Shared Value – How Procurement combines Sustainability and Cost Reduction
The relevance of sustainability has increased enormously in recent years. While this trend presents challenges for companies at first glance, it also offers opportunities to ensure competitiveness. The shared value approach demonstrates the specific role procurement can play in improving company sustainability while reducing costs at the same time.
Shared value represents a classic win-win situation, in which companies create added value for themselves while also achieving economic or social benefits and ultimately greater corporate longevity.
With its extensive network and position as an interface with external partners and suppliers, procurement can play a key role in initiating and implementing the shared value concept throughout the supply chain. In this role, it can contribute much more to the company’s success than pure cost-cutting. Procurement can achieve efficiencies that have a positive impact on the economic success of the company to a much greater extent, as well as on social problems such as environmental pollution and the waste of resources. However, it is frequently assumed that sustainable procurement can only be implemented at a higher cost. Case studies such as NORDSEE show that this is not always the case.
The key factor for strategic procurement is that it must incorporate the shared value approach in its entirety when looking at the way procurement is aligned to the business goals and in how procurement works. Furthermore, it must understand the importance of both recognizing the potential of shared value in its own company and introducing appropriate strategic solutions with suppliers.
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