Why it’s time for Procurement to move away from a linear model
A blog post by Harvey Laud, Director at Reconomy
Businesses are taking stronger steps on their ESG programmes as investors, consumers and the changing climate demand faster action.
The step-change in urgency is welcome and businesses across the world are achieving fantastic results through leadership, innovation, tech and data.
Yet there is an increasing disconnect between the ambitions of sustainability teams and the day-to-day operations of businesses through the supply chain and across the full lifecycle of their products and services.
This point is neatly evidenced by the siloing of procurement teams in legacy, linear business models.
The procurement division often operates as a discreet team – away from the wider sustainability and operational groups – and consequently develops its priority hierarchy.
This is typically dominated by commercial revenue with procurement acquiring on cost minimization which rarely translates into strong social and environmental value (triple bottom line).
This is not the fault of procurement teams but rather the legacy structure of businesses dictating different priorities for different divisions that aren’t aligned and therefore don’t target a common objective, frustrating progress towards achieving circularity ambitions.
The attempts of procurement teams to incorporate sustainability into their processes is a good example.
Because they are a siloed division without a complete view of the lifecycle of the products they are procuring, items are bought based on functionality and not necessarily balanced with social and environmental qualities.
If this doesn’t align with the business’ wider resource strategy – for example, if the new product is not easily disassembled or recycled within existing systems – then even the best intentions can undermine progress to resource efficiency.
We encourage businesses to adopt a more circular approach to their sustainability agenda that encompasses the entire operations and activities of the business, perhaps under the leadership of a Resource Director or similar.
This links the procurement team with the operational teams to create efficient circular ecosystems and more sustainable outcomes.
It allows companies to formulate strategies that deliver end-to-end sustainability, starting with data capabilities to understand the materials needed and their wasted resource impact, before progressing through to improving segregation, refining processing, designing for disassembly, and supporting governance demands.
Businesses aren’t left on their own to create holistic, circular solutions. Reconomy offers a range of services and expertise throughout the value chain to help companies deliver their sustainability agenda and be transparent on their path to net zero. This is even more relevant for organisations that operate in the EU with CSRD coming into effect in 2024.
From data management to the real-world infrastructure of recycling, we help companies link their procurement, commercial, and sustainability agendas in perfect harmony. Moving away from legacy models will help firms meet their ambitious objectives while delivering commercial growth.
Businesses can manage and control costs through various strategies, including efficiency improvements and waste reduction initiatives. Businesses need to conduct cost-benefit analyses and adapt to changing market conditions to optimize their raw material and wasted resource management costs through sound procurement practices.