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.


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.