The Collaboration Wheel – Your Tool for Successful Collaborations

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In a time of rapid change the ability to innovate and change quickly and effectively, again and again, is perhaps the only enduring competitive advantage. Those firms that can innovate and change constantly will thrive. Those that do not or cannot be left behind. This demands that companies seek outside their own ecosystem for ideas and execution in timely speed. Companies need to collaborate.How could a structured approach look like in the entire lifecycle of the relationship? 

We have developed the Collaboration Wheel, a tool which can help you create successful collaborations.

1. DEFINING THE NEED AND CREATING AWARENESS
As a company you need to be able to explain why you are looking for inspiration outside your own ecoinnovation system and most importantly how should it benefit your company? It is important that the open approach is anchored in your company´s strategy. It is also important that your leaders have a collaborative mindset. Check out this blogpost on Collaborative Leadership skills. Keywords:

  • Alignment with your company´s strategic objectives
  • Objective with your company´s Collaboration or Open Innovation Manifesto
  • Collaborative Leadership approach

2. GUIDING GOVERNANCE
The governance structure behind your approach is your backbone. The question is what type of collaboration culture you would like your employees to work by. What are their current skills and how much trust are they capable of and willing to put into the relationship? From an idea is generated to the idea is implemented – what are the roles and responsibilitues in that proces – and what happens in the relation if it does not get implemented. Keywords:

  • Creating a collaborative culture
  • Assessing people collaborative skills
  • Assessing the company´s collaboration maturity
  • Trustometer – Ecosystem trust
  • Stakeholder management
  • Decision making process
  • Roles and Responsibilities
  • Intellectual property Management

3. COLLABORATION PLATFORM (PEOPLE WITH PEOPLE)
Now that your backbone is in place and anchored in the strategy it is time to engage the people that are part of the process. What sort of tools and processes are you going to utilize for knowledge exploration, retention and exploitation? Keywords:

  • Knowledge exploration
  • Knowledge retention
  • Knowledge exploitation

4. CUSTOMER COLLABORATIVE ACTIVITIES
How is that your partners should be involved in your ecosystem, what sort of information are you going to share with them and how will you assist them? Keywords:

  • Ecosystem involvement
  • Customer communication
  • Customer assistance

5. GET MOVING
You have the system in place. Now it is time to seek out the ecosystem partners, assess their willingness and validate their capabilities. Keywords:

  • Seek ideas and ecosystem partners
  • Assess willingness
  • Validate ecosystem partner capabilities
  • Engage, collaborate and build trust

6. STAY ON TOP OF THINGS
It takes trust to manage a relationship. Do you have the knowledge about what triggers trust and how to use it effectively in your relationship?
If the relationship is not benefitting the company and the strategic direction it is time to say goodbye. How is the process and what triggers it? Keywords:

  • Manage relationship and maintain trust
  • Exit strategy, triggers and process

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

Why care about water as a procurement professional?

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Water resources are under increasing stress, with water management now recognized as one of the key societal, environmental and sustainability challenges of the 21st century. The stakes are high, and solutions aren’t simple. They require a deep understanding of the causes of water risk and a willingness to think beyond the normal.

WHAT’S AT STAKE?

Water scarcity will not only affect humans but also freshwater systems and species. According to the WWF:

  • 41% of the worlds human population lives in areas of severe water stress
  • 800 million people lack access to safe drinking water
  • 2,6 billion people lack adequate sanitation services
  • Water pollution is high, especially in developing countries where up to 70% of industrial waste is disposed without treatment
  • The world’s population is expected to peak at 9 billion by 2050. Already in 2025, 65% of the worlds population and 1/3 of the land area will be in severe water stress due to additional food and water requirements. Most of the 3 billion additional people will live in cities in the developing world with poor water sanitation infrastructure. Increasing water scarcity leads to increased potential for conflicts.
  • Temperature increase of 1-2 degrees by 2050. Climate change results in higher weather variability, less freshwater stored in ice, more droughts and floods, and changes in the ecosystem due to higher water temperatures.

WE ARE ALL IN THIS TOGETHER
It might sound like a cliché. Though, at the end of the day we are all in this together. The entire world is a stakeholder on the water issue. Less than one percent of the earth’s water is fresh water, and of that, only a percentage is not frozen and readily available for usage.

We, the people of this planet, are currently using 50 percent of the fresh water available annually, which is more than what the earth is able to restore within a year. The availability of fresh water compared to the demand of fresh water is putting extreme pressure on this resource.  The UN has estimated that anywhere from 2.7 billion to 3.2 billion people will live in water-scarce regions by 2025.

USE LESS WATER
All industries use water, some more than others, and as water becomes less available, and therefore more expensive, it will be in all business’s interest to use less water. In fact, many large corporations have shown great interest in the water issue already, not because of an inherent belief in helping to save the environment, but rather as a means to help save their businesses. This important, and historically overlooked, operational risk and associated costs are expected to rise exponentially in the coming years. Corporate, NGO´s and government must come together to attack water subsidies.

