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4 Ways CPOs Can Measure the Success of Their Sustainable Procurement Program

Sustainable procurement has been around for a long time now, yet few Procurement departments can demonstrate the success of their sustainable procurement program. Juggling between staying updated with the latest sustainability trends, handling supplier disasters, and complying with regulations leaves CPOs with little time to implement robust measurement strategies for sustainability initiatives.


In this article, we will give you ideas on how you can structure the KPIs (Key Performance Indicators) of your sustainable procurement program, ranging from the easiest to the most complex to implement and measure. This will enable you to effectively communicate your success internally, to your team and the C-suite, as well as to investors, customers, and society at large.



Success favours the prepared


 

 

Before we start


You know what we say, “it always starts with why”. So before you even think about the KPIs you need to implement, you need to understand what is driving sustainability in YOUR company.


If you have not done so already, you can read our article on the drivers of sustainable procurement which should already give you a starting point. You can use your best judgment to determine what are the sustainability drivers in your company or organise a formal workshop with your leaders to evaluate the drivers together. While this won't determine the type of KPIs you should have, it will provide guidance on what these KPIs should represent and how they should be communicated.


For choosing among the 4 types of KPIs below, consider these 3 factors:

  • Time and human resources available

  • Tools at your disposal to capture data (software etc.)

  • Maturity of your sustainable procurement program


Now that we have established this, let’s have a look at the 4 types of KPIs, from the easiest to the most complex to implement and measure. For each one, we will give four examples of what it means in the context of sustainable procurement.

 


 

Level 1: Input KPIs


Input KPIs gauge the resources allocated to your sustainable procurement program. It encompasses money, people, and tools.


For instance:

  • Sustainable Procurement capabilities: number of teaching hours performed by the Sustainable Procurement manager.

  • Eliminating deforestation: engagement of a dedicated consultant or a full-time employee to investigate deforestation practices.

  • Risk assessment: acquisition of a specialised software enabling comprehensive risk mapping across the supply chain.

  • Virgin plastic reduction: initiation of an R&D initiative targeting the reduction of virgin plastic usage.

 


 

Level 2: Output KPIs


Output KPIs quantify what you have tangibly “produced” with your program, the concrete results achieved as a result of the program’s implementation.


If we keep on using our previous examples:

  • Sustainable Procurement capabilities: number of procurement personnel trained in Sustainable Procurement practices, assessed via tests or quizzes to ensure comprehension.

  • Eliminating deforestation: development and dissemination of a deforestation-free policy.

  • Risk assessment: percentage of the supply chain mapped for sustainability risks with priorities established.

  • Virgin plastic reduction: successful identification of alternatives to virgin PET, such as recycled PET (rPET).

 


 

Level 3: Outcome KPIs


Outcome KPIs evaluate the measurable changes resulting from the program, indicating how practices have evolved. They demonstrate the program’s impact on operational practices.


  • Sustainable Procurement capabilities: number of category managers integrating sustainability into procurement processes.

  • Eliminating deforestation: percentage of deforestation-free raw materials within the supply chain.

  • Risk assessment: measures implemented at various stages of the procurement process (specifications, planning, tendering, contract management…) to mitigate the sustainability risks in your supply chain.

  • Virgin plastic reduction: number or percentage of product SKUs transitioned to rPET.

 


 

Level 4: Impact KPIs


Impact KPIs measure the broader effects of the sustainable procurement program on the society and the environment. They highlight the program’s significance in driving positive change beyond organisational boundaries. They are the hardest to measure and you will often need to associate with other stakeholders to capture the data.


  • Sustainable Procurement capabilities: evaluation of supplier behaviour changes post-integration of sustainability into category management, with quantified environmental or societal impacts.

  • Eliminating deforestation: surface of restored area following the transition to deforestation-free materials.

  • Risk assessment: reduction of environmental and human rights violations within your supply chain, indicated by metrics like CO2 emissions avoided or percentage of workers receiving fair wages.

  • Virgin plastic reduction: volume of virgin plastic avoided, along with associated CO2 emissions reductions.

 


 

Sustainable procurement programs are vital for organisations, yet measuring their success remains a challenge. Understanding the driving forces behind sustainability and implementing robust measurement strategies, through four levels of Key Performance Indicators (KPIs), can effectively demonstrate the impact of these initiatives. From assessing resource investments to evaluating societal and environmental impacts, each level of KPI offers unique insights into program effectiveness, enabling Procurement leaders to communicate success internally and externally.


Take action today to integrate KPIs into your sustainable procurement program, ensuring your efforts contribute meaningfully to organisational goals and broader sustainability objectives. Whether you're just starting or looking to enhance existing initiatives, BeeAware Consulting is here to support you every step of the way. Contact us for expert guidance and assistance in optimising your sustainable procurement program and demonstrating its success. Together, let's make a lasting impact on sustainability.

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