Most manufacturing companies do very little manufacturing themselves. The own value add is in many cases limited to some 10-30% of total manufacturing cost. Therefore, as we tend to repeat as purchasers, purchasing has a major impact on competitiveness and profitability.
Interestingly, the same is true for environmental impact such as carbon dioxide emissions: 70-90% of the emissions are generated by suppliers. So we as purchasers have the most important role to play in making our companies greener.
Why then should we care about the environment? Doing good is a good start. But in many companies that does not give you approval on your business case or plan. Therefore, here are some arguments why we should engage in it:
- It makes you competitive: Customers and employees alike appreciate companies that care about more than profits.
- It will reduce your costs: Cost of energy will due to taxes, regulations or market price changes most likely increase. Therefore it makes sense to move before the rest does.
Now the good news are that the methodologies to use when reducing, for example, carbon emissions are very similar to the standard purchasing toolbox. If you do a full TCO analysis of a purchased product, you have to break down the costs generated through the production of a product. When you have these costs elements, you then assess what can be saved in each element and how hard or costly it is so archive those savings. You get the classical Impact-Ease of implementation matrix and start with the juiciest low hanging fruits. The same approach can be used on carbon emissions. It is not harder than that. Try it. It is fun, it it good for your company and it is great for the planet.
Tags: Add new tag, green procurement
