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Incorporating waste reduction into strategic sourcing

Incorporating waste reduction into strategic sourcing

By Strategic Sourceror, February 24, 2014. Strategissourceror.com

 Incorporating waste reduction into strategic sourcing

The procurement process is full of potential sources of waste. Transporting goods across great distances, for example, often results in product breakage or spoilage of raw materials. Meanwhile, manufacturing is often fraught with inefficiencies, and the use of defective or inexpertly made materials often result in products that can’t be sold.

Especially as sourcing networks become increasingly complex, it’s essential that companies look closely at the potential sources of waste in their distribution chains and work to eliminate them. This effort is a critical component of a larger strategy, including spend management and environmental awareness.

The foundation for sustainability
Green logistics has become an increasingly important – even trendy – focus point for chief procurement officers and others involved in product sourcing. Companies are beginning to think about how their manufacturing, production practices and supplier relationships can be more closely aligned with enterprise-wide sustainability strategies that have the dual advantage of reducing long-term costs and improving brand image.

However, in order for firms to think about sustainability in a holistic way, it’s important to look beyond the trends and evaluate what is at the foundation of ecologically sound business practices. In a column for Environmental Leader, Schneider Electric’s Director of Sustainability for Europe Andy Dewis pointed out that the age-old principle of minimizing waste is central to the concept of green business.

“Many successful businesses have always practiced sustainability; maybe not by converting their fleets to run on biodiesel or installing solar panels, but simply by running as efficiently as possible and reducing waste. … And running a business efficiently is no fad at all,” Dewis wrote.

Waste reduction as strategic centerpiece
Dewis’ comments highlight just how interrelated cost reduction and sustainability can be if firms handle these initiatives correctly. But for some executives, eliminating waste may seem an obvious goal that doesn’t need to be explicitly articulated as part of a business strategy. This mindset, however, may make companies fail to emphasize the vital role that waste reduction plays in overall efficiency and agility.

GreenBiz recently reported on architect, designer and sustainability expert William McDonough’s comments at the 2014 Executive Sustainability Forum webcast. McDonough discussed how firms can develop strategies for avoiding waste as they chart out their plans for eco-friendly procurement.

“Why make something you can’t sell?” McDonough asked attendees, according to the news source. He also emphasized efficiency as a central business value, calling upon firms to rethink waste and investigate how raw materials that might otherwise be scrapped can be re-purposed and put to new uses.

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