USE THE WATER RISK FILTER
Water, or the lack of it can directly affect companies profitability. In the worst cases, poorwater management can force closure or relocation of business operations. According to the WWF, when it comes to dealing with water issues, many companies don’t know where to start. The WWF has developed the water risk filter. It assesses water related risks. View it here.

About the author: 
Alis Sindbjerg Hemmingsen is a thought leader within the field of Responsible Procurement. Her unique capability of combining sustainability and procurement best practices has positioned her as #210 on the global Responsible Sourcing ranking, listing the most influential contributors to the Responsible Procurement field.

Her mission is to inspire companies and people around the world to develop impact driven approaches to Responsible Procurement. This should accelerate the sustainable change with their suppliers and create a sustainable future for the generations to come. More than a 1000 people from 30 different countries have already downloaded her e-books and tools from the website of Responsible Procurement Excellence. Besides her thought leadership she works full time in Velux procurement (as of march 1st 2015). Views are her own.

 

Taking The Stage With Sustainable Procurement In 2015

I have written this post together with and for Ecovadis. First published here.
The Intergovernmental Panel on Climate Change reported that the risks of climate change are so profound that they could result in food shortages, plant and animal extinctions, and other dangers if greenhouse gas emissions aren’t curbed by 2050. They said this in a very stark language.
The challenge is that our economies motivate people and businesses to consume to such a degree that the planet is unable to regenerate itself.However, we have the opportunity to re-think the way we do business.The question is: how does that affect procurement in 2015 and onward?
PROCUREMENT ADDRESSES A SOPHISTICATED AGENDA
In order to understand the future, we need to understand the history. First of all, driving out costs has often meant driving risk in. The last 30 years has reshaped business models and the business landscape. Globalization coupled with rapid developments in the new information technologies are changing the way we work and live.This evolution of supply side management has placed procurement at the strategic heart of many organisations. The procurement function must address an increasingly sophisticated agenda in meeting the needs and demands of modern business.
The procurement function must add something which is value adding to the business.To deliver this new value creation imperative and meet the needs of business today implies a different role and set of responsibilities. They will have access to smarter systems and increase responsiveness. This will automate many processes, and reduce some needs for human intervention, but accentuating the need for those interventions to be creative, strategic and well-informed.
It will require that procurement leaders become bimodal, analytical, strategic thinkers, collaborators and orchestrators who optimise complex networks of global capabilities. Procurement will from their position be they who will have the mandate, and the ability to enable a delivery to the business.According to the white paper published by Optimum Procurement “The Dawn of Procurement’s New Value Proposition”, procurement faces the following challenges, to be:
INNOVATIVE

  • Increasing complexity demands greater focus and creativity
  • Technical competency will be increasingly complemented by soft skills
  • Procurement will become the attractor of innovation
  • Category managers will be entrepreneurial, commercial and leadership focused

FOCUSED

  • Procurement will become more aligned to strategic business goals
  • Supply management decisions will be much more rigorously validated
  • Increased analytics and modeling will help improve evaluation
  • Previously unattainable levels of analysis will be achievable in addressing a dynamic set of risks and constraints

COLLABORATIVE

  • Procurement professionals will need to be internal and external networkers
  • They will need to integrate across the whole organization
  • Job rotation will become an essential learning tool for them
  • They will be strong team players capable of overcoming functional, national and virtual boundaries

Circular Procurement
Now that we have touched upon the overall agenda affecting procurement it’s also important to address tendencies which is affecting the Sustainable Procurement agenda.

Many of the world’s natural resources are threatened, some are less obvious than others. Hence companies have to adapt to the fluctuations in commodity and energy prices. Companies, which rely on the availability of plentiful and inexpensive natural resources, are living on borrowed time. Our economies have up until now used a “take-make-consume and dispose” pattern of growth – a linear model, which assumes that resources are abundant, available and cheap to dispose of.

A circular economy, and in Circular Procurement takes into consideration that valuable materials are leaking from our economies. Our society can benefit economically and environmentally from making better use of those resources and hence, applying circular principles. Circular Procurement could be the answer to one of the worlds biggest challenges.

GOING BEYOND COMPLIANCE
Another trend is that sustainability is becoming an even more core part of a company’s core way of doing business. Procurement is playing a vital role in that transition, as they have to contribute to secure continuous access to resources and strengthen the company’s reputation and competitiveness. This means going beyond compliance.

Going beyond compliance means creating real changes within the environmental, social and economic agenda – which has a bottom line impact. It’s not just about following mainstream by developing a code of conduct or sending out a supplier survey. It’s about thinking: how can my business reach new markets, innovate new solutions or accelerate growth grow from a Sustainable Procurement approach?

