Newly launched standards define state-of-the-art practices for Procurement Organizations

Newly launched standards define state-of-the-art practices for Procurement Organizations boosting the importance of procurement tools for Responsible Sourcing.

New standards from ISO and COPC are being launched that are setting new best practice standards for what it means to be a leading procurement organization. Recently COPC and ISO launched similar procurement standards, in which COPC defines best practices for indirect procurement and ISO defines best practices for sustainable procurement in general. Although their scope and scale are different, both emphasize a more holistic procurement approach for organizations and the growing need for procurement tools that help monitor and improve social responsibility performance of supply chains.

Standard requirements push procurement strategies to utilize certification and monitoring tools.

ISO 20400 is currently being developed as comprehensive standard of Sustainable Procurement Guidelines which help buyers across industries make strategic purchasing choices. Jacques Schramm, chair of the ISO 20400 Committee, states that, “For many organizations, sustainable procurement is already featured in their sustainability reports, yet there is a distinct lack of clear guidelines on how to implement and measure sustainable procurement practices.” Thus, the goal of this new standard is to push sustainable procurement from a responsible practice to a key operational advantage that not only sets standards for suppliers but also measures overall supply chain performance, which may require procurement tools like supplier certification and monitoring.

While the ISO 20400 standard is still in draft and won’t be released until later in 2017, COPC released their Indirect Procurement Standard in March of this year. The primary difference from ISO 20400 is that the COPC standard deals strictly with the purchasing of goods and services that are used for the internal operations of a company, such as computer software or recruitment efforts.  In order to be successful, the standard recommends that companies go beyond considerations of cost and quality, and also evaluate supplier social responsibility performance. The Indirect Procurement Standard states that organizations must have, “quantitative and qualitative measures and targets to assess performance.” The goal is to evaluate the performance of five key subject areas:  Community Involvement and Human Rights, Workplace and Labor Practices, Diversity and Inclusion, Environment, and Ethical Conduct. Measuring these subject areas, that deal with supplier social responsibility, with procurement tools will enable organizations to become a leading procurement organization.

Procurement tools like supplier certification and monitoring are gaining importance.

As stated, with the launch of these new procurement standards, organizations looking to operate according to industry-defined best practices will need to adopt new tools that ensure suppliers are operating responsibly and sustainably. This means supplier improvement and risk mitigation tools like supplier certification and monitoring are a crucial aspect of being a modern procurement organization and previously lagging organizations will need to make strategic advances in order to achieve the new industry standards being set by COPC and ISO. Organizations that can develop a Responsible Sourcing Strategy that integrates an effective blend of different supplier improvement tools will be the ones best prepared to lead in the new era of procurement.

Leading Responsible Sourcing Strategies combine an optimal suite of tools based on supplier risk profiles.

Procurement standards not only differ in their applicability to industry, as seen between the ISO and COPC standards, but buyers also need to distinguish how to apply these standards to their suppliers in their own supply chains. By understanding risk and spend within their supply chain, buyers can properly define the right standard and tool for each of their supplier groups in order to form their best Responsible Sourcing Strategy. Tools like Verego SRS Certification and Verego’s Vendor Reporting System help buyers to quantify and measure suppliers’ performance at different scopes to help organizations achieve success in implementing sustainable procurement standards. As procurement organizations continue to define their Responsible Sourcing Program strategies, the leading strategies will be the based on understanding the tools at their disposal and combing a unique suite of tools best suited for managing the evolving social responsibility issues that remain hidden with the world’s global supply chains.

If you are interested in learning more about building an optimized suite of supply chain risk mitigation tools, contact Verego at info@verego.com and keep an eye out for our upcoming informative blog posts.