.

One example of a supplier that offer products with sustainability certifications is UK firm Portus Digital, which helps to repurpose or recycle redundant computer equipment. “Our aim is to be a frontrunner in the industry and set an example of how it is possible to combine technology and sustainability,” explains Tash Clementis, Director of Marketing. “People are more likely to choose a greener option when it’s easier and more accessible.”

Amazon Business also works with suppliers to help them become certified, ensuring they can benefit from organisations looking to make more sustainable and responsible purchases. “We launched on Amazon to help more businesses make sustainable IT decisions,” says Rob Judd, Director of Sales at Portus Digital. “We’re pleased by the response we’ve managed to generate so far – it’s exceeded our expectations.”

Research from McKinsey shows that organisations that embrace a comprehensive ESG strategy can enhance investment returns, increase top-line growth and keep and attract quality talent. Further, improvements on reporting can help businesses demonstrate their progress towards ESG goals more broadly, providing specific metrics to proactively measure against social responsibility and sustainability goals.

Amazon Business can also partner with organisations as they look to improve sustainability in other ways. Amazon Business Prime members can choose to consolidate their deliveries using Amazon Day, which gives them the choice of two days each week during which they can receive their orders. On, average, this reduces the number of packages. For larger orders, it’s also possible to receive bulk deliveries by the pallet, meaning organisations can stock up on items while minimising delivery journeys, where available.

Amazon Business, as part of Amazon, is committed to adopting sustainable practises, including reducing packaging and making use of electric delivery vehicles. It has also committed to power its operations with 100 percent renewable energy by 2025.

With sustainability and responsible business rising up the agenda for organisations, investors and consumers, it’s vital companies take steps – and can demonstrate those steps – to source responsibly. This is an issue that all businesses must embrace, and one they cannot afford to ignore.

 

 

 

 

Source   Independent

The road to sustainable procurement

Posted on by dishanth
The road to sustainable procurement

For many, procurement – determining a supplier for goods or services – is an invisible process. Despite this, it’s a completely vital one that keeps the global economy humming along.

How do goods get from one place to another? How are they procured, from where are they supplied, and how do they move down the chain? These are all questions procurement teams have to consider daily. Managing procurement is synonymous with running a sound business: according to one statistic, 70% of what an organisation earns is spent on suppliers.

The experience of COVID-19 and the pandemic’s disruptions to supply chains have reminded all of us – through higher prices and the inability to acquire basic goods – of the significance of this silent mover of the economy. Being reminded of procurement’s vitality and omnipresence begs questions about the process’s sustainability.

For many, a sustainable procurement process comes down to smart economics. Proxima is a consultancy that helps companies – FTSE 100 ones among them – sustainably transition their procurement and logistics operations. The company’s Executive Vice President for Procurement, Simon Geale, views approaches to procurement as well as sustainability through the lens of spending wisely, and in this regard, the interests of both most certainly overlap.

He goes on: “In very simplistic terms, procurement needs to embed sustainability as a form of value, in the same way as it might think about speed, quality, cost, etc. when creating strategies, buying or measuring outcomes. At certain times, this will mean finding new solutions; at others, it can mean influencing and convincing stakeholders where change can be beneficial in business terms.”

But it’s not always easy accounting for sustainability in procurement, which is often an indirect emission, one which the primary company has to in some way outsource to a contractor. “For most sectors, scope three greenhouse gas emissions – the indirect impacts that occur in a company’s value chain – are the largest source of emissions, but getting a handle on them is notoriously difficult.” These are the words of Selina Donald, the Founder and Chief Sustainability Advisor of The Bulb, a sustainability consultancy that specialises in events. As the leader of the sustainability and social values strategy for the recent Birmingham Commonwealth Games’ Opening and Closing Ceremonies, Donald was tasked with overseeing over 100 suppliers.

Recognising that “no one can become net zero until we all become net zero”, Donald stresses the need within procurement to align with like-minded suppliers, as well as to rate the sustainability and social values of potential suppliers.

“In their contract, there’s a clause that requires them to provide sustainability data and ensure that their values align with expected on-site behaviours across power and waste management, transportation and design.” In the event she is not sure, she deploys tools like TRACE, a carbon calculator that tracks the environmental impact of suppliers. By implementing workshops and maintaining regular communication, sustainability was kept at the forefront of her company’s relationship with suppliers. By setting up a direct line via an email address, suppliers were engaged “to provide sustainability support as appropriate and for them to put forward more sustainable options when delivering the product or service”.

Donald neatly summarises the approach: “We recognised that a key driver to meeting our Sustainability and Social Values commitments was working with a like-minded supply chain that can not only meet requirements and provide value for money, but, at the same time, hold sustainability, diversity, and ethical sourcing practices at the core of their operations.”