If you work in procurement 2015 will be the year where you focus on becoming bi-modal, analytical, strategic thinkers, collaborators and orchestrators who optimize complex networks of global capabilities. Think Circular (Economy) and go beyond compliance management – then you will be able to take the stage in 2015.

Author: Alis Sindbjerg Hemmingsen
First published in the Sustainable Supply Views blog from EcoVadis
EcoVadis is the CSR rating platform for supply chains spanning 150 sectors and 99 countries of Global-500 enterprises like Verizon, Coca Cola Enterprises, Johnson & Johnson and 100 others.  EcoVadis Scorecards make it easy to understand, track and improve suppliers’ environmental, social and ethical performance. www.ecovadis.com 

4 Ways Sustainability Experience and Skills Can Boost Procurement Careers

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I have written this blogpost for and with Ecovadis. First published on the Sustainable Supply Views blog.

Increased competition, higher customer expectations and shifting attitudes and awareness towards the environment and sustainability are a few of the pressures impacting the ever-changing world of procurement. Expected lifetime of a product is becoming ever shorter. Additionally supply chains are growing longer and are getting more complex. Companies have new exposures in new geographic regions, and the interconnected nature of the global economy makes problems more, not less, likely to arise. The likelihood of supply chain disruptions or brand-impacting events has increased, as well as their potential visibility in our hyper-connected world.

Procurement professionals who have taken on tasks or a role in Sustainable Procurement and CSR in the supply chain are gaining valuable skills to grapple with these challenges. For successful implementation of sustainable procurement, professionals must learn and use skills such as an entrepreneurial approach, a collaborative mind-set and a business-driven strategic view.

How can procurement professionals benefit further from these skills in their career?

Collaborative Mindset
Procurement will have to work in a much more cross-functional role. Most procurement pro’s agree that without the alignment and symbiosis of other departments, procurement has little power. Strong team playing skills as well as strong internal and external networking skills are key competences.

Having said that, if a procurement professional possesses these collaboration skills, then they have a great opportunity to apply them in a business development role.

As Gerard Chick, Chief Knowledge Officer and Optimum Procurement says:
“Procurement must be the function that is continually challenging ways of working. Looking to ensure it help its internal business stakeholders achieve their goals and targets whilst, at the same time, taking the opportunity to challenge total cost, facilitate customer of choice benefits such as access to innovation and of course the management of risk. Most critical of all is, that procurement must be aligned to the corporate focus addressing the key question for any business: What it the value for the customer?” Check out the article here.

Entrepreneurial, With a Life-Cycle View
The entrepreneurial mindset is key when it comes to developing new partnerships and new products. It is also key in relation to the existing products, which could be challenged by good product stewardship. Good product stewardship practically means that you use a life-cycle approach. Using a life-cycle approach will help visualize the hot spots in the products, help develop product design scenarios and support the organization in engaging and collaborating with key stakeholders, to ensure improvements are implemented.

Taking a life-cycle view means finding the “innovation sweet-spot” where consumer needs, environmental impact and technical and business capabilities converge. Taking a lifecycle view also ensures, that improvements made in design actually do translate into measurable improvements in environmental performance.

Once you have experience with a responsible procurement project, you bring valuable examples and perspective on all these aspects to every new project and product team you work on within your career. Good entrepreneurial skills are also a good sign of a person’s ability to adapt to changes and typically something which is highly sought after with new potential employers.

Business-Driven Relationship Development
In the past, if you asked a procurement professional where innovation happens they would typically answer: in other parts of the organization. They are not used to innovation happening outside the company, for example in their supply chain, and with the supplier. The changing business environment demands a much faster development pace, so supplier innovation is key to success. Procurement professionals have a key role to play as supplier coach and communicator.

For a deeper dive into these skills, check out this series of blogposts on the 14 skills of the modern procurement professional from CPO rising.

In many companies, and procurement functions, it is typically a challenge to include suppliers in the front end of the innovation process. Procurement teams are often disconnected from the functions they serve and the markets they engage with. They are not fluent in the nuances of the business and hence lack experience and authority. A good business understanding can lead to many exciting roles within or outside the company.

CPOs Seeking To Reap The Benefits
Looking backward, cost reduction was often considered the number-one priority in the eyes of the CPO. The new commercially-focused demands are rocking this traditional area of procurement strength. Globalisation has proven to be more about revenue growth than cost savings. Spend management is shrinking and the focus is now on sustained profitability.

That is why now CPOs are seeking to hire and promote those professionals with skills like strategic thinking, a business driven collaborative mind-set and an entrepreneurial total-cost-of- ownership approach. These skills are essential if you want to work in Sustainable Procurement. So even though CSR and Sustainable Procurement might not be the number one priority within your company, it is a great proxy for those skills.

