Sustainability and social responsibility are increasingly becoming ingrained within the operations of most organisations. With policies in these areas reflected into the processes and automation within the organisation.
Before we explore where automation impacts let’s look at a couple of definitions. The first from a tax authority and the second from an institute:
“Sustainable Procurement is a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment'.” UK HMRC
Corporate Social Responsibility (CSR)
“In broad terms, CSR is about corporate behaviour, governance and transparency in key social, environmental and business areas. It’s about considering the broader impact of company actions on all stakeholders. It’s about ensuring that companies do business responsibly, take a leadership position in community and social issues relevant to its own business operations (including those of its supply network), and are transparent about their actions in these areas.” CIPS
These definitions clearly show the emphasis being placed on Organisations to take a broader view of their supply chain and the overall impact of their organisation.
KFC has pledged that all its plastic-based packaging that reaches the consumer will be recoverable or reusable by 2025.
2: Government Expectations
Governments, as you might expect, are seeking commitments from Organisations and communities towards significant change in context of sustainability and CSR.
Governments themselves focusing on a wider range of issues. For some of which they need support from non-governmental organisations:
- Limitation of population growth
- Guarantee of basic resources (water, food, energy) in the long term;
- Preservation of biodiversity and ecosystems;
- Reduction of energy consumption and the development of technologies using renewable energy sources;
- Increase the industrial production in industrialised countries based on environmentally adapted technologies;
- Control of unplanned urbanisation and integration between countryside and smaller towns;
- Meet the basic needs (health, education, and housing);
- Adoption of the sustainable development strategy by development organisations (agencies and international financial institutions);
- Protection of supranational ecosystems such as the Antarctica, oceans, etc., by the international community;
- Outlawing wars;
- Use of new construction materials;
- Restructuring of residential and industrial areas;
- Use and consumption of alternative energy sources such as solar, wind and geothermal;
- Recycling of reusable materials;
- Rational consumption of water and food;
- Reduced use of chemical products harmful to health in food production.
The United Nations (UN) has identified 17 sustainable development goals: Implementation of a sustainable development program by the United Nations (UN). See Appendix to this article for more information on these goals.
3: Financial Markets
Also, from a financial perspective there is now the "Dow Jones Sustainability World Index". This was the first indicator of financial performance of leading companies in global sustainability.
There are however a growing number of Indices and funds including FTSE4Good, Bovespa Corporate Sustainability Index (Brazil), ISE Sustainable index, Ethibel, S&P ESG India and China's National Index. Ethibel for example only investing in shares of companies with a high CSR score.
HSBC has pledged to provide USD100 billion in sustainable financing and investment by 2025. The goal is one of five new commitments that HSBC is making to tackle climate change and support sustainable growth in the communities it serves.
Integrating sustainable practices can impact on organisational performance. What can be good for the community and environment can also bring economic benefits to an organisation.
The benefits that can be realised cover many domains including:
- Cost savings from focusing on full life cycle costs. Gains realised from more effective use and re-use of materials, focus on reducing wastage and minimising the use of natural resources, such as water and materials used to generate energy.
- Building supplier relationships through encouraging innovative approaches
- Opening up markets and new suppliers through offering sustainable solutions
- Tighter control on the supply chain and knowledge of the full supply chain. Reducing risk for the organisation
- An organisations public image
- An organisations alignment with local and national government initiatives, as well as the communities within which they operate
- Competitive advantage in being able to show your credentials as a sustainable supplier of goods and services
- Employee job satisfaction. Knowing that in doing business you are also minimising any negative impact your business has socially and environmentally.
“Companies that want to thrive and grow in the 21st century need to recognise that collaboration with suppliers to make all supply chain operations more sustainable will no longer be a ‘nice to have’, it will be an imperative to create business value.”
State of Flux consultancy group.
Perhaps one of the greatest challenges faced by an organisation is the ecosystem within which they operate. This ecosystem may not be aligned to the same objectives or as committed to achieve the same impact levels
Suppliers may not be as engaged as you would wish in the process. Perhaps there has been a history of competitive supply and little focus on long term engagement and partnerships from which to build.
In addition, the availability of suppliers will most likely be more limited, bringing the risk of higher purchasing prices.
There may not be the infrastructure in place to support your ambitions to re-use and recycle.
Initially there will be additional costs to evaluate and engage new suppliers and your own organisation in this process. There may be behaviours within your organisation, such as maverick spending, that does not align to your sustainable approach.
Another aspect that can be challenging for an organisation is transparency over their supply chain. Whereas governments typically operate in a transparent way, other organisations may not be used to opening up details of their suppliers and sources for products and services to provide evidence of their credentials.
6: The Impact of Automation
Automation, using an eProcurement platform, can assist in implementing a sustainable business. Automation can help to both define and streamline processes. Providing a range of benefits (in context of sustainability) as follows:
- Quicker onboarding of new suppliers with clear supplier “levels” that reflect their status in context of sustainable supply
- Ability to engage with remote suppliers, with automated stock control processes to reduce any waste of materials
- Users within the organisation able to easily use supply catalogues to ensure that goods and services are purchased from preferred sustainable supply chains: even down to the purchase of small items such as pens and paper.
- Ability to monitor consumption in real time and identify purchasing hot spots within an organisation. Focusing actions on these hot spots.
- Use of forms for suppliers to self-certify themselves and to provide attachments with appropriate certifications and disclosures.
- Clear audit trail of all documentation and interactions with suppliers, as well as all purchases.
- Automated workflows to ensure that users purchase goods and services within the policies of the organisation.
- Significant reduction in paper-based records, with the associated environmental impact.
- More accurate ordering, resulting in less wastage and return of goods, with all the associated transportation costs and environmental impacts.
- Ability to track the impact of sustainable supply chains on overall supply costs of the organisation.
"The Sustainable Development Goals are the blueprint to achieve a better and more sustainable future for all. They address the global challenges we face, including those related to poverty, inequality, climate, environmental degradation, prosperity, and peace and justice. The Goals interconnect and in order to leave no one behind, it is important that we achieve each Goal and target by 2030."