Sustainability, cost optimization, risk management - can there be a BALANCE?



Dear Readers,

The economic environment is becoming increasingly volatile and complex, with one crisis following another. In times like these, carrying on with “business as usual” may be difficult, but even in the face of crises, companies still have other challenges they must deal with.

The situation in the global markets was already tense, but it has now worsened, causing supply issues and rising raw material prices. Procurement in particular is facing extra problems: as well as managing these supply and pricing risks, the issue of sustainability is also high on the agenda. The procurement department is also a key driver of economic efficiency within a company and always needs to keep an eye on costs. Reconciling these sometimes contradictory goals is a balancing act that can only work if the management team gets actively involved, as we explain in our cover story. Our experts and interviewees also provide practical insights.

You can also read the results of our latest risk management study, and learn how your company can implement the requirements of the German Supply Chain Act. In the latest installment of our People@INVERTO series, we are introducing you to our new CEO Daniel Weise, as well as our Managing Directors Paul Mohr and Paul Zahn.

One of the most important prerequisites is defining the goals that will need to be included later in each area’s planning.

How Companies Can Successfully Balance Goals

It’s vital for companies to align their approaches to risk management, value creation and sustainability. Executive Management plays a crucial role in getting this right.

To date, cost awareness has been very strongly embedded in most companies and procurement departments have are currently affected by rising material costs (including raw materials), as well as supply bottlenecks. Focusing on short-term savings can often be at the expense of supply chain stability, and can get in the way of partnership-based, long-term collaboration with suppliers.

Procurement can only work effectively and achieve a successful transformation if management defines cross-company KPIs, creates the conditions and provides a clear mandate for procurement.

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