EcoVadis is the CSR rating platform for supply chains spanning 150 sectors and 99 countries of Global-500 enterprises like Verizon, Coca Cola Enterprises, Johnson & Johnson and 100 others. EcoVadis Scorecards make it easy to understand, track and improve suppliers’ environmental, social and ethical performance. www.ecovadis.com

Why is Ethical Procurement also Responsible Procurement?

I have been asked the question of whether ethical procurement is also responsible procurement. To me the answer is a clear: YES! In this blogpost I will explain why and give you some ideas to what ethical procurement is.

WHAT DOES YOUR FOOTPRINT LOOK LIKE?
In order to understand what ethical procurement is all about it is essential to understand what responsible procurement is.

The typical challenge for procurement professionals is to understand the impact procurement decisions have on local communities, workers, and the environment, and then take action to ensure a positive impact. Kind of like asking the question: Where did and do you put your foot and what does the footprint look like? At the end of the day, that’s what Responsible Procurement is all about. If you plan well, it can promote sustainability, provide you with cost savings, and protect and enhance your brand. It’s as simple as that.

Responsible Procurement is a new dimension for many procurement organizations. Typically they have based their decisions upon price, quality, and delivery time. Responsible Procurement means taking into account the economical, environmental, and social impact of purchasing choices.

Practically speaking, Responsible Procurement is about defining a set of mutually compatible requirements, specifications, and criteria that favor protection of the environment, social progress, and economic development. You do this by identifying resource efficiency, improving the quality of products and ultimately by optimizing costs.

BALANCING THE 3 PILLARS
Responsible Procurement is about balancing what is called the three pillars: social, economic and environmental. So why is there a need to balance these three pillars?

From an environmental point of view, we have to ensure that natural resources that are extracted and processed into goods and services are consumed in a more efficient way – getting more out of less. And by changing the way we produce and consume, we can still limit the impact that climate change is bringing about. From an economic and social perspective, we have to ensure basic human rights and economic development, regardless of age, gender, nationality, religious belief or economic status.

ETHICAL PROCUREMENT
To me ethical procurement is a combination of the two pillars: social and economic. As an example – if procurement professionals for instance accept bribery or corruption – then they do not treat their suppliers fairly. They prevent unhealthy economic development and put up barriers to trade. At the end of the day it does not create a transparent company either.

From a social perspective I think it is essential to consider how procurement professionals should act on behalf of the company in terms of recognizing equality and diversity, observing core labor standards, ensuring fair working conditions, and increasing employment and skills. To support them in doing that I believe guiding documents or policies is a great way to show your stand.

One of the companies which I think you can learn from in terms of policies is Tesco. Check them out here. Do especially check their Code of Business Conduct. Great inspiration to how you can define your expectations towards your procurement professionals.

Learn more about Responsible Procurement Excellence.  Download our free stuff, participate in our webinars or simply dive into our articles and blog posts for more inspiration.

TestResponsible Procurement Excellence has specialized in helping companies around the world develop and integrate an actionable approach to Responsible Procurement. An actionable approach goes beyond compliance, has a positive effect on the reputation, raises efficiency and generates revenue.  Sign up for the newsletter right here.

25 essential questions to ask your suppliers on product stewardship

Product StewardshipProduct stewardship in a product’s lifecycle must be a journey that incorporates the “seed” of a contract, through to the “shoots” of product design, manufacture, transport, sale, and the “fruits” of product use, all the way to the “composting” at the end of a product’s life. How can procurement support this journey and challenge their suppliers? Find below the 25 most essential questions, which you can ask your suppliers in order to create more sustainable products.

USE A LIFE CYCLE APPROACH
Good product stewardship practically means, that you use a life cycle approach. Using a life cycle approach will help visualize the hot spots in the products, develop product design scenarios and support the organization in engaging and collaborating with key stakeholders, to ensure improvements are implemented.

Taking a lifecycle view means finding the “sweet innovation spot” where consumer needs, environmental impact and technical and business capabilities converge. Taking a life cycle view also ensures, that improvements made in design actually do translate into measurable improvements in environmental performance.

The shared understanding is that the product, its packaging and the related supply chain has to be viewed as single solution, not a sum of disconnected parts when it comes to reducing its impact on the environment. A lifecycle view can ensure, that the environmental burden is not inadvertently increased elsewhere in the life cycle.

THE 25 MOST ESSENTIAL QUESTIONS TO ASK
If you want to use a life cycle approach or be good at product stewardship you, or your procurement professionals, will have to ask your suppliers some key questions. In our company we have developed a simple LCA tool (Life Cycle Assessment tool), which helps us gather the data and facts that we receive from the suppliers on a specific product, product line or category. Using the tool gives a good basis for discussions with the supplier on new design scenarios

Which questions could you use as a basis for your discussions?

Primary processes

  1. What raw materials are used, e.g. are they renewable?
  2. Could the extraction or processing of the materials cause air, land or water pollution?
  3. Could extraction or processing produce waste?

