This blog first appeared on Procurement Leaders and is part of a series of guest blogs for that publication.
As category managers move along the path to better (and more sustainable) procurement, developing solid category strategies is an important step in the process. Procurement managers use category strategies to hone in on the most important considerations for the category—setting the business up to make the right decisions about how it will purchase now and in the future.
In developing these strategies, category managers should look at competitors, examine the supplier marketplace, understand their relative bargaining power and internal and external constraints, and keep up to date on technology developments that could fundamentally change the category. Furthermore, category managers should understand the social and environmental risks associated with the category.
To illustrate the benefits of category strategies, I’d like to share the story of plastics at Cathay Pacific. By incorporating environmental risks into its category strategy, Cathay Pacific is changing its approach to the purchase of single-use plastic items, a key procurement category for the airline. (If you’ve ever flown on an airplane, you know the plastics we’re referring to: cups, disposable silverware, wrappers on blankets, and meal tray covers that get tossed after one use.)
Cathay Pacific’s 20/20 sustainability commitments include reducing waste by 25 percent and sourcing all Cathay-Pacific-branded products from more sustainable materials. But what does “more sustainable” mean in the context of single-use plastic items?
Cathay Pacific worked with BSR’s Center for Sustainable Procurement (CSP) to answer this question. Achieving “more sustainable” plastics is complex, as there are many factors, including energy and water used in production, the amount of waste generated, and whether it can be recycled or composted at the end of its life. Fewer environmental impacts are also linked to future monetary benefits. In this case, the Hong Kong government is considering charging companies for the waste they send to the landfill.
The CSP worked with the Cathay Pacific team to define the environmental characteristics of different plastic options and created tools to integrate a sustainability approach into the company’s overall category strategy and decision-making process. The CSP recommended sustainability-related questions for Cathay Pacific to include in procurement requests-for-proposals and created a comparison tool based on lifecycle analyses of the different types of plastics. The tool provides a user-friendly, numerical, and graphical report that helps Cathay Pacific buyers make a sensible assessment of which plastic was the best option on both financial and environmental criteria. Since conducting the CSP project, Cathay Pacific is looking to expand this process to other types of materials within its supply chain.
Integrating sustainability considerations into category strategies is indeed “better procurement.” We hope that this series has given you examples and inspiration to take action in your own business.