A Balancing Act: Drive Sustainability while Managing Cost and Risk

di Vishal Patel

Cost, Risk, and Sustainability. Those are three hot topics in the enterprise today. The question is, how do you balance all three while maintaining continuous operations and generating revenue at the same time?

A recent webinar hosted by Supply Chain Now, “Balancing Cost, Risk and Sustainability in the Midst of Uncertainty,” took an in-depth look on what it takes to transform Procurement into a highly efficient function that supports these key initiatives. The webinar highlighted the experience of one organization who was successful in that endeavor: Federated Co-operatives Limited (FCL).

FCL is a wholesaling, manufacturing, marketing and administrative cooperative that has been recognized by a wide variety of awards. Tanya Roach, FCL’s Director of Procurement, shared her experience with transforming their organization during the 2020 pandemic. She also explained how Ivalua was instrumental in making that happen.

Tackling Today’s Procurement Challenges

According to Roach, Procurement is experiencing a “triple squeeze” in today’s business environment as inflation, labor force shortages, and supply chain disruption continue to impact the value Procurement delivers to organizations. “We’re looking for cost mitigation strategies and new ways to deliver value,” she said. “To do so, we need to get creative and curious.” 

Gaps and dysfunction in the supply chains and a lack of visibility are making it difficult to support Environment, Social, and Governance (ESG) initiatives. Geopolitical manipulation on suppliers worldwide adds to the pressure. Meanwhile, the pace of business is accelerating, requiring organizations to be more responsive and agile.

According to Supply Chain Now’s Greg White, the cracks have been exposed and there is nowhere to hide. “Companies are realizing that because they can’t foist all the risk and blame of supply chain failure to distribution and retail outlets, they have to start to perform,” he said. “They’re finally making some inroads towards modernizing their supply chains, much like the consumer-facing entities had to do decades ago.”

Procurement’s Role in Sustainability

White pointed out that Procurement teams have a big role to play in helping businesses address inflation and determine countermeasures, while meeting sustainability requirements and goals. As such, many organizations are increasing technology investments and digital transformation efforts to benefit from long-term cost savings and efficiencies. 

However that’s only part of the puzzle – strong vendor relationships are equally essential. “When you think about supply chain resilience, technology can help, but if you’re not actively pursuing a stronger relationship with your strategic suppliers, it’s really difficult to reap the benefits when the hard times are over,” he said. What’s more, since running an efficient supply chain involves a complicated balance of risk, sustainability, social governance and cost, technology is absolutely critical. “When I say technology, I’m not talking about spreadsheets,” White said. “I’m talking about real solutions that can perform combinatorial analytics and can pool and share data to present actual solutions.” 

Vishal Patel, Vice President of Product Marketing at Ivalua, was also present during the webinar, and he added his thoughts on Procurement’s role in supporting ESG initiatives. “We’re seeing a lot of interest in ESG, specifically on the topic of measuring and managing carbon emissions,” he said. “At Ivalua, we are heavily invested in it as a company, and we believe that Procurement is in the right position to take ownership.”

Adoption is Crucial

According to Patel, research has shown that most digital transformation efforts in Procurement don’t succeed because of a lack of adoption. “Adoption requires more than just a nice UI; it’s about relevancy,” he said. “Employees want to know, will this solution work for me and for the role I play in my business unit? If it doesn’t, you’re going to have a lack of adoption.”

White echoed that sentiment, pointing out that 73% of technology implementations fail primarily because people try to make their ERP a Procurement system, and it’s not designed for that. Patel added that Procurement technology should be agile and able to keep up with business changes. “If you’re stuck with a rigid platform that’s difficult to change, you’re going to be limited,” he said. 

FCL: A Success Story

FCL is one organization who successfully transformed its Procurement function, right in the middle of the Covid-19 pandemic. It wasn’t a reactive transformation – they had already begun the process prior to March 2020. “In those uncertain times, we literally built our Procurement team, interviewing employees remotely and working remotely for about 18 months,” Roach said. “We were able to build a really strong function within FCL and move the needle for our organization, despite the challenges we faced.”

Roach said that building processes, policies and the foundations of a team required engaging stakeholders and encouraging them to participate. A critical part of the digital transformation was implementing Ivalua. “Our intent was to enable stakeholder collaboration,” she said, 

adding that as a corporation, sustainability is one of the organization’s focus areas. “Our vision is building sustainable communities together, and it’s in our best interest to be transparent with our suppliers, and get them to understand how they’re being measured against sustainability.”

Roach and her team chose Ivalua because of its flexibility from both a procurement and stakeholder perspective. “It’s a very intuitive tool,” she said. “Ivalua has really thought about the user experience, and that’s why we’ve been very successful with the tool’s adoption.” Roach added that finding change agents within her organization who could be early adopters and champion the technology was helpful. “We were mindful about implementation, starting with key business areas and rolling it out in sprints,” she said. “The adoption of an eSourcing tool is the best I’ve ever seen in my career.” 

By centralizing their data with Ivalua, suppliers benefit from greater transparency and collaboration, and the organization benefits from automation and efficiencies that eliminate wasteful practices. “Our intent was to have a place where stakeholders could collaborate efficiently,” Roach said. “As we were going through our transformation, we knew we’d need to make more data driven decisions, and having that data and information at our fingertips made that much easier. Ivalua also provides a place where suppliers can upload and share their data easily and have a good user experience.” 

Roach believes that when it comes to ESG, there’s no time like the present. “People just need to get started,” she said. “Don’t get so caught up on making sure you plan it all out. Anything’s possible when everyone kind of gets their hands dirty and you’re intentful about what you’re trying to achieve.”

Watch the webinar recording on-demand to hear the full discussion. Check out Ivalua’s Environmental Impact Center to learn more about how Ivalua can help you manage supply chain emissions and drive sustainability in your organization.