How A Supplier Collaboration and Innovation Platform helps achieve Sustainability Goals
In August, President Biden signed the US climate bill into law. The Inflation Reduction Act is a dramatically scaled-back version of earlier legislation. However, independent experts say it will still enable the US to reach its target of reducing carbon emissions to half their 2005 levels by 2030. The federal commitment aside, many US business increased their sustainability efforts last year to reduce the pace of climate change.
Coca-Cola leads the way, but others must follow
For example, Coca-Cola’s largest European bottler is set to link a new finance programme to its sustainability target. The programme incentivises suppliers to improve approaches to sustainability and build towards a net-zero target set for 2040. The new finance programme will reward suppliers that improve sustainability across the business. It will feature sustainability-linked KPIs that, if met, will create discounts against the initial funding rate.
This is interesting because one area really courting attention is the impact of emissions from organisations’ wider supply chain – known as scope 3 emissions. In May 2021, a court in the Netherlands ruled that the oil giant Shell must reduce its emissions across the board in an unprecedented case. This meant it was not only responsible for its emissions but also those of every partner in its supply chain. It set a new precedent driving companies to focus on scope 3 emissions.
Reducing scope 3 emissions is a significant undertaking. Procurement organisations are challenged with how to tackle scope 3 overall, where to start, how to measure and manage progress, how to engage suppliers on the journey and much more.
Organisations are working to increasingly tight sustainability timeframes. The focus now needs to pivot towards working with suppliers where there are active, collaborative relationships (ACRs) if they are going to deliver on ambitious sustainability goals. This is where a modern Supplier Collaboration and Innovation platform can enable companies to successfully manage supplier relationships and capture data and insights to drive decision-making.
It should enable them to not only track their sustainability efforts and also manage every aspect of their relationships more effectively.
4 key areas your Supplier Collaboration and Innovation platform must deliver
How is this achieved? A modern Supplier Collaboration and Innovation platform focuses on four key areas:
1. Supplier Relationship Management
Procurement functions are increasingly turning towards Supplier Relationship Management (SRM) as a controlled and systematic approach. One that helps ensure the supply of materials and services gets to the right place at the right price and time. Not only does this deliver cost benefits, but it also forms the foundation for them to become a ‘Customer of Choice’.
However, because of siloed ways of working, procurement frequently lacks the information and processes required to make the most informed, effective, and efficient decisions. This is where a central repository and SRM platform with all information in one place is essential.
The right SRM platform can centralise and consolidate performance data and overcome the challenges of fragmented data and imprecise assessments of performance. Such a platform delivers a single source of truth, providing faster access to better-quality data. Modern SRM tools also enable procurement to mutually manage relationships with suppliers towards shared objectives, cementing alignment around strategic goals and measurement with suppliers to ensure accountability in performance.
2. Supplier Collaboration
But in times of disrupted supply chains, ongoing economic and geo-political pressures, and limited resources, it is also important for procurement teams to develop deep collaborative relationships. This can enable them to become a ‘Customer of Choice’. Recognising the untapped value in their supply chains, some forward-thinking organisations have launched Supplier Collaboration programmes, leading to small pockets of excellence.
However, success has been limited because collaborations frequently derail due to a lack of systematic management. Without the process, capability, and technology to collaborate strategically at scale, procurement encounters friction in getting the most out of these relationships.
Therefore, procurement needs a workspace and a platform that supports the development of ACRs with internal and external stakeholders. The platform must be able to bring different lines of business together alongside suppliers to collaborate on projects, organise tasks and responsibilities, schedule events, assess sentiment, raise issues, discuss progress, and prove the value of collaboration.
But most importantly, they need to be able to prove that their work is making progress against agreed goals and KPIs that deliver measurable value to the organisation.
3. Supplier Innovation
Organisations now recognise the importance of being able to source innovation from the extended ecosystem to meet key business goals. With a wide set of macroeconomic challenges, from disruptive competitors to supply chain disruption and changing consumer demands, big businesses need to act quickly and innovate fast.
To achieve this, many are turning to their suppliers who have a wealth of knowledge and understanding of their local markets. This form of supplier innovation comes in many forms and can be small incremental changes that combine to improve a process or outcome rather than a ‘big bang’ large project. According to McKinsey, supplier innovation is 40% faster to market than homegrown ideas, translating to a considerable competitive advantage.
However, this requires a systematic way to source ideas and triage these to move ideation into deliverables. Then capture, govern, manage, and report on these ideas at scale. This is where an innovation hub and centralised platform pays dividends.
4. Supplier Sustainability Management
The final piece of the jigsaw in a Supplier Collaboration and Innovation platform is the ability to baseline and improve supplier sustainability with programmes aligned to business goals. However, influencing external actors in the supply chain is notoriously difficult.
There is a lack of transparency and centralisation over sustainability performance, unwieldy data from the disclosure of system providers, and difficulty in integrating this data with existing systems. This all hampers the ability to baseline and monitor supplier performance. A Supplier Sustainability Management tool will enable organisations to overcome these barriers by providing the data, tools and processes required to effectively measure, monitor, and manage supplier sustainability performance.
What does your organisation need?
The right Supplier Collaboration and Innovation platform should consist of the four key elements outlined above. It will enable organisations and their suppliers to manage every aspect of their relationship more effectively. The platform will help discover new revenue streams and develop innovative products.
It will also enable partners to take joint actions towards those sustainability targets. Organisations need to connect their extended ecosystem in an all-in-one collaborative platform to meet ambitious climate change and growth goals both now and in the future.
At Vizibl, we put collaboration, innovation, and sustainability at the heart of supplier relationships. Our best-in-class digital platform enables enterprise organisations, and their suppliers, to manage every aspect of their relationship more effectively.
Whether it’s taking joint action towards ambitious sustainability targets, discovering new revenue streams, or developing innovative products and solutions, Vizibl aligns suppliers & partners around key business goals to deliver mutual value.
Recognised by the world’s leading analysts and trusted by giants in pharmaceuticals, oil & gas, FMCG, and communications, the Vizibl platform connects buyers and businesses with their suppliers, on every continent, across the world.
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