Secondary processes

  1. What resources are used during manufacture, e.g. energy and water?
  2. Could the manufacturing process cause air, land or water pollution?
  3. Will the process or product meet the requirements of an environmental standard or eco-label?
  4. Are hazardous materials used?
  5. How much packaging is used?
  6. Does the process produce waste?
  7. Does the manufacturer have good working conditions and pay a fair wage?

Distribution

  1. Where will your products or services come from, e.g. what distance will they have to travel?
  2. How will a product get to you, e.g. air, rail or road?
  3. How will goods be stored, e.g. will they need cold stores?

Use

  1. What resources will be used during use and maintenance, e.g. energy, water, hazardous materials?
  2. Will the product need to be handled carefully, e.g. could it cause air, land or water pollution?
  3. Does the product have a limited shelf life, e.g. could it go out of date and need to be disposed of before you use it?
  4. How easy will it be to get the product repaired if all or part of it stops working?
  5. Will staff need training to use the product or service efficiently?
  6. Will using it produce waste?
  7. Will equality or diversity issues affect service delivery, e.g. does the service meet the needs of different users and those with different cultural backgrounds
  8. Could staff providing a service be exploited, e.g. low pay, antisocial hours?

End of life

  1. How will you dispose of it? How long will it last?
  2. Do you have to follow any legal requirements to use, store or dispose of it?
  3. Can it be reused, remanufactured or recycled?
  4. Will it produce hazardous waste?

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

Maintaining a competitive procurement strategy while delivering on sustainability

RP_building_strategic_approachMany Procurement Executives have become far more aware of the potential that Responsible Procurement can deliver for the company’s bottom line.

The real challenge lies in planning an actionable approach, ensuring a competitive procurement strategy, while at the same time delivering on sustainability.

How can you do that?

PROTECTING THE NEEDS OF THE FUTURE GENERATIONS

Your challenge is to understand the impact your procurement decisions have on local communities, workers, and the environment, and then take action to ensure you create a positive impact.

Simply speaking “Where did you put your foot and what does the footprint look like”. That is what Responsible Procurement is all about. If you plan it well, it can promote sustainability, provide you with cost savings, and protect and enhance your brand. It’s as simple as that.

Practically speaking, Responsible Procurement is about defining a set of mutually compatible requirements, specifications, criteria and actions that favor protection of the environment, social progress, and economic development.

Wrapping it all up: Responsible Procurement is about sustainable development that meets the needs of the present, without compromising the ability of future generations to meet their own needs.

Feike Sijbesma, CEO, Royal Dutch State Mines is true when saying:

‘When the richest quarter of the world’s population uses about half our global resources – and takes the liberty to produce almost half of the global waste – while another third lives in poverty’

Later in this blogpost I will speak more about Circular Procurement, adding to the above challenge.

THE 3 PILLARS
Responsible Procurement is about balancing what is called the three pillars: social, economic and environmental. So why is there a need to balance these three pillars?

From an environmental point of view, we have to ensure that natural resources that are extracted and processed into goods and services are consumed in a more efficient way – getting more out of less. And by changing the way we produce and consume, we can still limit the impact that climate change is bringing about. From an economic and social perspective, we have to ensure basic human rights and economic development, regardless of age, gender, nationality, religious belief or economic status.

THE RESPONSIBLE PROCUREMENT MATURITY MODEL
Now you have a basic understanding of what Responsible Procurement is all about. The next step is to understand where you should put your focus. After that, you can create an action plan that converts your strategy into real bottom-line value.

I have created a model which I call: The Responsible Procurement Maturity Model. You can download the tool right here. Use the tool as a dialogue tool. Put yourself in the position of: Where are we know and where would we like our Responsible Procurement ambitions to take us.

If you look at the model you will see, that the more you integrate with and involve your suppliers the more mature you get as a company, in terms of Responsible Procurement. At this stage I would also like to put an emphasis on the fact, that your approach has to be actionable. It is simply no longer enough to have a Code of Conduct in the drawer or having signed up for a framework like the Global Compact or GRI. I am not saying it is a “bad start” but your customers and end-consumers are expecting more of you. They want you to create a “real change”. It is what I call Responsible Procurement 2.0.

How can you create real change?

TRANSPARENCY – ALL ABOUT REPUTATION
As the world becomes more connected and we face an increasingly globalized economy, competitive forces require us to take decisions that increase the exposure to risk. By ensuring that suppliers have effective compliance programs and robust management systems, you can protect yourself from potential supply chain disruptions or delays associated with human rights, labor, environmental and governmental practice issues relating to your suppliers.

Assessing the risks involved in the supplier base is a resource-intensive exercise. When this information is known, however, it can help manage the business risks. Minimizing business disruption in terms of environmental, social and economic impact will have a positive effect on the company’s bottom line. But it can also protect the reputation and brand value. It can create the transparency your customers ad perhaps end users are looking for.

