Summary In the contemporary business environment, digital procurement is becoming increasingly popular and sought after by businesses around the world. The relationships …
How to maintain sustainability in procurement contract management
With sustainability considerations consistently on the rise, businesses must make accommodations for directing relevant initiatives in every aspect of their operations. Here is how sustainability can be maintained within contract management in procurement.
Procurement is and has always been a core business function that supports business continuity. With the expansion of globalisation, procurement has now become a function that leverages a supply chain that spans the world.
With this global expansion comes an increased level of regulation, especially now with economic instability and changing climatic conditions adding to the disarray of long-established procedures.
Establishing sustainability conditions in business is more important than ever, not just to comply with these regulations, but also to foster a positive reputation in the marketplace.
As key players in the procurement process, suppliers can be major contributors to the sustainability efforts of a business. Procurement contract management that incorporates sustainability measures into its operations can achieve this objective. Read on to find out how.
How to incorporate sustainability into procurement contract management
As contract management in procurement is the stage where customers, vendors, and partners form legally binding relationships with the business, it is a must to ensure that your sustainability requirements are met by the stakeholders before entering into a contract.
These are the key considerations you should make to incorporate sustainability into your contract management function.
Environmental impact
Assess your suppliers’ eco-friendly practices and structure your contracts to consider the environmental impact of the products and services being procured. Make sure to compare and prioritise sustainable options over other suppliers.
Social responsibility
Make sure that your suppliers adhere to fair labour practices, human rights, and safe working conditions. Selecting suppliers that are socially responsible and align with your business values are key considerations for sustainability.
Supplier diversity
Promote employing minority-owned, women-owned, and small businesses in your procurement contracts, encouraging a diverse supply chain. Diversity, equity, and inclusion measures are also a major component of sustainability initiatives.
Carbon footprint
Consider the carbon footprint your suppliers leave behind and promote decarbonisation-oriented suppliers through your contracts. Working with suppliers to minimise carbon emissions contributes to a more sustainable business environment.
Green procurement
Select suppliers that offer products and services that are energy-efficient, have low environmental impact, and use sustainable materials. Green procurement practices are a massive contributor to a business’s overall sustainability goals
Regulatory compliance
Encourage suppliers that follow environmental, social, and ethical regulations through your contracts. Set rigorous requirements for regulatory compliance and select suppliers that align with them to ensure a higher level of sustainability.
Ensure sustainability in your procurement contract management function with assistance from procurement specialists at Kronos Group
Implementing the aforementioned sustainability measures in your procurement function enhances productivity, drives growth, ensures regulatory compliance, and fosters a positive business reputation however, it may seem daunting.
Hence, procurement consultants by Kronos Group offer services that are aimed at improving your procurement function, from ensuring sustainability to future-proofing critical operations.
Improve your procurement function with the help of experts, get in touch with consultants from Kronos Group today.
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FAQs
Procurement logistics involve activities related to acquiring goods and services such as centralised procurement, decentralised procurement, outsourced procurement, global procurement, and reverse procurement.
Contract management is aimed at establishing a legal framework for supplier management, ensuring products and services are sold at an agreed price, for an agreeable quality, and delivered in time to the right place in the right quantity.
To effectively manage a procurement contract, follow the steps below.
- Define clear contract objectives.
- Establish key performance indicators (KPIs).
- Monitor supplier performance regularly.
- Communicate openly with suppliers.
- Maintain accurate contract documentation.
- Address issues promptly.
- Consider re-negotiation or termination if necessary.
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