Procurement is an important part of manufacturing processes. Practicing sustainable procurement helps you to reduce the environmental and social impact by optimizing resources. The best practices for procurement planning help you purchase high-quality products at affordable prices that match regulatory compliance. SME manufacturing companies following sustainable procurement practices, enjoy profits by lowering their expenses.
Let’s learn what is the meaning of sustainable procurement, its role, importance, tools, solutions and best practices to follow to increase productivity of your manufacturing business.
What Is Sustainable Procurement?
Sustainable procurement is a strategic approach to procuring goods or services while keeping the environment, society, and economics in mind. It is also called "green procurement". It works in three important areas:
- Policy-Making
- Purchasing Decisions
- Reducing Emissions
A well-planned sustainable procurement strategy helps to reduce negative impacts on the environment. It focuses on creating a business process that has less problems and is profitable.
Importance Of Sustainable Procurement In Modern Manufacturing
Sustainable procurement helps from reducing greenhouse emissions generated by production to using resources efficiently. Manufacturing companies can make this possible by using sustainable procurement policies, making informed decisions, and reducing emissions.
Sustainable policies promote transparency and accountability in manufacturing businesses, creating a positive social impact. Targeted decisions based on environmental considerations reduce energy consumption and resource wastage. Additionally, green procurement minimizes scope 3 emissions, which is one of the largest contributors to carbon footprints and climate change.
The Role Of Sustainability In The Procurement Process
Sustainability in procurement process helps in smart financial management and operational decisions. It helps with effective inventory management to meet current market demand. It also:
- Encourages effective use of raw materials and other resources while reducing wastages through the supply chain.
- Helps to meet environmental regulations and social standards that reduce the risk of legal issues.
- Promotes ethical and transparent practices among stakeholders, employees, and suppliers.
- Helps to mitigate supply chain risks.
- Helps with cost saving by reducing waste and lowering energy consumption.
- Encourages development of new and innovative ideas to reduce costs and improve operational efficiency.
- Helps to develop a more diverse supply chain that is capable of adapting to changing market conditions and demand.
Overall, sustainable procurement practices promote a better public image and greater customer loyalty.
Examples Of Sustainable Procurement
Companies often use two methods for green procurement, product-based and supplier-based.
Sustainable procurement examples include getting the supplies and implementing the practices that are less harmful to the ecosystem. Purchasing eco-friendly products such as recycled materials, biodegradable products, and energy-efficient equipment is another example of procurement in modern manufacturing.
Manufacturing companies also prefer to purchase materials that are free from harmful chemicals. Following ethical sourcing of products, like procuring goods from local suppliers, reduces transportation emissions and supports the local economy. The use of cloud-based inventory management software for your procurement life cycle can reduce energy consumption and electronic waste.
A sustainable procurement strategy includes effective recycling programs for waste materials generated during the manufacturing process. Companies also prefer to use renewable energy sources like wind, solar, and hydroelectric power to reduce carbon emissions.
Best Practices In Procurement Planning For Modern Manufacturing
Companies need to collaborate with all the internal departments of the organization and suppliers, choose sustainable sources and conduct regular monitoring and reporting. Let’s understand how you can implement sustainable procurement best practices in your business.
1. Examine Energy Consumption
You can begin by evaluating the existing setup of your supply chain and current manufacturing process. This will help you find areas where resource consumption is high and identify the waste generation. Make a sustainable procurement strategy to minimize such issues by establishing S.M.A.R.T (Specific, Measurable, Achievable, Relevant, and Time-bound) goals to track your progress and measure your effectiveness.
2. Create Policy Framework
You can create a sustainable policy framework for the procurement process to resolve the issues. Use sustainable procurement practices like procurement of sustainable raw materials, partnering with multiple suppliers, following regulations, and using a strategic approach to reduce environmental impact.
3. Build Effective Collaboration
Having an effective collaboration with your stakeholders, employees, and stakeholders helps you create a safe environment. Choosing the right sustainable procurement software can help gain reports and feedback from every department in real time. This provides a centralized dashboard where you can monitor the performance of your procurement life cycle and make informed decisions.
4. Choose Sustainable Sources
You should pay attention to choosing suppliers who provide sustainable raw materials for your manufacturing business. Consider materials that are eco-friendly, allow recycling, and are chemical-free. Choose suppliers that follow government regulations and offer electric or hydrogen vehicles to deliver raw materials.
5. Use Cloud System
Managing your procurement process manually can increase the consumption of paper, which consumes space and also increases wastage. Using ERP software that requires advanced infrastructure and installing hardware can increase electronic waste during the upgrade process. Thus, it is recommended to invest in a cloud-based sustainable procurement platform that requires fewer resources for implementation, encourages remote work, and prioritizes energy efficiency.