Transparency is also about ethical procurement. What are your expectations to your procurement professionals? How should they act on behalf of you? Some companies also indicate what the expectations are to their suppliers, when it comes to an ethical behavior.

You could create policies and guidelines which support your change. You could also, as mentioned before, assess the risks. To help you do that you could use technology or simple assessment tools.

The question is still – will it create a real change or just be a do-good feel-good time consuming exercise?

Looking at available business case numbers you will notice, that the payback is up to 85 times the amount invested. This is opposed to the 12% decrease in market value you would encounter if you did nothing (and in the likely-hood of an incident).

PRODUCT STEWARDSHIP – ALL ABOUT EFFICIENCY
Product stewardship is all about taking a lifecycle view. It is about looking into the value streams, the products or simply the spend categories identifying the so called “sweet innovation spots”. The spot where consumer needs, environmental impact and technical and business capabilities converge. Taking a lifecycle view also ensures, that improvements made in design actually do translate into measurable improvements in environmental performance.

Practically speaking you could take a product, a line of products or a category and look at the raw materials, the energy and the water that is used during the whole lifecycle process. Product stewardship in a products lifecycle must be a journey that incorporates the “seed” of a contract, through to the “shoots” of product design, manufacture, transport, sale and the “fruits” of product use, all the way to the “composting” at the end of a products life.

You will then get an indication of the level of water consumption, recyclability, energy consumption and CO2 emissions. You could use a simple Life Cycle Assessment Model (LCA). Based on the findings you could, together with the supplier define future design scenarios.

It does require a high level of collaboration with the supplier. On the other hand you will support the company in creating more sustainable products, reduce cost, enhance the brand, and create a stronger supplier dialogue.

If you look at available business case numbers you will notice, that reduction in Life Cycle Cost could have a payback of up to 6 times or 0.05% of total revenue per project.

CIRCULAR PROCUREMENT – ALL ABOUT REVENUE
Collaboration with suppliers regarding sustainability issues should foster product innovation. This is probably the least explored driver in Responsible Procurement. It’s also the most complex to achieve, and involves leveraging the responsible knowledge and practices of your suppliers. Additionally your customers also have to reckon the change in your product or service as added value.

At the same time no business can escape the fact, that the global economic conditions, the status and future availability of affordable resources, energy supplies and a growing global population are creating an ever more complex business environment. The limitations and growing problems of the linear economic model, that has served us well for many decades, demands that business “as usual” is unlikely to be a winning strategy in the future. The winning strategy lies within the circular economy.

A circular economy is defined as an industrial system that is restorative or regenerative by design. It replaces the end of life concept with restoration. It shifts business towards the use of renewable energy, eliminates the use of toxic chemicals, which impair re-use and aims for the elimination of waste through intelligent design of materials, products, systems, technologies and business models.

Procurement plays a key role in the transition towards a more circular economy. I call it Circular Procurement.

if you take a look at existing business case numbers you will notice that the payback from initiatives within this area are quite high – 58 times, or 0.05% of revenue.

Checkout these older blogposts on Circular Procurement:
The circular influence on procurement
Why Circular Procurement is also Responsible Procurement

Tip #1: WHAT ARE YOUR AMBITIONS?
The first thing I would recommend you to do is to find out what your company´s ambitions are in terms of Responsible Procurement. This is where you should start drafting your business case.

Get inspired to draft your own Responsible Procurement business case right here in this blog post.

Use the business case:

  • to ensure buy-in and active participation from top management
  • to create awareness about the company´s business drivers
  • as a fact pack, which you can use when creating the Responsible Procurement strategy
  • to benchmark your current position against your competitors
  • as a dialogue and decision tool with potential stakeholders.

Tip #2: UNDERSTAND THE EXPECTATIONS OF YOUR STAKEHOLDERS
Engaging your stakeholders in the early stages of the program design can help you identify relevant standards and approaches to Responsible Procurement.

Other stakeholders (besides the supplier) could include national and local governments, workers and employer’s organizations, NGOs, advocacy and activist organizations, academic and issue experts, and community groups.

Tip #3: TALK TO AND INVOLVE YOUR SUPPLIERS
Your suppliers are key to your success. Find out how you will involve them in the strategy/business case process, and get them fired up. I’m sure you will get a lot of great input, which will only serve to strengthen your Program. I discuss suppliers in some depth in my book. Purchase your copy today by visiting my website, and get all the inspiration you need to make them an integrated part of your Responsible Procurement program.

You can also download the e-book: Understanding Responsible Procurement and Creating value.

Please share this blogpost if you like it.

TestAt Responsible Procurement Excellence we want to inspire companies and people around the world to develop impact driven approaches to Responsible Procurement. This should accelerate the sustainable change with their suppliers and create a sustainable future for the generations to come. An actionable approach goes beyond compliance, has a positive effect on the reputation, raises efficiency and generates revenue.
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Implementing Responsible Procurement – what’s needed?