Still, it doesn’t come down solely to checking your partners. A deep understanding of markets is also informative and essential. Only then will sustainable procurement become shockproof. Going back to Simon Gaele at Proxima, he says: “Understanding the supply market means you will get the best outcomes available to you. If you don’t understand the market, you will always buy what you know, or, at best, be constrained by your own ideas and open to supply market risk. That’s a dangerous place to be in.”

Gaele does concede that the market – the lifeblood of enterprise and capitalism – does have a seminal part in the quest for sustainable procurement: “As unfashionable as it is to say sometimes, markets inform what we should be paying for sustainable solutions; even in a deep collaboration where we are ‘designing to X’, market intelligence informs commercial value calculations, top and bottom line.”

 

 

 

 

Source – Sustainability

How to move towards a more sustainable supply chain

Posted on by dishanth
How to move towards a more sustainable supply chain

Supply chain leaders are under pressure from all sides to become more sustainable, not just from board-level executives but also from customers and investors. In fact, research by Celonis and IBM found that more than half of Chief Supply Chain Officers (CSCOs) would be willing to sacrifice up to 5% of profit to become more sustainable.

One key way of improving sustainability is getting rid of process inefficiencies which create significant waste and increase unnecessary emissions. Excess stock or production waste is often the result of unclear processes, miscalculations, quality deficiencies, or capacity bottlenecks. The materials and products wasted in the process drive up costs and have a negative impact on a company’s carbon footprint. But it’s often the case that companies can’t even see hidden process problems.

Through data-powered process mining, it is possible to find and fix the hidden process problems that you don’t know you have and improve your sustainability performance.

 

The missing data

The sustainable procurement of materials is fundamental to achieving overall sustainability in the supply chain. Transparency with regard to the exact ecological and social impacts of suppliers is important. However, this is precisely where sufficient insight is often lacking or information is not always available in a timely manner.

Shipping delays at ports worldwide have wreaked havoc on global supply chains, with research suggesting that as little as 34% of container vessels arrived without any delay to their destination in February 2022. This statistic is only a glimpse of the huge inefficiencies in supply chain that lead to unnecessary carbon emissions and a negative environmental impact. As an example, 1.6 billion tonnes of food are wasted each year, contributing to roughly 8% of the world’s carbon emissions. 78% of this waste occurs before the food reaches the consumer due to inefficient supply chains, meaning food is actually perishing before it hits supermarket shelves. Businesses are therefore forced to order more food than is needed in order to account for the shortfall.

A common problem here is that decision-makers simply do not have the necessary information for climate-friendly route planning, and the amount of data is one of the biggest obstacles. What seems paradoxical at first glance has its roots in the increasing number of IT systems and applications as well as the virtually exploding mass of stored information. Whereas 25 years ago even larger companies worked with only a handful of different IT systems, today there are usually hundreds, often with numerous applications being used to support a single process. This complexity leads to breaks and inefficiencies in processes that cannot be detected, let alone fixed, with traditional methods.

At the same time, these weak points mean unnecessary consumption of resources and thus increased costs and avoidable CO2 emissions.

 

Why process mining works

This is exactly where process mining and execution management come in. Process mining works like an X-ray machine for internal procedures and can illuminate and subsequently optimise critical business processes. It does this by visualising the current state of internal operations, including all process variants on the basis of data. With valid, data-based insights across all procedures it is possible to break down silos and incorporate sustainability into every decision or measure. All processes and different data sources are taken into account. By bringing together data from all common IT systems, such as SAP, Oracle or Salesforce, and mapping it in its actual form, business processes become holistically understandable.

By applying process mining and the right execution management in this way, companies can shrink the time it takes to find a process problem from years to hours, and make great leaps and bounds in sustainability goals in a short span of time.

 

The path to sustainability

Making a business more sustainable actually has a positive effect on the bottom line. Some of the world’s leading companies measure the impact of inefficiencies within their supply chain processes in order to minimise resource waste. Process mining and execution management helps these companies find and realise opportunities to significantly optimise fuel consumption, yielding material, financial and environmental benefits.

Carbon commitments and sustainability goals are no longer seen as afterthoughts. Rather, they are fundamental aspects of a company’s overarching business strategy. As processes determine how businesses run, they enable operational and even systemic change. Once processes are analysed and improved with intelligence and data execution, it becomes possible to prioritise sustainability in every operational decision.

This continuous measurability is a crucial aspect for many companies in view of the increasingly strict regulatory requirements. To put it in a nutshell: AI-supported technologies and continuous follow-up are the prerequisites for a sustainability process that is ‘sustainable’ in the literal sense of the word.

 

 

Source Edie