How to run a sustainable procurement programme

A well-executed sustainable procurement programme can deliver significant business benefits and indeed reduce the cost of goods and services, according to Christina Vasili, Head of Procurement UK at KPMG.Here are her key tips in a Supply Management article:-

1. Simplicity

Successful programmes pick key areas of focus and rally resources (such as investment, physical resource, communications and partnering organisations) around this. Our early efforts on sustainable procurement lacked this simplicity. We cast our net too wide and therefore limited our chances of success. Our revised sustainable procurement programme identifies three key principles which support the firm’s wider sustainability agenda: carbon; diversity; and living wage. So our efforts and activities primarily support our ambitions around these three areas.

2. Governance and sponsorship

Leveraging the best our organisation has to offer in terms of knowledge and expertise was key to developing our thinking. It remains the case today. We have built strong relationships with our teams in corporate social responsibility, supplier management, diversity and climate change and sustainability. This has enabled us to align our programme to the wider corporate agenda, challenge our direction of travel to ensure we are still on the right course and enable us to keep pace with this fast-changing topic. Sitting across the top of this, both the CFO and head of corporate affairs take an active interest in our programme, while operational departments have been keen to support it. Being able to demonstrate to our key suppliers that sustainable procurement is not only a procurement ambition but a priority that sits at the heart of our leadership is very powerful indeed.

3. Programme framework

Back in 2006, when we first dipped our toe in the sustainable procurement pool, our activities all seemed to make sense as individual acts. We need a supplier code of conduct – our suppliers need to sign up. We need to understand the diversity demographics of our supply chain – let’s issue a questionnaire and baseline. We need to give consideration to carbon and diversity in our RFPs – let’s include some questions and create evaluation criteria around this. But we did not understand the overall picture. My comparison would be having a number of jigsaw pieces but the key thing that is missing is the guiding picture. You can spend some time working it all out, but that is likely to be a long and frustrating process. It was only when we deployed a dedicated resource to develop a framework and methodology that we had something that provided structure, clarity and consistency of approach. Everything we now do hangs off this framework. We all understand what we are trying to achieve and how we can do this successfully.

4. Roadmap

With any initiative, you can easily get caught up in developing and launching the programme. Efforts are focused on getting it off the ground and all too often little attention is paid to the journey. We certainly fell foul of this and it was only some eight months into the start of the programme that we realised we could not articulate the desirable outcomes for the second and third years against the three key principles. We quickly addressed this and worked with our steering group and external organisations to identify year two and year three ambitions which built on our first year of activity.

5. Less is more

All too often we hear of programmes that target all suppliers. Organisations don’t think twice about issuing questionnaires, for example on diversity, to more than 1,000 suppliers and achieve a response rate of 20 per cent – if they are lucky. To improve the level of engagement from our suppliers, we took a conscious decision to limit our efforts to key suppliers spanning our main spend categories. This means you can invest much-needed time to get these suppliers on board with the programme and help them to understand the ambitions, how it fits into the wider corporate agenda and importantly, what’s in it for them. Our first year response rate for the Carbon Disclosure Project was 76 per cent, which is excellent and significantly higher than the industry average (by way of comparison, the average CDP member response rate is around 40 per cent).

6. Internal support

We have touched on this under governance and sponsorship, but in KPMG (with the exception of travel suppliers) procurement does not own supplier relationships. This resides with the business, and primarily with supplier managers. As such, our sustainable procurement programme relies on their active support and participation. Procurement cannot move this agenda forward on its own. We rely on our colleagues to support progress in this area by using the supplier review meetings and their relationship with our key suppliers to take the results from each year’s activities and transform them into a positive dialogue for change.

7. Tracking success

From the outset, you need to have a way of tracking results. We have done this through the production of a quarterly dashboard which uses both quantitative and qualitative data to indicate how well we are doing against the programme’s ambitions. We use this to focus efforts, educate our key stakeholders and identify areas for development/opportunity. Moreover, it is used to drive the right conversations at a steering group level and maintain focus.

8. Two-way communication

Suppliers will lose interest if communication and information is a one-way street. The success of the programme relies on their participation. To galvanise that participation you need to demonstrate the value they will get from the programme. We produce supplier packs which provide information on their progress against our three priority areas. These are used at supplier review meetings to focus dialogue around key areas of opportunity and development. We also bring our key suppliers together annually with our programme sponsors, procurement team and supplier managers. It is an opportunity for us to share the programme’s successes, look to the year ahead and hear from our suppliers about how they have used participation in the programme to challenge their organisation, stimulate change and drive improvement.

9. Ask for help

Acknowledge you are good at some things and seek help from those that are better at others. We are a leading voice on the living wage. As a living wage principle partner and a living wage accredited employer, we are in the best place to help our suppliers understand the business and social benefits of paying the living wage.  However, we know some of our key suppliers are as good as if not better than us on carbon and diversity. Don’t be afraid to ask for help.

10. Business as usual

A successful sustainable procurement programme should not stand alone. It is not a separate activity running in parallel with supplier management activity but rather should be another thread that is woven into your broader supplier management activities. To see the article in Supply Management.

Christina Vasili is head of procurement, UK, at KPMG, which was recently awarded a ‘big tick’ for its sustainable procurement programme in the Business in the Community Responsible Business Awards 2013