RP_building_strategic_approachA recent study carried out by IEMA show that just 13% of companies are fully confident that they have the skills to successfully compete in a sustainable economy. Very few have an idea of what skills they actually need in the future.

Are you are aware of what it takes to implement Responsible Procurement?

Get inspired to take your Responsible Procurement approach to new levels in this blogpost.

BACKGROUND
Hearing from more than 900 businesses, the survey found that “many lack the basic skills to capitalize on the opportunities that a sustainable economy can offer,” says the organization – despite evidence building that businesses large and small can save money through more efficient use of resources.

The survey found that:

  • Only 13% of companies are fully confident that they have the skills to successfully compete in a sustainable economy;
  • Only 25% of leaders, and 20% of senior managers, are fully capable of addressing the sustainability agenda ;
  • In 72% of organizations, investment in environment and sustainability skills is less than for other disciplines with 63% of organizations spending less than £100 per head on environment and sustainability training each year;
  • 65% haven’t carried out a strategic evaluation of skills needed to successfully compete in a sustainable economy;
  • Over half (53%) of organizations are unable to recruit environment and sustainability professionals with the right skills.

IMPLEMENTING RESPONSIBLE PROCUREMENT

Maturity Model#1: Start out the discussions with the Responsible Procurement “Maturity Model”
The maturity Model
 is a great way to start a discussion about a company’s approach to Responsible Procurement. At the same time it is also a great way to get a discussion about what other companies do and what specifically can be done short term or long term to integrate a responsible (sustainable) approach to the suppliers.

#2: Add some structure with “The Responsible Procurement Wheel”
It can be challenging for Procurement organizations to implement Responsible Procurement on a large or global scale. The Responsible Procurement Wheel is your guide to active management. The “must remembers” in order to create a successful approach.

Check out the wheel here.

#3: What is a strategic approach?
What does it mean to have a strategic approach to Responsible Procurement? Building a strategic approach to Responsible Procurement means, creating a plan of action that is designed to achieve your vision. It is a template for how you manage your stakeholders, suppliers, processes, communication and reporting.

#4: The 13 key questions you should ask about your strategic approach
There are many ways in which you can plan your company’s approach to Responsible Procurement. Though if I had to plan it, then there would be some key questions that I would ask myself. In this blog post you will see some examples.

Read the blogpost here.

#5: What are the typical barriers to implementing a sustainable approach in Procurement?
What are the typical barriers companies are facing when implementing a sustainable approach in the Procurement function.

Get inspired in this blogpost.

#6: Best practice
In this blogpost you can learn from 15 other companies who have worked with Responsible Procurement.

Would you like some more inspiration? Download my e-book Understanding Responsible Procurement and Creating Value right here.

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TestResponsible Procurement Excellence has specialized in helping companies around the world develop and integrate an actionable approach to Responsible Procurement. An actionable approach goes beyond compliance, has a positive effect on the reputation, raises efficiency and generates revenue. 

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Time to Shift from Compliance to Impact Management

rp_circular_procurementIt is time to take your organization from compliance management to impact management. Lets put it clear: Compliance is key, but why not use the possibility of creating bottom-line impact and sustainable savings at the same time?

CREATING TRUE VALUE
Many Procurement Executives have become far more aware of the potential that the sustainable agenda can deliver for the bottom line. The challenge is to understand the impact your decisions have on local communities, workers, and the environment, and then take action to ensure you create a positive impact. Where did you put your foot and what does the footprint look like. The question is: how can you create value at the same time?

TRANSPARENCY
You could consider working with your transparency. You can do that by either driving down or eliminating risks. As the world becomes more connected and we face an increasingly globalized economy, competitive forces require us to take decisions that increase our exposure to risk.

So, by ensuring that your suppliers have effective compliance programs and robust management systems, you can protect yourself from potential supply chain disruptions or delays associated with human rights, labor, environmental and governmental practice issues relating to your suppliers.

Assessing the risks involved in the supplier base is a resource-intensive exercise. When this information is known, however, it can help manage the business risks. Minimizing business disruption in terms of environmental, social and economic impact will have a positive effect on the company’s bottom line. But it can also protect its reputation and brand value. And at the same time it can help you build your transparency.

PRODUCT LIFE CYCLE EFFICIENCY
You could also consider working with product sustainability. You can do that by looking into the value streams, the products or simply the spend categories. Identifying the environmental costs will likely drive down costs…but of course only if you realize the potential as well. Environmental cost drivers could include energy, water, materials, refuse, transportation, emissions, and biodiversity. You could look at it from a Life Cycle approach.

CIRCULAR ECONOMY
The Circular Economy is emerging. By collaborating with suppliers on the circular principles, it will potentially foster product innovation and help create a competitive circular advantage.

