How to Extend Sustainability Across the Supply Chain

Phil Foti
Phil Foti
Director, Product Strategy & Innovation at Coupa

Phil Foti is Director, Product Strategy & Innovation at Coupa Software, Sustainability Lead, and a Coupa Cares Board Member. He holds Bachelor of Science (BS) degrees in the fields of Management Science/Economics and Computer Science/Mathematics from the State University of New York College at Cortland, and currently lives in the San Francisco bay area.

Read time: 8 mins
How to Extend Supply Chain Sustainability Across Procurement

Support the move from passive reporting to the active influencing of spend by harnessing the power of Environmental, Social, and Governance (ESG) data infused across all your business spend processes.

Sustainability, social responsibility, and diversity are typically thought of as either environmental or cultural news stories, consumer shopping preferences, or employee/employer human resource issues. Until recently, these topics were not prioritized to the top of the list of business executives and boards of directors, let alone procurement management, supply chain planning, and finance organizations. For a long time now, the focus of a company was to make money, stay in business, and return value to shareholders.

Several trends have converged into a perfect storm over the last several years that is changing that myopic focus forever. Climate change urgency, civil inequality and unrest, cultural and consumer buying preferences, and pledges from leaders like the Business Roundtable are making it clear that priorities must shift.

It is No Longer Just About Shareholder Return and the Financial Bottom Line

There’s a growing recognition that corporations also must focus on people, communities, and the planet. Business leaders have realized that there are a greater number of risks they need to manage, compared to the past. Customers, investors, and employees are holding businesses to a higher level of public scrutiny. One unintentional oversight can result in bad PR, lost business, or employee turnover that affects the bottom line, health, and morale of the company. 

To combat these risks, corporations are making it a board-level priority to operate in a way that is good for the people, the planet, and the bottom line. The more measurable positive impact a company can affect, demonstrate, and substantiate, the more potential upside there is for increased press, profits, and employee retention.

Get the Tools to Engage Diverse Suppliers and Drive Impact with Coupa’s Supplier Diversity Management.

Supply chain decisions can extend and amplify a company’s sustainability goals, because there are millions of dollars going to medium and small businesses. Procurement organizations can influence supplier decisions for the greater good of their companies, and the world. In fact, procurement teams can become heroes if given the right guidance and tools to enable this new paradigm of — not just saving money and driving efficiencies — but doing so in a green, responsible, and inclusive manner. Procurement leaders and supply chain managers can use these tools to improve supplier diversity, reduce greenhouse gas emissions and their carbon footprint, and avoid buying from suppliers that engage in unethical business practices, such as child labor.

Business Spend Management Enables Sustainable Procurement and Supply Chains

Business Spend Management — let’s start by keeping it simple. When any money goes out of the company coffer, versus revenue coming in, that is business spend. All of it.

A primary objective of most procurement and finance organizations is to provide value to the financial bottom line, usually in the form of savings and efficiencies. The business processes and related jargon are wide-ranging: spend visibility, strategic sourcing, procurement, contracting, inventory, receiving, invoicing, travel and expenses, payments, capital management, supplier enablement, supplier risk, supplier performance, supplier management, benchmarking, supply chain analytics, and community intelligence. Value delivered in these areas can go beyond just savings and efficiencies. Here are some examples:

Building a Sustainable, Inclusive, Socially Responsible Supply Chain

Businesses want to incorporate their corporate responsibility mission into their procurement processes. However, when a company has supplier data in siloed systems and manual spend processes, it is nearly impossible to drive the meaningful results that corporate responsibility programs call for. What companies need is a digital Business Spend Management platform that surfaces supplier data and makes it easier to move invoicing and payments to digital. This makes it easy to incorporate corporate responsibility into the purchase process.

Learn how to uncover 10–15% savings to achieve better outcomes on large, strategically managed spend in our webinar, Strategic Sourcing: Upgrade from Spreadsheet Analytics to these Digital Transformation Game Changers.

