The definition of responsible sourcing has evolved. Companies need to start looking not only at their tier 1, but also tier 2 and tier 3 suppliers and vendors to make sure they’re aligned with the long-term sustainable goals. As definitions change, people should change in response. However, many people are still stuck in the simplistic view, only looking at tier 1 suppliers and focusing on financials when vetting them. I want to offer a deeper way of thinking through procurement.
There are several barriers to responsible procurement. You may have leadership who wants you to deliver on procurement within a tight timeline. You may have staffing issues and resource crunches. In order to access sophisticated systems and third-party tools to assess suppliers, you’ll need to obtain a budget and might face resistance in getting this approved. However, it is important to make the case for responsible procurement to your leadership. By taking the time to source the right suppliers that are strategically aligned with your sustainability goals, you’ll prevent the reputational risk of being associated with suppliers whose activities may undermine your pursuits. So really push for your leadership to move beyond lip service and provide the tools needed to procure responsibly.
A common mistake professionals make when choosing suppliers is not digging deep enough into the company. Often, a check on the company’s finances and a brief search on Google passes for an assessment. However, due diligence on suppliers should go much further than that.
Get a full picture of the organization by examining the organization closely. Which region do they operate in? Are they on governmental lists that would prohibit you from buying from them? Have there been any RoHS (Restriction of Hazardous Substances) violations? Are they violating pacts with certain agreements or pacts with other nations? How secure is the data that they collect? Who are they funded by? Partner with your compliance organizations to get a full view of what you should be looking for.
Another way to do this is to solidify your supplier onboarding process. There are third party tools in place that suppliers could use to input their information. The third party would then be able to run a detailed analysis for you, helping you verify whether your supplier is in the clear.
A key mindset for responsible procurement is adaptability. If you think you have to choose between a supplier that doesn’t meet your standards and a disrupted supply chain, your view is too narrow. Why not leverage strategic relationships you might have? For instance, if you’re working with a company on a different deal with more buying power, could you ask them to help procure the materials you need? Being able to shift your perspective and you can get it done and get it done right.
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Former Head of Global Value Analysis and Optimization | Director, Procurement Operations & P2P
Sanofi | Eisai