Rethinking supplier relationships for a sustainable future (Max Kent)

As sustainability issues continue to take centre stage in all aspects of business, organisations of all shapes and sizes are under increasing pressure from their stakeholders to ensure that environmental concerns are addressed, whilst they continue to act
in a sustainable way. 

There has been stellar work done already to ensure that sustainability is on the agenda of many financial and procurement leaders and their teams, but as much as this is a great start, there is much more to be done to ensure sustainability becomes a permanent
fixture in all businesses.

In order to bake sustainability into every fibre of a business, it needs to be woven into the very fabric of each business and within employee mindsets.

Great decisions start and end with great data  

One of the core ways to make this happen is to rethink the way in which we work with suppliers – and that starts and ends with data. If you have access to accurate supplier and send data, it can be a  great enabler to create and maintain sustainable business
practices.

However, if data is the key, what do businesses need to do to ensure they have good data and equally important, how do they use it to ensure they have a sustainable supply chain?

As 2022 has passed its halfway point, it is fair to say that organisations and businesses of all shapes and sizes have come to the conclusion that they will make little inroads regarding becoming truly sustainable, without the support and cooperation from
their suppliers – regardless of sector, or geographical location.

When looking at taking steps to reassess supplier relationships, a great way to start is to start with data – but how can organisations find ‘good data’ and why is it important for sustainability?

Collecting the right data

Any business decision needs to have accurate, complete and relevant data – and this is the same logic we must apply when looking at supplier sustainability.

In order to collect, analyse and report on this data as it relates to sustainability, organisations will no doubt be planning and delivering a significant volume of intensive data gathering exercises each year. These may provide data of some use, but asking
suppliers via surveys for information on a regular basis isn’t the best idea to get accurate data to make decisions, especially around sustainability. 

Yes you can ask specific questions, but these must be set against your own sustainability parameters and cannot be done in isolation to the rest of the business. This is before you even consider the time it takes to collect the responses & make an analysis
– by which time the data is likely out of data, making the whole task redundant.

To ensure you are able to get the information you need to make informed decisions, it is essential to communicate with the right supplier departments and also to really understand what the data you are asking for will help you to achieve. When looking at
collecting data, consider what information your organisation needs to make an assessment of the sustainability attributes of the supplier and also, who is best placed to provide the data.

This is where CFOs and Finance leaders can help to ensure that relevant data is provided to support their organisation’s sustainability efforts, but how?

By building strong relationships with their supply chains and knowing exactly what they’re looking for.

Communication is key and should be led by finance leaders 

Relationships are all about communication and if organisations don’t really know their suppliers, or have any real relationship with them – when seeking information from them, it may cause issues.

For example, if an organisation needs data in order to assess the sustainability credentials of supplier X and issues a survey to the supplier, if there is little or no relationship with the supplier – how do you know you are taking the best person? 

Also, if the supplier is unsure what information is being requested, or perhaps how, or why surveys relate to them, or who should respond – this may cause them to perhaps underestimate the importance of what is being asked of them, or even may lead to inaccurate
data being given to your organisation, which may hinder your sustainability planning.

Worse, you may be provided with false information which brands you into the ‘greenwashing’ crown – a palace no organisation wants to be. 

As a result, suppliers in the first group will lose time which impacts performance, and the quality of responses from the second could be diluted. 

Of course, there is an even better method, considering your finance and procurement teams may already have the data you need – but don’t realise it, or can’t access it. 

If every purchase is properly documented and completed digitally, and invoices are digitally handled then your company will have the keys they need to really make informed decisions on spending habits. 

For many companies, this still isn’t the reality, which only hampers the drive for sustainable practices.

There is now no room for complacency, organisations, businesses suppliers and employees alike all have to work together to ensure sustainability issues are not only addressed, but must play their part to protect and repair the planet,

Gone are the days of sustainability being treated in isolation, or as a set of as one-off activities – businesses, led by the processes behind sustainable business practices, through a combination of data-driven digital procurement with trusted supplier
relationships is one of the essential ways in which organisations can ensure a sustainable future.