Can procurement deliver the difference on socially-responsible purchasing?

It’s a challenging time, in particular for CPOs – Chief Procurement Officers. Three months into my role as General Manager for Amazon Business Europe and talking to many industry leaders, I can see that among the top priorities emerging are cost optimisation, supply chain disruptions and, very prominently, sustainability. These are key areas that were also discussed in detail at our 2022 Amazon Business Reshape event for procurement professionals.

Corporate goal-setting on matters of sustainability impacts all areas of the business; however, it’s particularly important for the procurement community as the individuals responsible for buying products and services for the business. Our own survey found that “improving sustainability” is the top priority for 39% of procurement leaders.¹

The intention-action gap in procurement

McKinsey estimates that, on average, 90% of a company’s emissions come from its supply chain, yet only 20% of organisations are currently using sustainability measures as a primary criterion in sourcing decisions.² According to BearingPoint, almost eight out of ten (78%) business leaders say their firms lack the capacity to turn ESG targets into action.

So if achieving sustainability-related goals is such a high priority for CPOs, what’s stopping them from taking action?

The same survey found that ineffective tools were amongst the most common challenges holding back more-sustainable procurement³ - something I think most would agree on. However, having spoken to many industry leaders at the Procurement Leaders’ World Sustainability Awards in Munich recently, I see a bigger, more complex issue. Tools are important, but to really bridge the gap between intention and actions, leaders need to go one step further within their organisations and enable hundreds, or even thousands, of their employees involved in procurement, to take sustainability into account when making business purchases. Helping organisations to streamline and scale their procurement processes in this way, is a key objective at Amazon Business.

Equipping the business to be more sustainable

While CPOs are aware of company-wide sustainability strategies and how they translate to procurement, individual buyers might not be clear on what they need to do. Is their priority, for example, to find products that meet specific sustainability-related criteria, and if so, which one? Plus, how about conflicting priorities such as price and delivery?

We are focused on combining both, and making sure it’s quick and easy to save businesses time and cost. We’ve introduced features to enable businesses to easily classify exactly what products can be purchased by buyers to align with wider business sustainability goals. These include our Guided Buying tool, Buy Local feature and Climate Pledge Friendly product range, which highlights certified products that meet sustainability standards and help preserve the natural world; from carbon neutral notebooks through to TCO certified monitors, which have a lower environmental and social impact.

Buying decisions are complex and distributed across an organisation, so it’s important that each buyer firstly, understands what “sustainability” means to the business, and secondly, has the right infrastructure to take action. Here are two examples:

Siemens UK wanted to automatically identify where buyers can replace existing purchases with more-sustainable alternatives. The Guided Buying feature from Amazon Business enabled the procurement team to set parameters around the types of sustainability efforts that are important to them, be it carbon emissions, materials or packaging. These insights have helped to drive awareness and action among buyers. Siemens UK is now exploring how to make this part of a commitment to reduce its supply chain CO2 footprint by 20% by 2030. The new functionality has also sparked discussions about incorporating additional sustainability-related options into procurement operations, such as refurbished products and potentially mandating the purchasing of products with sustainability-related credentials in certain areas.

Similarly, Gransolar, a group of solar photovoltaic energy and battery storage companies, needed a procurement provider to empower teams with the opportunity to measure purchases in CO2 generation and meet the group’s commitment to lower carbon footprints in purchasing practices. Amazon Business has helped Gransolar by making it easier for purchasers to source Climate Pledge Friendly products certified with lower CO2 generation, while also helping to better manage tail-spend.  It adopted Amazon Business as its ‘one stop shop,’ creating an authorisation process to ensure there was no rogue spending taking place that wasn’t aligned to its strategy. What’s more, Gransolar’s mission was to implement a 360-degree recycling plan and shake up its procurement strategy making it more circular and less wasteful. Amazon Business’ scalable procurement process has offered the organisation a connected and digitised buying environment, allowing teams to monitor what they are buying and provide guidance on how to reuse and recycle.

Empowering teams to take action

While tools help to drive awareness and action – how about scalability? CPOs are focused on trying to make procurement as efficient as possible, but adding more criteria and new priorities can hinder that movement – particularly for large organisations with hundreds or potentially thousands of buyers involved. It’s a trade-off. A potential solution comes from reflecting on our own behaviour as a customer. I, for example, would rather not call my bank agent with queries. Instead I prefer to use my banking app to manage 90% of my business. Translated into procurement, this means that instead of giving just a small group access to tools, decentralising and giving everyone some autonomy can help to overcome this trade-off.

This becomes even more relevant when looking at the next major cohort to join and grow within the workforce. According to a Deloitte study, there is a strong appetite across Millennials and Gen Z to implement more-sustainable buying practices within their businesses.⁴ When asked to rank the environmental actions they’d like to see their employers invest in, those audiences prioritised highly visible actions that enable employees themselves to take action, such as banning single-use plastic products and training people to make better environmental choices in their everyday lives.

A good example of a company making this possible for their employees is global consultancy, All for One Group.

With the rise of hybrid working, All for One Group saw a sudden requirement to send tech equipment directly to employees in countless different locations, rather than just the main office hubs as it had done previously. To meet this demand without negatively impacting its sustainability goals, the business enabled employees to order and receive deliveries directly from the Amazon Business warehouse to their home office. Additionally, by adopting a sustainability-focused guided buying service through Amazon Business, the business ensured that employees across all regions were able to easily choose items from a pre-selected Climate Pledge Friendly product range, in line with the company’s sustainability policy.

This is a challenging time for businesses – and procurement – in many ways. These examples offer a positive step in the journey to addressing the intention-action gap experienced by procurement leaders and show how businesses can work with partners to continue innovating when it comes to sustainability.

¹Amazon, B2B E-Commerce in Evolution Report

²McKinsey, “Buying into a more sustainable value chain”, September 2021

³BearingPoint, “Catch up in the race to more sustainable procurement”, March 2022

⁴The Deloitte Global 2022 Gen Z and Millennial Survey, May 2022