Steps to Establishing a Green Supply Chain

Companies can use a rules-based eProcurement system to incorporate certain criteria into the purchasing process e.g., vendors must meet certain green standards.

For companies that base purchasing decisions not only on the value that vendors deliver, but also on their compliance with green initiatives, Basware, a provider of financial process automation software, is offering some advice on creating a green supply chain.

"Companies realize that an environmentally friendly supply chain helps them to fully support their corporate values, attract and retain key talent and create goodwill among customers and prospects," said Jari Tavi, chief technology officer, Basware Corp. "Using third-generation eProcurement technology, companies are able to create and manage a supply chain that supports green initiatives and promotes other areas of corporate social responsibility. Just as vendors have been required to be compliant with Sarbanes-Oxley (SOX) regulations, they will soon need to achieve a certain level of compliance with environmental initiatives and other social responsibility imperatives."

According to industry analyst firm, Gartner, Inc., "'Going green' is no longer just a phrase. Future suppliers will need to be certified green just to remain on shortlists for enterprise consideration. The green movement will pick up steam in 2008 and change the way businesses approach environmental conservation. Strategic Planning Assumption: By 2011, suppliers to global enterprises will need to prove their green credentials via an audited process to retain preferred supplier status."

The following are some steps to steps to establishing green supply chains:

  • Companies can use a rules-based eProcurement system to incorporate certain criteria into the purchasing process e.g., vendors must meet certain green standards.
  • Making purchasing democratic. Any system you implement must be easy to use to encourage user adoption. It is also important to put purchasing systems in as many hands as possible so that it becomes an organization-wide initiative to support green suppliers and other favored vendors.
  • Recognizing and rewarding the true value in your supply chain. Price alone should no longer be the major factor in selecting a vendor.The value a vendor provides, such as quality and reliability, as well as adherence to corporate values, are key areas that companies should consider. Advanced eProcurement solutions enable companies to identify and manage the vendors that provide them with the most value, so they can increase business with these top-tier suppliers.
  • Considering other areas of compliance that you want to promote through supplier selection, including choosing vendors that follow your corporate values and promote social responsibility.
  • Consider your financial value chain holistically and look for ways to implement green values throughout your Purchase-to-Pay operations.
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