Channelling indirect spend through online marketplaces means procurement teams can better understand what they are buying and meet broader sustainability ambitions
Operating more sustainably is pivotal for public sector organisations, both in terms of cost efficiency and in leading by example as the UK attempts to meet its carbon reduction targets. It’s also an important element in attracting and retaining talented individuals, without whom the public sector would be unable to function effectively.
Those working in procurement teams also have a responsibility to do their bit, and that means factoring in sustainability and other corporate social responsibility (CSR) credentials when it comes to deciding what to buy and, crucially, who to do business with.
While such issues are a central element of many formalised contracts that are overseen by procurement, particularly those for higher-value items, this is not the case for all spend.
Indirect spend, typically lower-value items essential to the daily running of organisations, such as stationery, IT equipment and furniture, often falls outside procurement’s remit. Typically the priority when buying such items is to get hold of them as quickly as possible, so products are purchased by office managers or end-users as and when they are required.
From a sustainability perspective, this is problematic. Not only is there little thought as to whether such items come from a reputable supplier, it also means there is little in the way of information over what is being spent over time, making it difficult to identify if there are other ways items could be purchased more sustainably.
Digital marketplaces are helping public sector organisations get on top of such spend, however, and to apply a greater degree of scrutiny to the credentials of suppliers.
Amazon Business, for instance, provides a single location from which employees with the correct authorisation can access a wide range of products. Its Guided Buying feature enables procurement teams to direct users towards reputable suppliers that align with the buying organisation’s own priorities.
This means ensuring suppliers that can demonstrate sustainability certifications appear at the top of search results. Items that have achieved trusted third-party labels or Amazon’s own Compact by Design Certified label are clearly marked Climate Pledge Friendly, and these can be presented to potential buyers as preferred options.
Employees can also be directed towards local suppliers, which can help reduce delivery miles and boost small businesses and the local economy. Organisations can also choose to have items grouped together into a single delivery once a week, which also helps to reduce carbon emissions. Easy reporting capabilities mean procurement teams can these metrics, allowing them to demonstrate a tangible improvement over time.
But using a digital marketplace for such indirect spend can also help businesses operate more sustainably in other ways. Having more information on what is being spent, where and by whom can help procurement teams identify any unnecessary transactions.
It could be, for instance, that one team is regularly using more stationery than anyone else, allowing procurement to question why this is the case and identify any possible reason behind this. Eliminating purchases altogether can remove unnecessary carbon emissions associated with manufacture and delivery, as well as saving public money.
Tools such as Spend Visibility and Amazon Business Analytics give procurement teams more insight into what is being spent, and as well as helping accounts teams reconcile transactions more efficiently.
One organisation that has been able to improve its sustainability credentials through partnering with Amazon Business is Nottingham Trent University. The organisation has an ambitious target of becoming Net Zero by 2040, and procurement is playing its part by prioritising products from local suppliers.
“We look at whole-life cost, so we look at circularity from the products that we’re buying to end of life and the impact that we’re making on the planet,” says Claire Davies, sustainable procurement manager at Nottingham Trent University.
“We’ve selected East Midlands region suppliers so it brings up those products first in the search results. That helps us to support our local economy and reduce carbon emissions by cutting the amount of mileage travelled.”
Recently, the organisation has been making use of the sustainability certifications, ensuring that suppliers that have these feature more prominently than those that don’t. “By turning on the sustainability certificates against the products we’re going to see a lot more sustainable purchasing taking place as a result of Amazon Business,” she adds.
To find out more about how Amazon Business could help you align procurement with broader ESG goals, visit business.amazon.co.uk/en/solutions/responsible-purchasing