Promoting Sustainable Indirect Spend

The term environmental, social, and governance (ESG) has now been firmly embedded in the world of manufacturing. Regulatory pressures, social unrest, and heightened investor and consumer awareness drive manufacturers to double down on their ESG spend and ensure long-term, measurable changes. Increasing ESG spend can be a challenge given the monetary pressure that these companies face in the post-COVID world. The smartest alternative for manufacturers is to improve sustainability in their indirect purchasing practices. To achieve this, they need to be aware of available local, diverse, and sustainable suppliers.

“Manufacturers have many indirect needs, from break room supplies to cleaning supplies. We ensure they buy sustainable office products to hit their ESG goals,” says Todd Heimes, director, global marketing, business prime and expansion.

Amazon Business helps numerous customers worldwide reshape their procurement with cost and time savings, greater productivity, and insightful purchasing analytics. Amazon has partnered with trusted third-party certifications to highlight products with sustainability standards. As of May 2022, over 300,000 Climate Pledge Friendly (CPF) products are available on Amazon Business. With the Sustainability Preferred policy enabled, organizations can steer spend toward these preferred products now that they are more discoverable.

A Comprehensive Analytics Tool in Place

Amazon Business’ comprehensive analytics tools allow clients to visualize everything that their Amazon Business account users have purchased. They can then determine how much of their spend align with the ESG goals. The company helps customers buy sustainable products with proper certifications.

“We have the ability to help customers purchase sustainable, environment-friendly products from local suppliers, veteran-owned suppliers, or minority-owned suppliers,” says Heimes. “We have policies in place, helping customers determine how successful they’ve been in meeting their ESG goals.”

For the largest customers, Amazon Business has designed professional services or white glove services to help them better utilize the suite of Amazon Business products. As a result, they can be more successful in meeting ESG objectives.

Amazon Business takes a hands-on approach while serving clients and provides proper support at every stage. A typical client engagement process includes helping manufacturers set up their accounts, keeping in mind their different departments and users. As a result, all the accounts are mapped to the clients’ organizational structure. This is specifically beneficial for larger manufacturers that have multiple departments and sub-departments for different facilities.

Once the account set-up is done, clients can add the guided buying tool designed by Amazon Business. This paid feature enables them to determine different purchasing policies or spend thresholds (approvals) based on the user groups.

For instance, bp, a British multinational oil and gas company, is continually reimagining its purpose and testing new ways to modernize and increase the efficiency of its global operations. As the company evolves to become more agile and sustainable, it’s embracing digital innovation to reinvent from within. In February, bp set an ambition to pivot from an international oil company focused on producing oil & gas resources to an integrated energy company that delivers diverse energy solutions for its customers. Amazon Business is one of the suppliers bp is working with to deliver on this goal. It has partnered with Amazon Business to adopt digital solutions to improve its supply chain challenges.

“When we’re dealing with off-shore movement of materials, consistency and reliability is key. We are consolidating orders and shipments with Amazon Business to one day per week, timed with our vessel schedules. This adds reliability to our supply chain and will have a positive impact on our ambition and commitment to be net zero by 2050,” says Justin Burnett, vice president of materials management and warehousing, bp.

A Continuous Focus on Sustainability

To help manufacturers achieve their ESG objective, Amazon Business has launched the Climate Pledge Friendly program. It is a part of the company’s commitment to preserving the natural world. The company has partnered with trusted third-party certifications and created its own certifications, Compact by Design and Pre-owned Certified, to highlight products that meet sustainability standards and help preserve the natural world.

Another important initiative in the company’s arsenal is to add more buying policies pertaining to purchasing to enhance clients’ guided buying experience.

"We have made concerted efforts to support the sustainability objectives of our clients,” says Heimes. “Apart from the initiatives, we have also made our trucking fleets more energy efficient and cloud services more sustainable. In the coming years, the world will see Amazon Business upholding the principles of sustainability.”

Originally published on Manufacturing Technology Insights.