6. Monitor Performance
For sustainable procurement you need to monitor and analyze the performance and make changes if required. You need to be updated on environmental compliance trends and government regulations and make informed decisions. The best practice to maintain sustainability in your procurement process is to have accurate and up to date data on your workflow.
7. Create Awareness
You can bring all the stakeholders, i.e., external and internal, workers, and suppliers, to create awareness about sustainability. Educate about your policy framework and organizational goals to promote uniformity in your manufacturing business. Such an initiative can improve workflow and promote productivity in your modern manufacturing company.
Tools And Solutions For Procurement Management
The procurement process involves numerous business operations such as inventory tracking, supply chain management, warehouse management, and many more. Modern manufacturing businesses need to maintain procurement orders, supplier details, and budget management to conduct a sustainable movement of goods.
If you are among those SMEs in India that need to purchase lots of stock for their manufacturing process while maintaining sustainability, you need the right tool to handle these activities. You should encourage the development of products that have a minimum environmental effect throughout their lifecycle.
Implementing cloud solutions in the procurement process helps with easy decision-making in sustainable procurement. These tools provide a single dashboard for working closely with your suppliers.
While choosing your ideal software, you must consider some of the features like automation, easy collaboration with the team, and budget. Here are the top picks of procurement management software that you can consider for your sustainable movement of goods.
1. SAP
SAP is cloud ERP software that supports sustainable procurement policy, social responsibility, and the circular economy. It allows suppliers to collaborate by following sustainability goals, being aware of risks, and helping to maintain a reliable supply chain.
2. TranZact
TranZact is cloud-based purchase order software that provides sustainable procurement tools for purchasing goods. It offers a centralized dashboard that allows you to collaborate with multiple suppliers, stakeholders, and employees, track your inventory in real-time, and place orders for your manufacturing. TranZact also helps you manage your whole manufacturing process with ease.
3. Odoo
Odoo is CRM (Customer Relationship Management) software that contains an Energy Spurt tool to manage your procurement process. The tool consists of sales, invoicing, purchase, accounting, and manufacturing modules for effective purchase management and monitoring the shelf life of the products.
Sustainable Procurement Practices With TranZact
Managing the procurement process with sustainability can be time-consuming. TranZact is the right sustainable procurement solutions to effectively manage supply chain while collaborating with suppliers. It offers technologies that can help reduce resource waste, allow government compliance, and reduce operational costs.
TranZact can help you automate manual work through cloud ERP modules and minimize environmental damage. Sign up to TranZact today to benefit society and the economy while increasing productivity in your manufacturing business.
FAQs
1. What is sustainable procurement practice?
Sustainable procurement practice is the process of moving inventory while considering fundamental economics and protecting the environment and society.
2. How to make the procurement process more sustainable?
Here are tips to make the procurement process more sustainable:
- Develop a sustainable procurement policy.
- Evaluate the supplier’s sustainable practices.
- Practice ethical sourcing.
- Promote transparency in your supply chain.
- Implement a cloud-based software.
- Educate and train your staff.
- Have effective collaboration with your stakeholders.
- Monitor and measure the performance.
3. What is the principle of sustainable procurement?
The principles of sustainable procurement stand on three pillars.
- Environmental Responsibility.
- CSR (Corporate Social Responsibility).
- Economic Visibility.
4. What are the challenges of sustainable procurement?
The challenges of sustainable procurement are:
- Implementing right technology
- Higher procurement cost
- Lack of support from suppliers
- Fewer internal support
- Limited knowledge of sustainability
5. What is sustainable procurement examples?
Sustainable procurement examples are:
- Purchasing renewable energy sources
- Procuring recycled products
- Implementing waste management programs
- Using cloud-based inventory management solutions
6. What are some best practices that manufacturers can adopt to ensure sustainable procurement?
Manufacturers can make sure of sustainable procurement by creating sustainable procurement policies, working with suppliers to improve sustainability, training staff on the process, and tracking and reporting performance.
7. Are there specific tools or software available to assist companies in implementing sustainable procurement strategies?
Yes, there are specific tools and software available to assist companies in implementing sustainable procurement strategies. TranZact offers supply chain mapping, and LCA (Life Cycle Assessment) to streamline the supply chain and improve transparency and accountability.
8. How can technology be leveraged to enhance sustainable procurement efforts in manufacturing?
Technology can be leveraged to improve sustainable procurement efforts in manufacturing by automating data analytics, implementing supplier management platforms, and managing real-time resources.
9. How can manufacturers integrate sustainability into their procurement processes?
Manufacturers can integrate sustainability into their procurement processes by defining environmental and social goals and closely working with suppliers to make better decisions.
