Purchasing and Negotiation Training

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Editor’s note: This is the first of an eight part series that will explore Sustainability and how purchasing can and must take a leadership role.  This one introduces Sustainability and how green procurement is so integral to its success.   

Sustainability is coming to corporate American business.  We will need to manage its impact on the sales, purchasing, and image perspectives.  So what is Sustainability and how is it related to puchasing?  For many, it is a tangential, even fringe movement with little substance and unrelated to purchasing.  Others say that it is an eco- fad driven mostly by extremists.  But for the hard core business crowd, it is an opportunity to harvest savings. Savings are another word for reduced costs and there is no one in a better position to do this than purchasing.

Sustainability has no coherent school of thought.  For instance, there is no universal rating system to evaluate an organization’s Sustainability.  Green procurement is also a work in progress.  

Purchasing pros are skeptical of any poorly defined initiative.  Total Quality Management (TQM) and Six Sigma movements were both initially viewed as adding unjustifiable expense, yet are now embraced as value added and cost saving best practices.  The same can be true of a purchasing managed Sustainability strategy. 

Sustainability strategies should have a top-line (revenue growth) and bottom-line (cost reduction and profitability) components.  The overall strategy must address at least these three major business matters, reducing costs, adding or retaining customers, and complying with the law.  

1. Reducing cost

Strategies such as the Reduce, Reuse, and Recycle programs are not new but may not have been previously connected to Sustainability.  Waste reduction and elimination, energy efficiency and conservation, and other operational efficiencies that reduce costs are ideal examples of effective purchasing Sustainability strategies.  Purchasing may need to formalize many strategies already in place and adopting others once we become aware. 

        2. Adding and retaining customers

Reputation and image have disproportionate influence on business.  Our customers may value Sustainability and drive compliance throughout the supply chain as a condition of doing business.  Development and delivery of products and services that build customer and brand loyalty have always been essential to business success.  Well publicized fiascos with heavy metal laden baby toys, toxic drywall, and consumer goods produced in China have had enormous negative impacts on major US companies.  Removing toxic heavy metals is not only green, it is just good business. 

      3.   Legal requirements

The Environmental Protection Agency cites greenhouse gases (GHG) as an environmental and health hazard. Regulation of carbon dioxide (CO2) emissions from sources ranging from motor vehicles to power plants is the law.  This is forcing many businesses to develop Sustainability strategies that address emissions and extend to chemical management in general.  Green procurement plays a great role in making the business case to justify the time and resources needed to mount an effective Sustainability strategy that also complies with the law.   

Green purchasing must lead the Sustainability revolution

Green procurement equals cost savings equals Sustainability.  Cost savings is in the DNA of every successful purchasing pro.  Sustainability in general advocates for the 3Rs of Reduce, Reuse, and Recycle.  Perhaps Sustainability is most well known for conservation of natural resources, particularly energy and water.  Sustainability also demands reduction of green house gas (GHG) emissions, but reducing GHG is a matter of energy conservation and reduction which translates obviously to saving money. 

Click here for online or CD/print media versions of "Green Purchasing" course

But green purchasing costs money, no? 

Let’s debunk this myth.  In almost all cases, the very opposite is true.  There may be isolated cases involving what is called Corporate Social Responsibility (CSR) where there is attention to societal issues such as diversity in hiring over which purchasing has little control.  However, customers of our companies may be driving Sustainability.  Giants of industry such as Wal-Mart, GE, American Airlines, and hundreds of others cannot meet their Sustainability goals of their own without crediting the efforts of their supply chain.  

Their supply chain is us.  We must be conversant with all aspects of Sustainability for that reason.  We have many ways to be the best and only business unit able to make the greatest progress in Sustainability. 

For many years, large energy consumers have had commodity or strategic purchasing specialist to buy energy.  Now, by focusing on Sustainability of all size companies we just need to know where to start, how to measure it. 

In concert with the American Purchasing Society, I am developing a green procurement course that will have far more extensive material available in online, print, and portable digital media.  We will update quarterly so companies can build on successes.  We will offer discounts to those who sign up early so send me an email stating your  interest and I’ll respond with particulars.