Blog, Quoting Software, Sourcing, Supply Chain Management

How your organization benefits from implementing a Supplier Environmental, Social, and Governance (ESG) Management Program   

  • January 4, 2023
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(ESG) Management Program, Sustainability, Supply Chain

Sustainability continues its upward trend as an operating and social conscience metric for companies of all kinds. Customers in all markets consider it strongly when deciding on the source of their purchases – its been reported that 85% of consumers are more likely to buy from a company with a reputation for sustainability than from one without. Consequently, 91% of companies take sustainability criteria into account in decisions across the business, including in sourcing and procurement. 

 

In addition to working on measuring and improving sustainability in their internal business processes, organizations increasingly look for and measure ESG criteria throughout their supply chain. This task is made more complicated when you take into consideration suppliers located around the world and the trend toward outsourcing of labor. Extending reviews and developing a system to ensure traceability and transparency through your supply chain and to manage and identify ESG risks. But in this era of cut-throat speed, how can your organization know whether its suppliers are sustainable, credible, and suitable? And how to do that quickly? 

 

ESG is more and more a critical link in the supply chain, but a common challenge businesses have is not having the appropriate technology and tools to effectively measure and track their ESG initiatives and lacking the skills and expertise to implement solutions. This can be especially difficult if you lack proper ESG measures with your suppliers. 

 

According to research by KPMG 

  • Most companies find it difficult to clearly communicate their commitments and demonstrate progress 
  • Six in ten (59 per cent)  small- and medium-sized businesses acknowledged that they “struggle to articulate a compelling ESG story” 
  • 61 per cent struggle to overcome stakeholder skepticism, or the perception of greenwashing 
  • A similar percentage (61 per cent) say they expect to rely increasingly on external assurance or validation of their own ESG data 

 

What is ESG? 

ESG criteria serve as a guideline for environmentally friendly, socially acceptable, and ethically righteous business operations and supply chain activities; something particularly relevant and tough to track in the procurement, sourcing, and supplier relationship management-related areas. 

To be effective, ESG criteria need to be structured into an organization’s supply chain management strategy, complementing any other regulations and standards – and implemented tactically into daily supply chain activities. 

 

A tool to easily track ESG criteria 

QSTRAT is proud to be able to offer our customers a simpler way to ensure your supply chain conforms to sustainability requirements end-to-end, with the inclusion of a sustainability questionnaire in QSTRAT Sourcing. QSTRAT provides a Sustainability self assessment questionnaire (SAQ) that is simple and fast to complete for your Suppliers. 

QSTRAT Sourcing is an accessible and affordable way to streamline supplier communications is a web-based software application designed specifically to simplify and automate your sourcing process. QSTRAT Sourcing uses proprietary Adobe PDF forms technology to collect information, ensuring the secure transfer of sensitive pricing information – eliminating the need for suppliers to download specific software. PDF integration updates QSTRAT automatically with the SAQ results, scores them and tracks follow up actions. This makes it easier for your organization to incorporate them into your sourcing decisions along with other costing elements. 

Using the QSTRAT solution, sustainability data can be gathered as part of the onboarding/vetting process for new suppliers, and then continually as part of regular Supplier performance reviews and certification updates. 

 

How do I use this information in my Sourcing processes?  

  • To build your database, have all new suppliers fill out this questionnaire before qualifying them as a supplier into your system, or for existing suppliers, incorporate into your regular supplier performance reviews 
  • Configure and develop a true supplier rating system for Supplier ESG that allows for progress tracking over time, with periodic update from suppliers. 
  • Future proof your system with the configuration capabilities of QSTRAT, allowing you to add, remove or update attributes as your systems and measurements change 
  • Leverage your ever building database of results as a key part of your decision-making process when choosing sources and build the ESG into your performance reviews as you continue your relationship with the supplier.  

 

Why QSTRAT?  

QSTRAT’s assessment is based on an international standard, giving you the confidence that your rating aligns with the latest industry standards.  

 The assessment gives you:  

  • Easy to understand results – get an indication of the supplier’s sustainability rating at a glance, identify where they can improve their score, and compare the ratings between suppliers  
  • Reports you can track and analyze 
  • Data you can share within your team, with customers and with suppliers. 

 

Take control of your Supply Chain 

Many manufacturers are still relying on spreadsheets for their procurement needs and capturing all your cost drivers – along with ESG guidelines – in one place is no easy task. Give your business the power to make informed decisions based on a smooth and efficient sourcing process to ensure success in the future with QSTRAT Sourcing 

 

To learn more about QSTRAT Sourcing or the full QSTRAT suite, or to book a demo, get in touch! 

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