Enabling Sustainable Supplier Management with Scanmarket by Unit4
Sustainability remains a growing priority across enterprises, but much of this attention is turning to procurement teams. A recent report found that over 70% of an organization’s carbon emissions come from its supply chain, known as Scope 3 Emissions.
For procurement managers, supply chain professionals, and chief procurement officers, adopting sustainable supplier practices is not just about compliance or public relations, but is a strategic investment.
This blog explores the fundamentals of sustainable supplier management, its benefits, the critical role of Scope 3 emissions tracking, and how advanced tools like Scanmarket by Unit4 cloud solutions can drive meaningful change.
What is Supplier Management?
Supplier management is the process of strategically overseeing an organization's relationships and interactions with external suppliers. It involves sourcing, contracting, performance tracking, risk management, and supplier relationship management.
Effective supplier management ensures that an organization has access to high-quality goods and services at competitive prices while maintaining strong partnerships with suppliers.
What is sustainable Supplier Management?
Sustainable supplier management is a strategic approach to sourcing that maintains supplier relationships while prioritizing environmental, social, and economic considerations.
Sustainable supplier management goes beyond traditional procurement practices and focuses on ethical, environmental, and social responsibility aspects of supplier relationships.
By incorporating sustainability into supplier management processes, organizations can reduce their carbon footprint, drive cost savings, improve reputation and customer loyalty.
Why is sustainable Supplier Management Important?
In today's climate, businesses are increasingly recognizing the importance of sustainability in their operations. Sustainable supplier management goes beyond traditional procurement practices and focuses on environmental responsibility.
But even in today’s more environmentally conscious world, sustainable supply chain practices require complete transformation. McKinsey reports, for most products, 80% to 90% of greenhouse-gas emissions are ‘Scope 3’, or related to the supply chain.
While Harvard Business Review report that 100% of supply chain to some multi-national companies lacked appropriate environmental management systems, with 80% in certain instances flagged for social problems – the need for transformation is today.
By incorporating sustainability into supplier management processes, organizations can reduce their carbon footprint, drive cost savings, improve reputation and customer loyalty.
Key considerations for Sustainable Supplier Management
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Corporate Social Responsibility (CSR) - Sustainable supplier management intertwines with CSR by emphasizing ethics, human rights, and environmental responsibility. Examples include promoting fair labor practices or ensuring suppliers meet diversity targets.
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Regulatory Compliance - Companies must comply with environmental laws, such as those governing waste management or hazardous materials. Sustainable supplier practices minimize risks of non-compliance and penalties.
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Reducing Environmental Footprints - Strategies such as selecting suppliers closer to distribution centers, improving transportation efficiency, and sourcing eco-friendly materials help curb emissions arising from logistics and production.
Benefits of Sustainable Sourcing
Investing in sustainable supplier management contributes to three vital areas of growth and impact.
Carbon Reduction
Globally, supply chains are responsible for a vast majority of carbon emissions. Opting for sustainable sourcing practices, like working with eco-conscious suppliers, can significantly help reduce greenhouse gas emissions. Scanmarket by Unit4’s solutions have been known to help organizations cut emissions by up to 50% through efficient carbon accounting and monitoring processes.
Cost Savings
While some sustainable practices might seem costly upfront, they result in long-term savings through resource efficiency, energy conservation, and waste reduction. Strong ESG credentials drive down costs by 5 to 10 percent, as reported by McKinsey.
Improved resource allocation also optimizes operational costs, proving that sustainability and profitability are not mutually exclusive.
Enhanced Reputation
Prioritizing sustainability strengthens your brand’s image and builds trust with customers, stakeholders, and investors. McKinsey highlight that top ESG performers enjoy faster growth and higher valuations than other players in their sectors, by a margin of 10 to 20% in each case.
Companies showcasing achievements in Environmental, Social, and Governance (ESG) benchmarking often see substantial goodwill and competitive advantage. Being a sustainability champion is increasingly a deciding factor for partners, customers, as well as investors.
Challenges affecting sustainable Supplier Management
Scope 3 emissions represent the largest share of an organization’s carbon footprint. These emissions originate indirectly from activities across the value chain, such as supplier manufacturing, transportation, and product lifecycle.
Most businesses struggle with fragmented supply chain data, making Scope 3 emissions difficult to measure accurately. Engaging suppliers to take accountability for their emissions presents a unique challenge, especially in complex, globalized supply chains.
How can Scanmarket by Unit4 help you focus on Sustainable Supplier Management
Harnessing intelligent technology solutions is the key to revolutionizing sustainable procurement processes, essential for collating, visualizing, and acting on Scope 3 emissions data.
Scanmarket’s Spend Analytics module allows businesses to achieve improved visibility and tracking of Scope 3 emissions on the supplier and category levels. Enhanced transparency helps procurement teams target areas for improvement, identify emissions hotspots, and measure reductions over time.
Centralized digital platforms ensure error-free, real-time visibility into all sustainability metrics. Scanmarket modules also integrate dynamic updates, keeping procurement leaders informed about supplier compliance in regulatory landscapes.
The Carbon Accounting reporter utilizes the Spend Analytics module, and is designed to extend the visibility of your supply chain beyond the bottom line and can help you reduce carbon emissions by half on your decarbonization and sustainability journey.
To learn more visit the Scanmarket website, consult our datasheet, or talk to sales today!