Whether from customers, investors, governments or regulatory bodies, enterprise organizations are facing pressure from all angles to meet ambitious sustainability pledges.
With looming deadlines, no clear path to improvement and the need to balance sustainability against other key business goals, the race is on to satisfy these stakeholders and make concrete progress.
The majority of a large company’s environmental impact — on emissions, water, land, natural resources, biodiversity and more — will sit in the upstream supply chain. Enterprise organizations and their value chains also have a huge impact on our society and our communities. As a result, one thing is clear: true sustainability cannot be achieved without our suppliers.
Given this fact, many businesses are looking towards supplier and partner stakeholders to affect the fastest, most impactful change on sustainability and ESG objectives, signaling a huge opportunity for procurement and supply chain functions to make progress on key business priorities from their position at the interface between the business and its wider ecosystem.
In order to increase supplier sustainability, procurement and supply chain functions must undertake a variety of steps to strengthen business relationships with suppliers and partners, and to increase their visibility of supplier sustainability credentials. Yet getting an accurate view of supplier sustainability is notoriously difficult, as is influencing external actors in the supply chain. When it comes to improving supplier sustainability, we at Vizibl recognize a few key factors that success hinges on:
Key supplier sustainability success factors
Data and measurement
Supplier sustainability is incredibly difficult to measure and baseline. Much of this stems from the hurdles involved in obtaining meaningful, accurate and sufficient data from suppliers across a variety of dimensions, and in aggregating and normalizing this data to drive actionable insights.
When it comes to looking forward and making improvements, these difficulties are compounded further. Sustainability data is retrospective-looking by its very nature, with the long time to collect, aggregate and normalize these data points causing it to be out of date by the time it’s usable.
Lack of centralization and transparency also pose problems for reporting, in addition to unwieldy data from disclosure system providers, and difficulty integrating this data with existing procurement platforms.
As a result of these difficulties and delays, organizations in turn delay action to drive improvement, opting to wait until they’ve succeeded in “running the numbers.”
To overcome this inertia in a landscape low on the data needed for data-driven decision-making, it’s time to control the controllable and focus on what we already know. To do so, organizations need the ability to find and use the data that they do have, seek further data from suppliers, supplement their own insights with normalized data from common providers and feel empowered to begin working alongside key supplier stakeholders to drive action.
Alignment and collaboration
For many less mature procurement functions, supplier relationships are frequently unidirectional, characterized by siloed work and a transactional mindset, with little attempt made to seek alignment with supplier stakeholders beyond contract terms.
To reach goals in concert with supplier stakeholders, this state of play must be replaced with a Supplier Collaboration approach: forming a relationship founded on establishing alignment, collaborations, and an ethos of mutual value. Nowhere is this truer than in Supplier Sustainability Management, where passive measurement is not enough to meet our goals. As the saying goes, you don’t fatten the pig by weighing it.
For us to truly capitalize on our relationships with suppliers and partners to reach sustainability milestones, we must first seek alignment with key value chain stakeholders over our goals, cementing shared objectives as the foundation for our relationships.
And for successful Supplier Collaboration and ultimately successful Supplier Sustainability Management, organizations must have the processes, mindset and infrastructure in place to forge what we at Vizibl call active collaborative relationships. This means relationships with productive activity aimed at the shared goals established in the alignment phase. Such activity includes joint projects, open opportunities or ongoing measurable initiatives.
Active collaborative relationships serve as a leading indicator of success against lagging success metrics, including when it comes to sustainability. For example, an organization running multiple emissions-reduction projects with a cohort of strategic sustainability suppliers, centered around alignment of objectives and expected outcomes, with clear success criteria, would not only be an organization with many active relationships, but would also be a business maximizing its likelihood of delivering on its emissions commitments.
To build such relationships, procurement should be seeking privileged ‘customer of choice’ status with key suppliers — a relationship founded on transparency, accountability, knowledge sharing and mutual benefit, supported by two-way processes and centralization of key insights.
Innovation and transformation potential
In some categories or industries, meeting sustainability goals is not possible with existing solutions. As a result, alignment on targets and even collaborative improvement projects with suppliers will not suffice. Instead, complete transformation is required for success in sustainability.
