Sustainability has now established itself truly as a money-making market opportunity, valued at 12trillion US$ per year by 2030, and likely 2-3 times higher. The positive bottom line for businesses comes mainly from reputational opportunities due to which businesses attract consumers, retain employees, B2B customers, investors and overall deliver attractive returns to shareholders.
When I set out to write this blog, I wanted first to find out if there is any reliable information on what percentage of the total of procurement practitioners (within any reasonably relatable framework) are actually in control of or able to at least influence procurement strategies or, even better, the level of integration of procurement strategy with business strategy. Couldn’t find exactly what I was looking for. Granted, I only spent a limited time on this! And I would absolutely be grateful for any suggestions of reliable sources from readers savvier in this respect than I am.
90/10
Finger in the air, let’s take 10%. I don’t think I’d be too far off. Maybe I’d be even optimistic, but let’s go with it, for the sake of the point I’m about to make. Say 10% of all procurement practitioners (to include CPOs, buyers, procurement/supply chain consultants, etc.) in the whole wide beautiful world have what we would consider as control or direct influencing power in their respective business environments. Now, what’s important for me is that there are 90% of practitioners who are not in such a privileged position. These 90% probably act out their role within small boundaries, with very little or even no control whatsoever.
For example, take myself. I spent most of the time during the first three years of my career in such a limited role. I started of as a buyer in a male-dominated construction sector, international organisation and pretty much during the full-on economic crisis of 2008. As such, it was an absolute struggle to ensure supplies were coming at all, and most of the focus was less on strategy, and more on lead-times, cost savings and payment terms. To be fair to my managers, strategy was a preoccupation, albeit constantly slipping towards the sides. I placed hundreds of POs, negotiated contracts and made extensive offer comparisons being acutely aware of this context. I was lucky enough to have their ear sometimes when recommending more expensive options with technical advantages over the strictly economical ones, but it entailed an extra effort of persuasion, the right project opportunity, and momentary context was key for their approval.
The power of the
90%
And the good news.
There is power in the many. If the 10% can control strategy design, say in a
way that it integrates sustainability principles, then I firmly believe the 90%
can influence sustainable downscaling results, with or without that strategy.
How, you ask? Nothing requiring a PhD. Applying a little bit of knowledge and the
natural sense of logic. Read further.
First,
notwithstanding the usefulness of a one-click google search, I am encouraging
anyone to read up on the topic of sustainability and procurement. Most
information you’ll find will be high-level and maybe more practical for your
bosses’ boss, and that is fine. For theoretical purposes and vocabulary is
always useful and surely you are striving to move to the 10% side!
To illustrate my
‘power of the many’ point, I’m narrowing my proposed approach to procurement in
a manufacturing context. Inputs, process, outputs. A more relatable context for
illustration purposes, I feel. So, I’m choosing the following sequence:
Sustainability
-> economic degrowth -> value chain -> procurement -> resources
It is a simple
illustration of how the latest preoccupation of all capitalist, and not only,
actors can be drilled down to easy-to-tackle, actionable, elements. The
connection between the principles of sustainability and economic degrowth
(equitable downscaling of production and consumption that
increases human well-being and enhances ecological conditions at the local and
global level) is clear.
Procurement is, at
its most basic function, a facilitator of production, a key part of the value
chain. So, how can procurement contribute to the equitable downscaling of
production? Shareholders would not be very happy. Less production, less
consumption, less profit. Not quite. It’s all about drilling deeper, interpretation
and perspectives.
Downscaling. Now this is the key word to dissect. Downscaling can easily trigger visions of quantitative reduction, but it doesn’t have to be so. Reduction of production resources is a smarter way of looking at it. And how do we reduce production resources? Again, reduction can go beyond the quantitative dimension. Reduction can mean ‘same resources, more production’ or ‘less resources, same production’.
To use the same
amount of resources for more production we need innovation across the
production process. Apart from the immediate observation that production
process design is not a matter for procurement being naive, it is also
incorrect. Procurement can be involved in increasing the production capacity in
a fair amount of ways (e.g. procurement of latest technologies, of process
re-design expertise, etc.). On the other hand, it can certainly step up on SRM
and use that power for insights into the latest developments and improvements
of attributes of direct production supplies, of more sustainable and
potentially at the same cheaper alternatives, from the current and even from an
extended supply base.
Procurement can become a facilitator of sustainable degrowth when positioned as a strategic partner in business modelling. However, the adoption of a ‘drill down to the nitty gritty’ mindset of such a contemporary challenge (e.g. going from a new ubiquitous buzzword to ‘I will ask my steel-bending machine supplier to include in the technical manual energy-saving tips and tricks and periodical training sessions for the operators around energy saving practices’) can result in an easy-to-access tool box for any sustainability conscious individual procurement practitioner, when strategic direction and support is lacking. In practice, should you be interested in a bouncing-ideas session, it would be a pleasure to hear from you, to discuss context and applicability on a case by case basis.
As a side note, even outside the procurement discipline discussion, my opinion is that developing countries are the most important targets to encourage the adoption of innovative sustainable degrowth practices. Global north developed countries, the highest consumers of planetary resources, would find it difficult to downscale a privileged life-style in a short amount of time. Nevertheless, for the same reasons, the smallest of downscaling percentage would carry significant weight. Under developed countries (e.g. predominantly agrarian) already consume per capita 300% less resources than their wealthiest counterparts and also are best positioned to continue developing by way of great leaps, on a backdrop of sustainable economic degrowth, due to the seamless integration in a current fast-paced innovation environment. Therefore, developing countries, not quite poor in GDP terms, but definitely with an eye on that almost within reach coveted developed status, must shift the approach to one based on the principle of sustainable economic degrowth before it is too late. Otherwise, earning the ‘developed’ title will become an increasingly difficult task, rather than an easier one.
Thank you!