Check out these older blogposts:
What is the role of procurement in the circular economy?
Circular thinking in procurement 

 

The world needs new solutions & more effective collaboration to solve some of the biggest challenges. That is why we inspire companies to move to more open forms of strategic innovation. We are doing that by mobilizing capabilities and resources for mutual benefits and by putting more focus on trust in the relationship. Get inspired on the Collaboration Growers platform.

Create transparency in procurement with the 25 most essential questions

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Risk is omnipresent in business today. From political unrest to natural disasters to the risk of suppliers going out of business. Unsustainable practices can create unacceptable risks for companies. 

Without risk, business as we know it might not exist either. To compete, grow and capture benefit, companies need to take chances; it’s what businesses do. Although business risk has existed as long as there has been commerce, the situation is clearly different in the 21st century.

Work with risk the active way and create transparency. Transparency can help procurement support the business in creating the competitive advantage. 

FORMAL RISK MANAGEMENT CAPABILITY
Few companies translate the concern into a formal Procurement risk management capability. Most do have risk-management structures within their finance organizations. Though this is not sufficient.

Risk should not be measured “opportunistically”, i.e. on a “case by case basis”. There needs to be a structured risk management capability within the procurement organization. Given todays turbulent supply markets and volatile, global business environment, procurement professionals need to make consistently superior decisions. A lot of companies see a connection between sustainability and risk.

Procurement has to develop a formal, structured risk management capability which creates visibility into supplier performance and supply risk issues and enable more supplier collaboration. Procurement must through active management mitigate risk and enable agility, which again leads to transparency.

What are the 25 most relevant questions to ask?

AN OVERVIEW IS IMPORTANT

  1. You want to create an overall risk picture of the risk at your suppliers. Exactly how do you define suppliers to the business? Are your business risk and procurement risk as separate silos or are they merged?
  2. Is your supply chain dynamic? Have you developed flexible operations, a diversified supplier portfolio, global visibility and options to scale?
  3. Your partner’s do you know who they are and how their operational and financial risk profile looks like? Which third party vendors and counterparties are there? Which components, suppliers, player’s come in and out of the process across the entire supply line.
  4. If you are counting on supplies from a vendor what happens if you don’t get those raw materials?
  5. What risks are and should be captured and how are they to be assessed and measured? Do you link your risks with your company’s dark spots and general business objectives or is it purely done to ensure compliance?

MANAGEMENT PLAYS AN IMPORTANT ROLE

  1. Do you have buy in from the top of the organization? Have you integrated Risk Management practices across all business functions to ensure understanding, commitment and alignment?
  2. Have you embedded risk considerations into all business operations and linked them with important business processes?
  3. Detectability, detection lead-time, time to recover and cost to recover separating resilience success from failure
  4. Do you have a clear risk ownership, a well defined organizational structure with explicit roles and responsibilities to manage risk? Alternatively a risk committee? Basically resources who review emerging trends, progress and results. Resources which provide counsel and redirect resources if the risk picture demands so.

FOCUS ON PROCESSES IS CRITICAL

  1. Is there a process for identifying critical supply categories?
  2. Are vendors segmented to identify and prioritize those critical to business continuity?
  3. How is the action planning process implemented and monitored? What monitoring activities are in place to ensure risks are being managed and action plans are followed? Is your action plan funded with appropriate resources to address the core of the risk issues and implement treatment, not just symptomatic relief?
  4. Are there proactive risk aggregation activities to ensure 1(risk interdependencies are taken into account and are managed? 2) Costs for managing risks are leveraged effectively?
  5. Are the risk management processes consistent throughout the organization and are they linked with other important business processes?
  6. Is your company communicating your efforts and results on Risk Management in Procurement?

DATA IS ESSENTIAL (IF THEY ARE CORRECT)

  1. Do you capture enough data to recommend profitable strategies?
  2. Does your organization simulate potential scenarios?

METRICS MATTER

  1. Do you have the right analytical tools to identify, measure and monitor the operational risks? Tools, which can quantify the impacts of the uncertainty? Tools, which can sharpen the company’s view, provide stronger capabilities in prioritization? A tool, which you can use to correlate to management initiatives.
  2. Do you know which kind of supply chain risks you are able to manage well?
  3. Are your reports focused and relevant? Do they deliver key information in a timely way?
  4. What data do you need to capture to produce those reports?
  5. Once data is captured, what types of analytics are necessary to predict and identified event or risk?
  6. Does your reporting include metrics on current risk management efforts, changes in the risk environment and indicate when intervention is required?
  7. Is the reporting visible to the top management?
  8. Is the reporting structured so it creates visibility on key risk and mitigation strategies and perhaps an overall risk management strategy?

You can also download the e-book: Building a strategic approach to Responsible Procurement right here.

Responsible Procurement Excellence has specialized in helping companies around the world develop and integrate an actionable approach to Responsible Procurement. An actionable approach goes beyond compliance management and builds on impact management.

Stay connected, sign up for the newsletter.

Supplier Enabled Sustainable Innovation