To overcome these unmet needs, and facilitate this transformation, organizations need new ‘green’ products and solutions, and the supply base signals the perfect source of these innovative ideas. Suppliers come armed with their own talent pool and R&D capacity, a wealth and breadth of knowledge of competitors and even entire verticals, and an intimate understanding of local conditions in an increasingly global marketplace.
Thanks to ideas being partially pre-validated by the suppliers themselves, supplier innovation is typically faster to market than home-grown ideas, allowing organizations to transform their products and services more efficiently, better arming them to face a challenge where time is of the essence.
Building privileged ‘customer of choice’ status as mentioned above is key if procurement is to truly capitalize on the innovation potential of the supply base. In addition to building trust, cementing alignment and supporting ongoing collaboration, customer of choice status grants priority access to existing IP and future innovation potential from strategic suppliers, allowing organizations to be first in line for transformative green solutions.
In addition to seeking customer of choice status with incumbent suppliers to drive supplier innovation, procurement must also move away from purely prescriptive specification-based buying and begin to incorporate a ‘solution crowd-sourcing’ approach into their practices. Though it requires modification of existing processes, this approach opens the organization to a more diverse array of organizations, such as researchers and start-up businesses, that offer more bang for your buck in terms of innovation.
Many mature procurement organizations realized some time ago that alignment, collaboration and innovation alongside suppliers were key to making the most of their relationships with their external ecosystem. As a result, pockets of Supplier Collaboration and Innovation (SC&I) excellence exist, many aimed at sustainability improvements, as enterprise organizations build stronger partnerships with supplier stakeholders.
Without the right combination of mindset, processes, tools and technology, SC&I and Supplier Sustainability Management are very difficult to accomplish at scale. Given the size of the challenge enterprises are facing when it comes to meeting ESG goals, scalability is an absolute necessity. Pockets of excellence are no longer sufficient.
Effective management of mutually beneficial relationships requires core foundations of data and performance centralization, two-way transparency, fit-for-purpose people and process governance, effective project management tools, and robust reporting capabilities.
Many procurement teams, however, are still forced to use internal-only offline ways of working centered in local files and email clients. The function lacks access to centralized and up-to-date data, struggles to gain visibility of relationship performance beyond basic operational information, and has no tools to work directly alongside supplier and partner stakeholders from a central location.
As a result, robust management of multiple customer-of-choice relationships at the scale required to make a difference to the organization’s ESG goals becomes almost impossible.
Supplier sustainability management
In the quest to help large enterprise organizations overcome common barriers surrounding improved supplier sustainability, the team here at Vizibl are launching our new Supplier Sustainability Management module to complement our Supplier Collaboration and Innovation platform’s existing sustainability functionality.
Vizibl Supplier Sustainability Management provides both the data and infrastructure for more effective measurement, monitoring and management of supplier sustainability performance.
With this latest module, our customers can:
- Configure multiple ESG programs quickly and easily, attach common disclosure frameworks like CDP and the Science Based Targets initiative (SBTi) with no manual data manipulation and invite suppliers to the programs
- View overall program performance according to the attached frameworks
- View sustainability performance across the entire cohort of suppliers, or drill down into individual supplier performance
- Set a roadmap of phased improvement targets for the program to chart a course towards improved supplier sustainability
Upcoming additions to this module will extend its capabilities further, providing expanded goal-setting capabilities, more in-depth insights into CDP data from the Vizibl platform, custom framework functionality allowing for bespoke supplier sustainability data collection and an expanded two-way integration with the rest of the Vizibl platform.
The unique and powerful combination of this new Supplier Sustainability Management functionality coupled with Vizibl Supplier Relationship Management, Supplier Collaboration Workspace, and Supplier Innovation Hub enables organizations to deploy effective Supplier Collaboration at scale in support of their pressing ESG goals.
Align on sustainability targets, collaboratively problem solve with supplier stakeholders, open-source innovation for sustainable transformation and business growth, and gain priority access to scarce green goods and services. All on one platform, all Vizibl.
Find out more on our website, www.vizibl.co/platform/supplier-sustainability-management.