Indirect Spend. Big sustainability risks & opportunities that are being missed.

I spend a lot of time these days working on things that people tell me they are worried about and no-one wants to own tackling. You'd think that there wouldn't be much left to do in sustainability...

As part of my work supporting sustainable supply chain collaborations, a wave of procurement leaders have raised concerns about both the human rights and sustainability risks and opportunities in their indirect supply chains.

By "indirect" - and many use different definitions and categorisation - we are referring broadly to the goods and services an organisation buys that are not part of the final product/service. For example, the trucking company or the facilities maintenance suppliers, rather than a sugar or chemical supplier. This is a?huge part of the supply chain that has quite often been overlooked by those concerned with human rights issues or emissions reduction.

Last year, I began convening the procurement and responsible sourcing leads in brands (especially those consumer brands within initiatives such as AIM-Progress), retailers and also pharma and chemical companies. It soon became clear that focus needed to sharpen on indirect.

4 meetings and almost 100 companies later - we are set to launch an exciting new project, with a simple aim:

To get indirect procurement professionals a quick, simple and single-view of the key risks and opportunities in their category; what existing best-practice tools are fit for purpose; and develop/launch tools where they don't exist or are not fit-for-purpose in certain categories/issues.

We ran a survey of nearly 40 companies to identify the indirect spend categories we should prioritise and the issues that should be focused on.

The groups of categories in priority order of concern were:

1. Recycling, waste and environmental services
2. Logistics, distribution, last-mile delivery and warehousing
3. Cleaning, FM, maintenance & construction
4. Brand & marketing services and products
5. Big tech and consulting services

When we asked what the priority should be across environmental and social impacts - we almost couldn't split human rights and GHG emissions. So we're covering both.

It's clear that we are NOT short of industry and issue collaborations that provide best-practice sharing in these categories for those in sustainability and responsible sourcing. A key topic in these is often the successful engagement of the procurement function. There are fewer initiatives that actually produce genuinely-useful outputs, especially with and for busy procurement professionals.

Therefore, this 12 month project is intending to co-ordinate across multiple different groups and tools to bring 80% of what's needed together in one place. The remaining 20% of what doesn't exist or isn't fit for purpose will be prioritised, developed and piloted.

The 3 key outputs that the participants will benefit from are:

1. A single, category-specific matrix of the key risks, opportunities, initiatives and tools for your procurement team to use, including in their category strategies
2. A minimum of 4 best-practice sharing sessions - focused on insight from those suppliers/companies doing well in the priority categories and issues
3. Explore & develop a shared due diligence and improvement processes, including fit-for-purpose assessments and easy access to common supplier data, via existing technology

If you are a procurement or sustainability professional that thinks you've also got some hidden risks or untapped opportunities in your indirect spend and would like to get your colleagues engaged, please get in touch.

Equally, if you are part of an initiative that has done some work on this, we'd love to ensure your work gets to more of those that need it.

Like any good supply chain sustainability collaboration, we also critically want to include the voice of key indirect spend suppliers.

From the nearly 100 companies that have expressed interest, we want to only work with a manageable group that can participate and want to take action.

If you are interested to learn more, please get in touch with me asap ([email protected]).

We are aiming to finalise the commitments in principle to participate by 7th February.

To deliver the outputs, I am partnering with TwentyFifty (a leading supply chain human rights and sustainability consultancy) and SupplyShift (the platform for delivering the best-practice, customised assessments and engagement that will be needed for the indirect spend categories where generic tools just don't work).

We'll be looking beneath the surface at the iceberg and at the often shared (and sometimes overlooked) areas of supply chains to find exciting opportunities to make big impacts. And to finally collaborate and deal with some big risks that we already know are there...

You can view the recording of our last meeting below:

You can view the outline project proposal here: