How good supplier data can elevate ESG in procurement

Good supplier data can elevate EDG efforts in procurement writes Costas Xyloyiannis, CEO of HICX

Elevating ESG is now a top two enterprise priority, according to Deloitte’s Global Chief Procurement Officer Survey 2023. In practice, however, delivering this goal is difficult. It depends largely on good supplier data, which is notoriously hard to achieve and maintain.

At the heart of the data problem, is the way in which we work with suppliers. More specifically, our mindsets and processes. To remedy it, Procurement leaders will need to spend time, which unfortunately they don’t have much of.

Deloitte’s survey, however, suggests a way for CPOs to work smart, writes Costas Xyloyiannis, CEO of HICX. He says the two top strategies which CPOs cited can be built around the goal to secure and keep good supplier data.

It will take some effort, but the resulting good data from which the brand can roll out ESG is a worthwhile reward. And as the broader brand will benefit, CPOs can get their fellow executives behind them.

Strategy no.1: Increase supplier collaboration

First, let’s reform how every employee sees suppliers. Too often, suppliers are just a means to save costs. And while saving is important, it’s not everything. Untypically, cost savings slipped off the podium in this year’s survey, into fourth place. This focus shift – away from squeezing suppliers and towards collaborating with them – will bode well for brands that want to perform in ESG. But only if everyone in the organisation can adopt the mindset.

If they do, brands can offer suppliers a better experience which will encourage them to contribute to improving data.

Strategy no.2: Invest in digital transformation

Then through this lens, let’s redefine what it means to digitise. Most brands have too many entry points for supplier data. Openings are created by each digital tool which employees use to engage suppliers. Because, by default, suppliers deposit their data in whichever tool they’re expected to use.

When we step back and look at all the data across the brand, as a whole, it is very compromised. And any ESG decisions shaped by this data will be misguided.

Procurement has the chance to digitise in a way that addresses this process flaw. We can maintain reliable data by fitting a central repository that has a single, monitored, front door through which all new data must enter. Master data is able to flow to other tools. The rule however is that tools can only borrow the data, and never alter it. The idea is for good data to live in this foundational repository and be looked after.

Future-proofing

Truly digitising, gives suppliers a better experience too, which drives the collaboration goal—and sets in motion a virtuous cycle.

Now, suppliers who once fed the ESG data problem can contribute to its solution. Leaders who help their CPOs to collaborate with suppliers and digitally transform, for the enterprise, can steer supplier behaviour, keep good data and fuel ESG success.


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