Determining the Biggest Sustainability Risks to Your Supply Chain

Many trends are affecting corporate procurement and supply chain objectives and decisions across sourcing, procurement, and finance organizations, including: 

  • Supplier diversity, equity, and inclusion efforts in the US and abroad
  • The EU Green Deal and new taxonomy regulations
  • Complying with the Modern Slavery Act in UK and Australia
  • Tracking conflict minerals and RSLs in manufacturing
  • ESG factors overtaking investment strategies

Embedding Sustainability into the Purchasing Process

With a comprehensive Business Spend Management program, it is easy to incorporate your CSR/ESG goals when selecting the best supplier to do business with. As we digitize, connect, streamline, and save, imagine having at your fingertips, on one screen, access to the following data sources:

  • Supplier diversity classifications and certifications
  • Sustainability ratings
  • MSA and child labor data
  • Social media monitoring
  • Supply chain transparency
  • Financial, judicial, news sentiment, and screening list data

It’s Time to Move From Passive Reporting to the Active Influencing of Spend

The new US administration’s recent supply chain policies will also drive the need for better tracking and active management of suppliers and risk. For example, as recently reported in The Washington Post article, “Biden orders sweeping review of U.S. supply chain weak spots,” the White House aims to avoid shortages of critical goods with new policies. “The American people should never face shortages for the goods they rely on,” President Biden said.

This is accelerating the pace at which enterprises are moving away from legacy siloed reporting — with look-back capabilities only — to systems that enable them to actively, in near-real time, make informed decisions at the point of sourcing, contracting, buying, and paying to influence spend with verified sustainable and diverse suppliers.

Coupa’s Ecosystem Delivers the Goods

Coupa’s ecosystem of 3rd-party data and partners — along with Coupa’s “connected core” working in conjunction with power applications that deliver “suite synergy” across all BSM processes — allows organizations to direct procurement efforts and business spend toward the most optimal environmental and social goods, services, and suppliers. All companies, regardless of size, sector, or product, can use these tools to easily:

  • Buy green
  • Spend ethically
  • Source inclusively
  • Contract effectively
  • Decrease risk across ESG domains
  • Decrease supply chain risk and implement scenario planning with the transparency and machine-learning of a digital supply chain
  • Maximize digitization and reduce environmental footprint

Digitize and Incorporate Sustainability into Every BSM Process

With Coupa’s BSM platform, it is possible to harmonize and digitalize across all sourcing, procurement, supplier processes, and transactions as a holistic stream of spend and savings. For example, imagine being able to:

  • Automatically optimize how savings and supplier diversity or savings and carbon footprint factor into a sourcing award. 
  • Execute a catalog search that is smart enough to offer lower price alternatives and green/ethical/inclusive choices at the same time across multiple suppliers.
  • Quickly find diverse suppliers for a certain category and enable, buy, and pay in one place.
  • See supplier health, risk, and sustainability ratings that follow a supplier from procurement through payments. 

This ability to digitalize, increase environmental and social impact, and drive savings — all at the same time, in one place — is all possible today in just weeks or a few months with Coupa’s Business Spend Management platform.

How to Create Global Impact at Scale

Coupa customers today are achieving their sustainability goals across many areas with many types of spend. The Coupa ecosystem is expanding rapidly to support these efforts and the multiple facets of sustainability. Setting goals for 2030 and 2050 is necessary, but imagine if you could also set specific targets for 2021 and 2022, and have the data, processes, and platform to support the achievements of those goals and drive immediate impact to people, the planet, and your organization. 

It’s a Team Effort

Technology, risk, compliance, sustainability, diversity, finance, and procurement. These teams cannot tackle sustainability goals and processes alone or in a serial manner. These teams must come together and agree that a holistic approach to digitalization, sustainability, and financial value can and must coexist.

We here at Coupa look forward to helping you maximize your impact on people and the planet through BSM-powered Social and Corporate Responsibility that will improve supplier diversity and reduce your supply chain's carbon footprint, while also helping you drive maximum savings and efficiencies for all your business spend.