Sustainable Procurement
Read this article, which highlights a novel strategy for procurement. Focus on sections 1, 2, and 5 and the opening paragraphs for sections 3 and 4. The model in the paper presents a new strategy to reduce procurement costs and enhance overall procurement flexibility.
Introduction
Traditional supply chain deals with man, money and
material (3M) and the green supply chain deals with man, money,
material and environment (3Me). Finally, sustainable supply chain deals
with man, money, material, environment and society (3MeS). Hence, the
sustainable procurement process (SPP) should include the coordination of
social, environmental and economic dimensions (the triple bottom line),
see e.g Matos & Hall. Sustainable procurement process (SPP)
should also include recycling of disposed product to improve
sustainability of supply chain.
Good
practices yield better result and inspire other. Unilever launched
"Unilever Sustainable Living Plan" to achieve hundred percent sourcing
of agricultural raw material sustainably by 2020. As part of its
Sustainable Living Plan, Unilever promotes the use of tomatoes raised
sustainably in Knor soups. In 2010, Tesco developed Tesco Knowledge Hub
to share knowledge with suppliers and agricultural producers to develop
sustainable supply chain to reduce the energy costs, waste and
environmental impacts of the products Tesco buys to achieve thirty
percent reduction of carbon emissions from the company's supply chain by
2020, compared to 2006-07 levels. In 2014, Ceres conducted the research
to measure to what extent more than 600 of the largest, publicly traded
U.S. companies are integrating sustainability into their business
systems and decision-making to develop the supplier self-assessment
questionnaire (SAQ) to form the foundation of sustainable of supply
chain. Today companies are keen to know the process of augmenting the
sustainable procurement. Thus, it is true that only companies that make
sustainability a goal will achieve competitive advantage.
In this paper an attempt has been made to integrate
the concept of sustainable procurement with an innovative postponement
strategy. The complexity of production process can be avoided by
manufacturing a base product or core product as per aggregate demand and
then auxiliary parts/components can be manufactured and assembled after
the receipt of customer demand. This approach can reduce cost, lead
time and also the complexity of logistics and inventory. Thus, 'procure
when required' or 'procurement postponement' could be an effective
strategy of any manufacturing company that assembles products. In this
paper an integrated approach of procurement postponement and sustainable
procurement process is discussed in light of a case study of an Indian
company. This paper is organized as follows. Section 2 discusses about
literature review. Section 3 describes methodology. Section 4 depicts
the mathematical model for two-stage supplier selection for ATO. Section
5 provides the case study of an Indian company. Section 6 and 7
discusses about results and conclusions.