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Environmental responsibility has become a business imperative-and many senior executives are looking to their supply chains to deliver the "green" results their organizations now need to deliver. By adopting the six-step strategic sourcing process outlined here, companies can more easily go green while improving profitability.
Environmental responsibility is no longer just a regulatory burden. It has become a business imperative. Soaring energy and commodities costs are pushing companies to pursue options to reduce costs. A host of products and solutions are available to save energy, water and waste-and many more are on the way. And at no time has there been more interest from consumers and governments in companies operating in ways that protect the environment and respect human health and safety.
As a consequence, many senior executives are looking to their supply chains to deliver the breakthrough results needed to meet these expectations. In fact, supply chains in general and "green" sourcing in particular are quickly becoming the primary focal points for improving profitability while building a company's green credentials.
Green sourcing can help in two important ways. It can help companies improve their financial results, allowing them meet their cost reduction goals while also boosting revenues. It can also contribute to a better public image and reputation with the company's stakeholders.
With those plus-points in mind, Deloitte has developed a green strategic sourcing process for enterprises to consider in their efforts to pursue green sourcing opportunities to achieve their margin improvement goals. Our objective with this article is to present a comprehensive approach that is specific, actionable, and measurable in terms of achieving financial objectives. We firmly believe that green sourcing does not call for adoption of entirely new processes; it can easily leverage existing sourcing techniques to capitalize on an expanded set of opportunities. Our six-step approach, depicted in Exhibit 1, is a comprehensive process for enhancing sourcing savings by taking advantage of environmental factors.
Before we start walking through the six-step approach to green sourcing, it is worth looking in more detail at the long-term benefits of such an approach.
Meeting (and beating) Cost Reduction Goals
In most companies, the sourcing and procurement departments are charged by senior management with reducing costs; the green component can be a catalyst that can...