Typical barriers to implementing a sustainable approach in the Procurement function

By Responsible Procurement, 17 December 2013, Responsibleprocurement.dk


Read here which barriers companies typically face when implementing a sustainable approach in the Procurement function:

•     Introducing Responsible Procurement may lead to significant changes in the central organization. As an example it may necessitate changes in processes and systems for supplier selection, level of employee training and procedures of verification and performance assessment. It may also impact product design, logistics and maintenance processes, as well as skills and competencies of procurement staff.

•     One of the barriers to initiating Responsible Procurement is the need to justify the activity and its cost to the board of directors based purely on the benefit or profit of the company. Since neither private nor public organizations are run as charity institutions, business logic and bottom line results is in charge of the board rooms and therefore, the right arguments need to be brought forth in order to justify the undertaking.

•     Additional costs are one of the important barriers for incorporating social issues into procurement processes. Additional costs may arise in the short run from the need to develop additional systems to collect information. Moreover costs to develop internal and external strategies and procedures and to implement them.

•     Other internal barriers can be lack of training and lack of information in the focal organization regarding social and ethical and environmental principles and processes in the supply chain. Organisations may have advanced systems for dealing with responsibility principles within the organization. Though they may have very little understanding of what challenges can arise upstream in the supply chain, how they can affect the reputation or how to develop a system for addressing supply chain related responsibility challenges.

•     Some companies lack top management commitment, or the commitment ends when resources are needed for implementation of the principles, especially if the company, in order to comply with its code of conduct, needs to choose better performing and therefore more extensive supplies. The level of top management commitment is therefore decisive for managers to decide to what extent Responsible Procurement is to be implemented in the company and how proactive they can be in introducing Responsible Procurement to their supply chain.

•     Studies discuss lack of legislation in Responsible Procurement as a barrier for both companies and public organizations.

•     A general problem for incorporating social and ethical issues is that both focal organizations and their suppliers have difficulties with imposing changes or checking the performance beyond the first tier suppliers.

•     Audits for Responsible Procurement practices require significant input of time and financial resources from focal organizations. In order to reduce costs, focal organizations often hire external auditors.