In 2019, procurement leaders can advance their strategic objectives by collaborating more closely with their counterparts in trade finance and sustainability.
Although the goals and challenges of these three groups may appear different on the surface, they are in fact far more aligned than many realize. Working together is therefore highly valuable in achieving a shared vision for supply chain management.
Shared Objectives
Deloitte’s 2018 Chief Procurement Officer (CPO) survey once again shows that cost savings remain the top priority for procurement leaders, with spend consolidation being their primary strategy.
Corporate Social Responsibility (CSR) management has risen to sixth place on the agenda, indicating an increasing alignment between procurement priorities and sustainability goals. Research from Procurement Leaders also shows that trade finance professionals want to integrate sustainability more tightly into their offerings, creating new opportunities for collaboration.
Sustainability experts welcome efforts to consolidate spending across a smaller pool of suppliers and are supportive of the increased emphasis on CSR. In fact, working with a smaller group of tier-one suppliers can help sharpen sustainability efforts and improve performance.
Meanwhile, when looking further up the supply chain, all parties agree on the benefits of enhanced visibility and connected supply networks. For sustainability teams, this visibility helps them respond to emerging challenges. For procurement, it supports risk management and supply security. For trade finance, it creates opportunities to provide financing to a broader range of companies with enhanced service propositions.
Ultimately, everyone is looking toward digitalization. Digital supply chain finance is rapidly surpassing traditional trade finance mechanisms. Procurement leaders are seeking end-to-end digital processes, while sustainability professionals are increasingly using digital tools—such as satellite imagery—to improve operational performance.
Shared Challenges
All three groups face several common challenges. The first involves how to measure supplier sustainability performance across all tiers of the supply chain. Traditional methods—such as certifications, audits, and other legacy sustainability assessments—are now being questioned. As the number of databases and performance-measurement tools continues to grow, the complexity increases accordingly.
Trade finance professionals must consider this in their know-your-customer (KYC) processes, while procurement teams need clarity on what they should be requesting and measuring from suppliers.
Another major challenge is breaking down organizational silos. Sustainability experts need to work more closely with finance and procurement, yet these teams often “speak different languages.” Procurement and finance can see a link between sustainable suppliers and high-performing suppliers, but they need stronger evidence to fully embrace this connection.
Finally, supplier engagement and access to upstream suppliers remain critical issues for all three groups. Procurement understands that the greatest supply chain risks lie upstream, which also aligns with the sustainability perspective that upstream engagement is among their most difficult tasks. Trade finance sees opportunities in financing the supply chain, but they require better access and visibility to identify financially attractive opportunities.
A Path Forward
In the near future, we are likely to see these three approaches—procurement efficiency, enhanced financial returns from trade finance, and the achievement of sustainability objectives—become fully integrated.
This convergence may be what finally drives true, transformative change across global supply chains.
