Measuring Supplier Sustainability

“Supplier performance measurement will no doubt continue, but what we measure seems to be evolving.”

By Darin Matthews, FNIGP, CPPO, CPSM
Instructor/ Founding Chair, Procurement and Supply Chain Management certificate program

Measuring Up

Measuring the performance of our suppliers is really nothing new. Organizations often track specific metrics related to contractor performance and this information can be used for considering future work or contract extensions. This only makes sense.

Just like having an automotive repair shop work on your car. Did they do quality work? Complete the repair on time and on budget? Keep you as the customer informed of their progress? Supplier performance measurements that have historically been used include things like on ­time, delivery, product quality (zero defects), and cost control. While these areas should remain important to us, there is something else that leading organizations are looking at: sustainability.

Sustainability Measures

Sustainability is a broad area that encompasses environmental, social and economic factors. Things like the use of 100 percent post-consumer waste (PCW) paper, green cleaning products, and energy efficient equipment have become widely accepted in the past 20 years. Countless public procurement offices have implemented sustainable procurement policies.

More recently, the use of diverse suppliers at both the prime and sub-contract level are being measured. This provides an opportunity for minority-owned, women-owned, and emerging small businesses to compete in the public procurement process. Leading agencies from Oregon to Virginia are actively promoting the use of small businesses and measuring how well they are doing.

UC’s Sustainable RFP Scorecard

In 2018 the University of California adopted a policy to include sustainability as part of their RFP selection process. For solicitations over $100,000 a minimum of 15 percent of the selection criteria must be allotted to sustainability (for both goods and services).

Concurrently UC is partnering with a third party to help evaluate supplier performance in the area of sustainability. EcoVadis is an international leader in this space, offering a robust system for assessing suppliers on their corporate social responsibility (CSR) practices. A scorecard measures their performance in four categories: environment, labor and human rights, ethics, and sustainable procurement. This allows agencies to compare performance in a specific commodity area and help suppliers make improvements where needed.

Embracing Higher Standards

So how did the first RFP go when factoring in the new sustainability policy? You might be surprised.

While the campus customer was initially resistant, the supplier community seemed to embrace it. In fact, the winning proposal offered more than UC could have imagined. The top supplier earned a good share of points in this category. Some highlights of their proposal included the support of green travel, energy reduction at their U.S. facilities, use of electronic documents to reduce paper usage, and a support program for their employees during gender transition.

Supplier performance measurement will no doubt continue, but what we measure seems to be evolving.

ABOUT THE AUTHOR—DARIN MATTHEWS, FNIGP, CPPO, CPSM, is the director of procurement and supply chain for UC Santa Cruz. He has extensive management experience, speaks throughout the world on procurement issues, and has published several books and articles on supply chain management. He is the founding chair of the new UCSC Silicon Valley Extension Procurement and Supply Chain Management certificate program and teaches a variety of courses at Extension. For more about Darin, click here.

Some of the courses he teaches include:

This article originally appeared @ Government Procurement magazine.

 

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