Turn Spend Insights Into Procurement Opportunities for People, Profit, and the Planet
Although the traditional view is that Procurement exists to cut costs, its opportunities to make a positive impact on the world are massive. While its initiatives are often focused on strategic spend insights, Procurement can also measure and improve ESG performance and compliance metrics. But many teams don’t realize the true value of using spend analysis to become more sustainable, ethical, and compliant companies.
Spend insights are a great starting point for setting non-financial performance benchmarks, proposing new business goals, and driving holistic enhancements. For example, companies can use spend insights to ask themselves if they are:
- Reducing greenhouse-gas emissions and environmental impact/pollution?
- Partnering with the “right” suppliers and planning long-term to become more sustainable?
- Sourcing from fair-trade compliant suppliers, suppliers that pay livable wages, and that uphold human rights?
- Sourcing from local farmers and partners closer to home, where they’ll also have a lower environmental impact?
- Complying with ESG laws, policies, and regulations – by submitting disclosure reports, reducing problematic categories or suppliers from its value chain, and being transparent with customers and advocacy groups? What about the company’s suppliers?
Procurement teams aren’t only uniquely positioned to not only drive cost savings and reduce risk for enterprises. They can also drive value beyond traditional financial measures – for the good of the business, the planet, and its citizens.
But to be effective change agents, procurement teams need to learn from past business behaviors and current supply chain partners and use these insights to optimize future decisions and outcomes for the greater good.
Spend Analysis’ Untapped Potential
Spend analysis is a vital process in the world of corporate social responsibility. However, to use it for good, procurement teams must connect the dots between what they know about their spend and their supplier base, what they want to achieve next, and how they plan to execute their goals.
Our combined strategic procurement platforms Spend Intelligence and Procurement Performance Management provide businesses with insights and visibility that enable them to make more sustainable, ethical, and compliant sourcing decisions.
Using spend analysis, we enable our customers to turn procurement insights into new projects with transparent goals. This process leads to greater performance that’s more valuable than simple cost cutting because it benefits customers, stakeholders, and the planet, while also contributing to the company’s bottom line.
Connecting Spend and Supplier Insights
You can’t improve what you can’t see.
Spend analysis helps procurement teams make more economical or “total value” sourcing and procurement decisions. But a traditional spend analysis alone cannot measure a supplier’s performance against non-financial KPIs. ESG-facing Procurement requires a 360-degree view of its suppliers’ information, performance, and risk profiles.
To gain this all-aspect view of suppliers, you can enrich your spend data with supplier data – business information, performance, and risk assessments. This allows you to transform your spend data into actionable intelligence that’s greater than the sum of its parts and adds unique value. It helps procurement teams understand if their suppliers use environmentally friendly and sustainable business practices, protect workers’ rights, and comply with laws and regulations.
Turning Spend and Supplier Insights Into Action
Supplier and spend intelligence can uncover insights that will be indispensable moving forward.
Procurement can then assess its current performance and determine whether (and to what extent):
- Its sourcing and buying behaviors are compliant with applicable laws and regulations
- Uphold commitments to its shareholders and customers
- Are ethical and sustainable
If they are, then Procurement can drive greater awareness of its strategic value to the enterprise as a change agent and good corporate steward.
If they’re not, or if there is still more progress to be made, then procurement teams can convert these insights and assessments to new procurement performance initiatives. These may include allocating more spend with diverse or sustainable suppliers. Armed with this intelligence, procurement leaders can resource, set goals against, track, and monitor ESG and other non-financial outcomes.
When it comes to ESG-facing spend analysis, you’re not just gathering data for data’s sake. You’re using your spend data to transcend cost optimization and achieve something more for your organization. With a solid procurement performance management focus, all sourcing projects in your pipeline can become transparent, which will facilitate greater buy-in to ESG and non-financial KPIs.
Want to learn more about how Procurement can help advance the environmental, social, and governance (ESG) goal commitments and other critical measures of non-financial performance? Click below now to watch our newest webinar on ESG factors!