Green supplier relationships make commercial sense

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Recently supplier relationships have become headline news, but not always for the best reasons. However, the increased focus on what good procurement can deliver could mean positive change for hotels, their suppliers and society as a whole, according to Simon Atkinson, Managing Partner of procurement specialists Occumen.

The hotel industry is currently spending significant sums on improving its environmental credentials – both in its infrastructure and the activities, products and services within it. Witness IHG’s roll-out of its Green Engage programme: not only aimed at improving the Group’s internal sustainability performance and auditing, but also allowing it to deliver greener credentials to its corporate clients.

But what does this mean for the industry’s relationship with its suppliers? While the spotlight has fallen on the retail sector in recent months, with a certain amount of media comment directed at the likes of Premier Foods, Tesco and global drinks giants Diageo, the issue of supplier relationships is now featuring more frequently on the business agenda of organisations across most industries.

Focusing the corporate mind

Truly sustainable procurement is not about global customers leveraging more financially from their suppliers. It is about price and quality, combined with environmental, social and economic factors. This requires the rigorous comparison of procurement and CSR policies against the criteria a hotel or group uses to measure its sourcing activity. The fact that Hilton Group, for example, has recently appointed a new Director of Strategic Sourcing Sustainability and Special Projects is a case in point.

This change in mindset is based on two fundamental questions:

  1. Are sustainability and commerciality mutually exclusive when it comes to procurement?
  2. Can sustainable procurement drive innovation and lasting change?

Making commercial sense

There is plenty of empirical evidence; much of it reported in Green Hotelier, that being green actually costs less over the whole of the purchasing lifecycle. This applies at both individual hotel and global company level.

For example, a decision to landscape a hotel garden with low-maintenance, drought-resistant plants can reduce staff time and also water usage. At a global level, a change in laundry policy to use more efficient, cool wash technology and cleaning products has a similar impact, albeit on a much larger scale. The benefits in both cases are not only environmental, but also commercial.

Driving innovation

The micro/macro model of sustainable procurement also works when it comes to driving innovation. The current determination to use local suppliers, reduce food miles and so on is partly the result of a shift in customer motivation and partly the desire to offer greener marketing and brand propositions. From a micro perspective, this has meant greater collaboration with local suppliers who, with an increase in corporate customers, have a greater incentive to invest in more innovative methods of growing produce, rearing animals, or crafting textiles and furnishings.

On a macro level, demand by the global hotel groups for greater laundry efficiency has encouraged washing and drying machine manufacturers to develop new technologies.  While in the short-term this may mean a premium for the hotels on the price of new machinery, it is more than compensated for by the reduction in consumable costs, while boosting sustainability.

Making a real difference

Beyond the commercial and marketing benefits that can be derived by individual hotels and groups themselves, sustainable procurement and supplier relationships have the potential to lead to wider social change.

Whether politically, commercially or ethically motivated, the ability of hotel groups and industry associations to effect change is unquestionable. Lessons can certainly be learnt from other associated industries. For example, Barry Parkin, Mars Group’s Chief Sustainability Officer and Chairman of the World Cocoa Foundation, has been instrumental in driving industry-wide change towards a sustainable cocoa economy, but also in calling for sustainable procurement models across all industries. While there is clearly some degree of commercial incentive, Parkin’s desire for change stems from a genuine motivation for a more ethical society.

There are countless aspects of the hotel industry that could apply similar principles to procurement simply by asking “how do we as an industry, rather than as individual organisations, stimulate change?” In the US, diversity is a major theme, particularly in the government and military supply chain where, for example, there are rigorous policies regarding the positive employment of minority workers by suppliers, including hotels.  Equally, a global initiative by the hotel industry for the use of sustainably grown cotton in bed and table linen could see a dramatic impact on both environment and employment. ITP's work on supply chains is evidence that collective action is being called for and the way forward.

In essence, a sustainable approach to procurement and supplier relationships not only means greener, leaner outcomes for the hotel industry, it also makes sound commercial sense.

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