The concept of sustainable sourcing, known as integration of social, ethical, and environmental performance factors into the process of selecting suppliers and platforms, is nothing new.
Sustainable sourcing impacts nearly every area of corporate business and the consumer’s mindset. Everything from sourcing materials, talent attraction and consumer purchasing habits is changing because of sustainable sourcing growth. Sustainable sourcing is needed because supply chains continue to expand globally into developing countries for lower costs and larger production capacity. This expansion exposes companies to increased risks and heightens the expectations of their stakeholders.
The International Organization for Standardization (ISO) defines sustainable procurement or sourcing considering the United Nations Sustainable Development Goals (SDGs), officially known as the 2030 Agenda for Sustainable Development, which is a “shared blueprint for peace and prosperity for people and the planet, now and into the future.” ISO has standard 20400 that can be the starting point for guidance on sustainable sourcing. This standard supports the United Nations SDGs for 2030.
Nowadays, companies are increasingly making sustainable sourcing an essential part of their procurement and supply chain management processes. Sustainable sourcing provides the following opportunities to businesses:
- Reduce costs through supplier diversification worldwide
- Enhance the company’s competitiveness
- Increase revenue with access to new markets and an effective multi-supply chain
- Brand crisis prevention: encourage the company to make the commitment and take corporate responsibility
- Manage Risks for brand protection, and against supply chain disruptions, fines, and litigations
Ideally, sustainability is already something your organization is invested in. But, if it’s not, there are still ways to start. Regardless, it’s important to align your efforts with company-wide goals. To support sustainability through sourcing, firstly, a list of sustainable criteria for supplier selection is needed and integrated, followed by choosing a suitable sourcing platform that provides sustainable products and environmental-friendly services. In addition, companies need to find a way to encourage and educate suppliers in setting their own business standards and developing responsible practices on their own.
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Carol Lau, Senior Vice President of Client Service, Sales Support & Analytics, Global Sources said, “As a B2B sourcing marketplace, we Global Sources, also support the supplier community to be more sustainable. Through our webpage, buyers can filter products via the specific categories/ materials/ features related to recycling, where “sustainable” or “eco-friendly” products will be found. In addition, we encourage our suppliers to show the ESG-related certifications, for example a Global Recycled Standard, on the relevant product detail page, so that buyers can get the sustainable materials or products with tangible proof-points,”
“By connecting buyers and suppliers with Global Sources, attending online events and tradeshows, exchanging e-business cards and utilizing AR/ VR virtual showrooms of supplier factories, not only can the online sourcing experience be enhanced with convenience, but it also reduces carbon footprints in general.”
Taking H&M Group as an example, The H&M Group has committed to making it possible for customers around the world to express themselves through fashion and design, and to choose a more sustainable lifestyle. To fulfil this commitment, the company is working to ensure that all raw materials used in their products are sourced in a responsible and sustainable manner. According to H&M Group Sustainability Performance Report 2020, nearly 65% of the materials used by the company’s brands were recycled or otherwise sustainably sourced. The company aims to reach 100% by 2030.
H&M Group utilizes their Sustainable Impact Partnership Program (SIPP) to assess supplier compliance with the company’s Sustainability Commitment, and to measure overall sustainability of suppliers over time. H&M Group also utilizes sustainability standards developed by NGOs, other companies, and multi-stakeholder initiatives, including the Good Cashmere Standard from the Aid for Trade Foundation, the Responsible Mohair Standard from Textile Exchange, the Responsible Down Standard from The North Face, and certifications from the Better Cotton Initiative and the Forest Stewardship Council.
Ultimately, sustainable sourcing is here to stay. It’s already become a key consideration for consumers and businesses. While buyers won’t be able to solve sustainability by themselves, they can certainly be a force for good for now and in the future. Diversifying the supply chain is of the utmost importance to ensuring the greatest possible choice of goods and services. The most obvious advantages are cost and efficiency, but it also comes down to sustainability and, ultimately, reputation. Companies may leverage a Hybrid O2O sourcing channel to support on-the-go overseas sourcing needs, reduce the carbon footprint, and lower the greenhouse gases that contribute to global warming.
Embracing technology is another critical factor to achieve the sourcing in a sustainable, efficient, and cost-effective way. During the supply chain management processes, companies increasingly consider utilizing AI-based software and platforms for intelligent sourcing, automation and inventory management, and even logistic arrangement. In addition, partnerships with local communities and small businesses, can also help encourage local product innovation and support the growth of the SMEs.