22
Apr
2020

Lifehack Sustainable Procurement: Keeping an Eye on Suppliers’ Evaluations

 

Beginning in April 2017, many companies are required to publish a CRS report (Corporate Social Responsibility). This report requests information regarding how the company addresses concerns like the environment, employees, social responsibility, respect for human rights, and the fight against corruption and bribery. This also includes the suppliers

In general, companies should keep an eye on them, even when not required (yet) to produce a CSR report. The further away suppliers are in terms of geography, the more difficult it is to make them comply with their obligation to deliver CSR-relevant data.

The good news is that sustainable behavior on the part of suppliers and manufacturers nowadays is rated by external auditors and index lists. They take into consideration numerous questions regarding environmental and social themes along the entire life cycle of a product.

The Higg Index in one of the best-known index lists, a uniform methodology for collecting sustainability data in the area of textile production. The basis for this self-assessment tool is a catalog containing more than 100 different features along the complete life cycle of clothes items, in terms of materials, production, packaging, transport, use, and disposal. This way the products of the participating fashion brands can be compared. In addition, there’s a whole range of sustainability certifications; some of them illuminate environmental aspects while others shed light on social aspects or those related to occupational safety.

The Challenge

It is difficult to reliably document and track the actual behavior of suppliers regarding compliance with sustainability aspects and the validity of certifications. However, only then can orders that don’t comply with pre-defined minimum standards be canceled promptly or after a date clearly communicated to the supplier.

The ERP System Solution

ERP systems take care of the monitoring and communicating with suppliers, as well as the decision of whether an order can be released or not. To this end, suppliers are authorized to upload their certifications and yearly CSR reports into the ERP system through a special audit and certification management system.

An interface is created to access the data bases of index lists like Higg in real time. Then users can set up those sustainability criteria that they consider more or less important. These are then connected to the product data. Depending on what the company prefers, these data can influence the value chain process. For instance, an order could be blocked if the supplier or the product don’t comply with the required criteria.

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