Purchasing and Negotiation Training

This is Part VI in a series of eight that will explore Sustainability and green purchasing’s leadership role. Part I explains how Sustainability is driven by the cost savings of green purchasing, Part II deals with the heart of Sustainability, energy and fuels, Part III with the 3Rs of Reduce/Reuse/ Recycle, and Part IV with construction and facilities in green purchasing, and Part V with Chemical and Environment Management .  The common theme though all is that purchasing can and should take a leadership role.  

Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant

Editor’s note:

Corporate Social Responsibility (CSR) is probably the area of Sustainability least under purchasing’s direct control.  For the uninitiated, CSR seemingly appeals to those who plant trees in proportion to their GHG emissions.  Further, CSR is often broadly defined  and  loosely quantified.   

Yet, it also almost always entails the supply chain inclusion so chances are high that CSR will fall to purchasing.  For instance, a Sustainability goal required by a customer might be that suppliers report in specific areas such as Reduce/Reuse/Recycle (3Rs).  The primary motive for the 3Rs is cost savings and thus the tie to procurement.  The skill sets needed to discharge this CSR obligation falls squarely within purchasing’s forte and thus the reason why we may need to step up CSR efforts.  When a major or new customer demands that all their suppliers drive Sustainability throughout the supply chain, expect that down hill torrent to flood the desks of the purchasing managers who must then adopt green procurement as our own new mantra.  

A popular but fuzzy precept of CSR is stewardship of the planet’s resources.  This is widely interpreted to mean conservation of natural resources such as fuels, water, and raw materials as well as reduction of GHG.  

CSR also extends into areas remote from purchasing such as

• ethnic, social, gender and economically disadvantaged diversity of ownership of supply chain enterprises
• mandatory compliance with edicts involving types and sources of labor (child, prison, slave, or other coerced)
• wage levels, including the ratio of executive to worker pay checks
• ethics in business matters with suppliers
• sponsorship of “community” events, and more 

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Other goals of CSR are more familiar to procurement.  These include

• commitment to treat all suppliers honestly, ethically, and equitably
• requirement that supplier performance be measured
• those suppliers at risk of losing business must be given  the opportunity to improve in all areas of deficiency, not just CSR

Any experienced procurement pro recognizes the parallel to the best practices of supplier qualification and evaluation.  Thus, purchasing is in the best position to ensure that suppliers satisfy these CSR requirements. 

As the public becomes more aware of Sustainability, customers will seek to buy “greener” products.  Companies must act to “green” their processes and supply chains.  For example, minimizing heavy metals or GHG intensive processes reduces the potential exposure to claims of air and water pollution.  These good business measures are logs on the image fire that warm the public to an organization’s CSR efforts.  If the cost of these logs are defrayed in whole or in part from savings achieved in other parts of green purchasing efforts, there is every reason to pursue it. 

Smart companies see this and try to convert the public’s interest Sustainability into increased profits. The link between CSR and economic gains cannot be over stressed.  For example, General Motors (GM) reduced disposal costs by $12 million by reusing containers.  Whether GM was motivated by CSR or cost savings, or perhaps to publicize their soon to be released hybrid (green) Volt vehicle, the economic gains were a consequence of its commitment to Sustainability.  

And it is not just customers. As the economy improves, job candidates may favor a perceived green company.   Younger ones in particular are likely to evaluate an organization’s sustainability. 

While purchasing always has plenty on the plate, expect that Sustainability and its high profile subset, CSR, to soon be on the green procurement menu.