Wow, who would have thought that I would leave a conference hosted by a supplier and feel better about the world and the impact we can have on it? That is exactly the way I felt not once, but twice, at SAP Ariba Live in Texas and in Barcelona. While I adore Tifenn Dano Kwan’s influencer team, particularly Amisha Gandhi, who is the Vice President of Influencer Marketing, and Gale Daikoku, the Global Communities and Ambassador Program Lead, the person who struck a chord most deeply with me was Padmini Ranganathan. She’s the Global Vice President of Sustainability and Risk with SAP Ariba. What first struck me as odd was the combination of “sustainability” and “risk” in her title.
Often when people think of sustainability, they think of one of these two definitions:
- The ability to be maintained at a certain rate or level, such as “the sustainability of economic growth;” or
- The avoidance of the depletion of natural resources in order to maintain an ecological balance, such as “the pursuit of global environmental sustainability.”
After talking to Padmini, I had a realization that risk and sustainability are perfectly wed. If I want procurement to have a purpose, then I need to truly understand who all my first-, second- and third-tier suppliers are (at a minimum), so I can ensure that I use ethical and sustainable partners deep into my supply chain. At the same time, I can also look for unethical behaviors like modern slavery, conflict minerals, money laundering and other issues that could cause a catastrophic risk event for my company. Through this level of understanding with my sourcing suppliers, I can make choices that elevate the working conditions of the people who work for my suppliers. With increased transparency and tighter controls, procurement can help communities thrive, and make choices that protect our planet and conserve resources, which directly impacts people’s lives all over the world.
I can choose to not do business with companies that have relaxed controls in place and choose to work with companies that have ethical standards that mirror my own. If I can avoid risk events from happening beyond the risk appetite of my board, then I can develop compensating control mechanisms to safeguard or countermeasure a lack of control in a specific area, and I can develop stronger contracts that transfer some of the risk away from my company.
Without this view into my supply chain, I am exposing my company to immense risk from so many angles. With a focus, however, on sustainability and procurement with a purpose, I am able to gain visibility and conduct a good threat assessment of my supply chain.
I was also struck by the wonderful partnerships that SAP Ariba has created with companies like ConnXus, Made in a Free World, EcoVadis, Maplecroft and the UN Global Compact. In a recent whitepaper that I read by SAP Ariba, they noted some amazing brands that have made this purposeful commitment to sustainability. For example, Adidas is listed as having sold one million shoes made out of ocean plastic in 2017 (CNBC, March 2018) and Apple has diverted 625,000 metric tons of waste from landfills since 2015 (Apple, Supplier Responsibility 2018 Progress Report). These are not small changes and clearly show the level of commitment companies are making to drive sustainability.
By identifying three common sustainability pillars as the driving force for many major brands, including social (human and workplace rights), environmental (energy and climate change) and economic (decent work and fair employment), SAP Ariba has mapped their technology to each of these pillars to show how they can support these goals. Linda Tuck Chapman says in SIG University’s Certified Third Party Risk Management Professional program that “Risk is a team sport” and only enabled successfully through the use of technology. If the foremost person in this arena states this as fact, SAP Ariba has surely heard the message and enabled a team to address this area and build it into their technology.
As I discussed with Padmini, the ability to avert a single risk episode can fund your movement into future sustainability goals. Using a basic equation (Exposure x Likelihood = Impact) combined with many models designed to assist in calculating this, we can avoid millions, if not billions of dollars of impact to the bottom line of our organizations.
Procurement with a purpose -- I am sold and energized and proud to be part of this new future!
Dawn is passionate about elevating the role of procurement. She regularly presents at industry conferences and writes on the topic. For more of her insights, follow Dawn on Twitter or connect with her on LinkedIn.
Dawn Tiura is the CEO and President of SIG, SIG University and Future of Sourcing and has over 26 years' leadership experience, with the past 22 years focused on the sourcing and outsourcing industry. In 2007, Dawn joined SIG as CEO, but has been active in SIG as a speaker and trusted advisor since 1999, bringing the latest developments in sourcing and outsourcing to SIG members. Prior to joining SIG, Dawn held leadership positions as CEO of Denali Group and before that as a partner in a CPA firm. Dawn is actively involved on a number of boards promoting civic, health and children's issues in the Jacksonville, Florida area. Dawn is a licensed CPA and has a BA from the University of Michigan and an MS in taxation from Golden Gate University. Dawn brings to SIG a culture of brainstorming and internal innovation.