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NewsDay

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Sustainability, integral part of business

Opinion & Analysis
Matters that are not important to the business are included in the strategy. To the contrary, sustainability an integral part of the business is always missing in most business strategies

Matters that are not important to the business are included in the strategy. To the contrary, sustainability an integral part of the business is always missing in most business strategies to the peril of business competitiveness. Strategy is the campus of the business and therefore, critical matters of sustainability need to be enshrined. Who then is supposed to include sustainability in the business strategy?

PURCHASING & SUPPLY BY NYASHA CHIZU

The procurement function is the major driver of sustainability in business. The function is central in the formulation of budgets where the procurement skills to costs the activities planned for the business are essential. It is the function disposed of the responsibility to control costs by managing the cost of inbound logistics. These two elements are the basis of the measure of the going concern in accounting terms.

From an operational point of view, procurement is responsible for the development of specifications. Specifications are an integral part of sustainability in business where issues of efficient utilisation of resources is encouraged. Further, promotion of re-use and recycling can only be achieved if it is incorporated in the specifications. Specifications need to take into account issues of exploitation of resources today with the future in mind. Most if not all of resources used are non-renewable and unplanned use can lead to extinction. Last but not least, inputs, processes and waste need not to damage the environment. These issues are effectively driven by procurement in specifications designs.

On the other hand, businesses to be sustainable need to be corporate socially responsible. Many allocate part of their profits to support the under privileged society as a means of achieving social corporate responsibility. Does on ever think of whether the proceeds utilised for such noble cause are derived from sustainable businesses. Businesses that cut corners are the ones that make more money and have the capacity to support public corporate social responsibility programmes. If it was in diamond industry, such corporate social responsibility programmes are equivalent to ‘blood diamonds’ that cannot trade internationally.

Procurement can be a major social corporate responsibility driver by merely procuring goods and services efficiently for the organisation. This automatically results in customers buying quality goods and services at affordable prices. By simply delighting their customers through provision of affordable quality products, procurement professionals would have achieved a salient social corporate responsibility goal without the need to spend a lot of money on media coverage of donations from so called ‘blood diamonds’ business activities.

The matter seems simple but very difficult to manage. The major reason is that the major driver of sustainability is a backroom function of most businesses and hence it is missing on the boardroom agenda. The solution is not merely shifting the backroom function to the boardroom, more needs to be done. In addition to alignment of structures and systems for the effective implementation of sustainability by incorporating it in the strategy, there is a critical human element that need to be fixed.

Most procurement functions are manned by non-professionals and the situation is precarious. In the first instance, the cadres do not have any idea of how sustainability can be developed and managed. Secondly, they don’t understand the objectives of procurement activities given that one’s background shapes one’s way of thinking.

The flip side of the challenge is having qualified procurement cadres that lacks entrepreneurial skills. These cadres lack understanding of how to drive the business case to achieve sustainability. Capacity building is therefore critical to develop the necessary skills to drive sustainability.

●Nyasha Chizu is a Fellow of the Chartered Institute of Procurement and Supply writing in his personal capacity. Feedback: [email protected] Skype: nyasha.chizu