Sustainable sourcing or green sourcing ensures that the products and services purchased have the lowest environmental impact possible, with positive social results. For example, those responsible for sourcing must assess their suppliers’ use of nonrenewable resources, along with efforts to replace them with alternative renewable resources.
An overall sourcing strategy with sustainable policies and principles should be in place, including the decision to make or buy. This will help guide the rest of the sourcing activities.
Sustainable Sourcing Process
Developing a sourcing strategy with sustainable policies and principles requires looking closely at the sourcing process.
Step 1: For new products or services, sustainability requirements should be embedded into the specifications used in the requests for quotation (RFQ).
Step 2: Evaluation criteria should be developed to assess potential suppliers’ sustainability score, and balance economic, social and environmental factors. Guidelines such as the UN Global Compact and ISO 14000 can be used to measure suppliers.
Step 3: New suppliers should be screened to ensure minimum standards are met, as well as ensure that a supplier is compliant with any environmental and social responsibility regulations and legislations for the countries they are doing business in. Questions such as the following can be asked of potential suppliers:
Step 4: A short-list of suppliers can be used to differentiate those suppliers who meet sustainable procurement criteria from the overall list of potential suppliers.
Step 5: Once quotes or bids have been received, a set of criteria such as shown below can be used to determine which suppliers score well. Based on the objectives, weights can be added to the criteria in order to compare multiple suppliers.
Step 6: Once suppliers have been selected that fit the corporate sustainability strategy of the buying organization, the contract is put in place and should incorporate any applicable sustainable requirements and performance measures.
Supplier Sustainability Criteria
An overview of supplier sustainability criteria is provided in the table below.
Economic | Social and Ethical | Environmental |
Cost competitiveness | CSR policy in place | Use of recycled materials |
Financial stability | Ethical practices | Use of renewable energy |
Fair pricing practices | Human rights practices | Location of sub-suppliers |
Production / service capacity | Anti-corruption and fraud policies | Material impact on environment |
Process capability | Health and safety record | Process impact on environment |
Innovation capability | Sub-supplier practices | Methods of transport |
Child/forced labor practices | Use of non-conflict minerals | |
Diversity | Packaging reduction | |
Disposal of waste |
Exercise
Review your understanding of the sustainable sourcing process by dragging and dropping the the steps in the correct order
