Regenerative Procurement — How Supply Chains Need to Move from Lines to Circles
Walk to Work #4
The Volans team very much enjoys an opportunity to invite friends (new and old) over to our quirky more-plants-than-people offices to have interesting discussions over wine and cheese. We call these sessions ‘Salons’. Our most recent one — held late last year — had participants chew over what the future of procurement might look like.
Our contributors were wide ranging, with individuals attending from corporations such as Interface, BT, Mars and Coca-Cola. The conversation fluttered across how procurement teams are important levers of change within companies, to how communication with customers about supply chain impacts needs to be improved.
My main conclusions from the salon are sectioned into three broad topics: the pitfalls of the current system in regards to measuring the success of procurement teams, how the use of language influences behaviour and, finally, how a more tenacious attitude towards collaboration is needed in the industry.
Metrics
My first takeaway from the evening was on the way we are currently evaluating the efficiency and productivity of supply chains. Currently we measure progress purely from an economic, cost-efficiency standpoint when, instead, we should look to incorporate social and environmental factors too. These could include (but aren’t limited to) the retention of employees and the supporting of biospheres and the natural environment. In addition, the current rules of the game are distorted away from simple sustainable solutions. New products are cheaper to make and easier to pass through regulation, whereas circular and recyclable products are often disincentivised by legislation that is slow to adapt.
The focus of supply chain metrics is on outputs — how much is made and how cheap it was to make it — rather than inputs, such as how raw materials are sourced and who made the products. The figures we see give no indication about the process and individuals involved. Humans are involved all the way through the procurement process, from farmers harvesting crops, to workers in factories and corporate employees in offices, yet all the focus is on the item being made.
Language
The way language is used can influence the way we feel or the opinions we produce from what we read and hear. The language of supply chains — the very term itself — is both linear and dehumanised. The detached, economics-based lexicon used to explain supply chains allows us to feel removed from what is occurring. Traceability in a supply chain is all about the product, instead of on the people who make the product. How do we change the narrative so people are the focal point?
A term that we prefer — and which we discuss in our new white paper on Procuring a Regenerative Economy — is ‘value cycle’. This gets at both the shift from linear to circular economy models and the need to shift from a pure cost-efficiency perspective to a focus on financial and non-financial value creation at all points along the chain (or cycle).
Collaboration
With the speed at which customers are asking for products and the squeeze from over-extraction and climate change, resource management and how we get the most out of materials is ever more important. Something our procurement professionals were adamant on was how to stop the “vertical segregation” of supply chains. How can procurement teams promote collaboration with and between suppliers? Building trust, having a transparent flow of information and putting more focus on the people involved were all proposed solutions.
So, what will it take to move to value-centred, circular models? And what examples are already out there of companies putting this idea of regenerative procurement into practice? Our new white paper, developed as part of our Tomorrow’s Capitalism Inquiry with the support of our friends at EcoVadis explores exactly these questions.
Ultimately, procurement teams have a crucial role to play in the transition to a regenerative economy. Procurement is the linchpin that integrates sustainability across entire industries and product cycles. Harnessing this influence by giving more power to procurement teams to act as innovators and value creators will be an important step towards a circular, regenerative economic system.
I very much enjoyed the Salon, and look forward to further debate about how we bring these important ideas into fruition.
