Griffith College Lecturer Ingrid de Doncker on Procurement
Griffith College Lecturer Ingrid deDonker on Procurement
It is not unreasonable to say that Climate Change is the defining challenge of our time. Global Warming has, in reality, turned into Global Warning. There’s little argument. Most people acknowledge that something has to change and that everyone has a role. It’s not always clear to everyone though what they could or should do... writes Griffith College's Graduate Business School lecturer, Ingrid de Doncker.
Use less regenerate more
We think of it a little like ‘weight management’ or ‘counting calories’. You know that if you want to lose weight, you probably need to consume fewer calories than you metabolize. Similarly, if we want the planet to regenerate, if we want it to get healthy, or at least stop getting sicker, we need to consume less, generate less carbon, use less energy, than we or the planet can regenerate. It’s a simple equation really: use less, regenerate more.
If we were to be totally impractical for a moment, if we were to suspend reality, we could all just stop consuming. I know … but just bear with me for a minute.
Procure goods and services
Just imagine: no more emissions from cars, no more trees being cut down, no more plastic being dumped in the ocean. It would be like a global detox. That would give the planet a chance to regenerate. But – and I am back to reality now – we still need to eat to survive and buy clothes to wear. Many of us need to drive our cars to work when public transport options don’t exist, and if you live on an island, like I do in Ireland, or you need to travel long distances, you probably have to take the occasional flight.
So, I am not suggesting that we all stop consuming, but we should think about what we buy, and how we buy it. We should consider the total impact of how we procure goods and services, how buyers – be they consumers, companies or countries – purchase from suppliers.
Let’s just think about that from a global perspective for a moment. Wherever you look, huge sums of money are spent in a variety of ways.
- The EU’s budget at €165.8 billion is just 1% of the EU-28’s gross national income.
- Ireland spends more than €5 billion a year importing fossil fuels.
- The US Federal Government will spend $4.746 trillion in FY2020.
- The top 20 companies in the world has combined Cost of Goods of $2 trillion – the cost of goods required to make their own products ready for market.
- China’s spending on healthcare will touch $1 trillion in 2020
- Six billion pounds of coffee are exported from Brazil annually. In a market of a trillion cups a year it is easy to see how Starbucks has revenue of $26 billion.
There’s a tremendous amount of buying and selling going on, but when you look at the data, it is clear that how we buy is not optimised. According to a report in the Washington Post, more than half (51%) of Federal spend is wasted. Meanwhile the waste management industry is thriving, growing at CAGR of about 6% a year, expected to exceed half a trillion dollars by 2025. According to a 2017 report the Environmental Audit Committee of the House of Commons, 2.5 billion coffee cups are used and thrown away each year in the UK alone, but less than 0.25% are recycled.
It’s time to talk about sustainable procurement.
Procurement is the dynamic force at the centre of business and the broader global economy that is not very well understood or exploited. It is a single function that can have greater consequence on a company’s well-being than introducing new products, entering new markets or increasing sales revenue. It is a discipline, often not well practised, that can impact climate change and the sustainability of our economy. It is at the core of commerce and can have huge influence on the future of our planet. When we deploy it effectively, procurement is a very significant force for change.
Irrespective of whether ‘we’ refers to consumers, companies or countries, we know that a lot of what we buy is unnecessary. Each one of us can look around our homes and ‘fess up to things we have bought that we should not have. Each one of us working in business can point to bad buying decisions and inefficient or ineffective projects that ‘were just a waste of money’. The good news is that there is considerable good news. Good buying practices are the quickest way to find quick wins for many of these problems, while at the same time driving value to a company’s bottom line.
The challenge is not one that is solely or even mainly about overconsumption, though that is certainly a part. It is not necessarily about reducing what we buy in our personal or professional lives. It is more about thinking about why we buy what we buy, and why we buy it in the way that we do. It has to be about the What, the Why and the How.
Future-proof the planet
I have been in the business of procurement for most of my career and I’ve have seen it deliver increased profits and better supplier relationships. I’ve always said to my customers: “My job is to help you buy better.” While I focus on it every day, it is important that everyone gets the memo.
In this critical time, ‘buying better’ has taken on a more profound and far-reaching meaning.
How do we future-proof the planet through better buying? It is time for everyone to buy better. It is time to spend money wisely before we run out of time to spend it.