Sustainable Procurement: With Tender Season Upon Us, How Can Procurement Specialists Build Sustainable Supply Chains?

Tender season — the annual period when shippers seek proposals from carriers defining transportation services for the upcoming year — is an ideal time for shippers to incorporate sustainability initiatives into their procurement process. While this critical period is known for its rate negotiations, shippers, carriers, and suppliers can also use this time to consider prescribing strategies to implement sustainability initiatives into the tender. 

Sustainability initiatives can range anywhere from lowering transportation-related greenhouse gas emissions when moving goods across land and sea, to ensuring ethical sourcing and utilizing recycled package materials and components. These are just some of the ways that shippers might pursue environmental, social, and governance objectives in their supply chains.

As Searoutes wrote last December, companies can set the tone for environmental responsibility in the shipping industry by prioritizing the incorporation of sustainability practices during tender season. 

While there might be a perception that integrating sustainability initiatives into the procurement process could result in higher costs, data-rich technological tools can help procurement specialists convince carriers that pursuing sustainability and seeking efficiencies within route optimization are not antagonistic goals. Rather, they can be complementary goals that can enable long-term value for a company.

For Today’s Shippers, Sustainable Procurement is Easier Said Than Done

Shippers are under greater pressure than ever from customers and regulators to build sustainable logistics practices. However, implementing sustainability initiatives into the tender might appear on the surface to be a daunting task. 

Indeed, while sustainable procurement is an admirable goal, there are three challenges to achieving an eco-friendly contract. Being concerned about higher costs, ensuring that shipper and carrier sustainability goals are compatible, and staying ahead of the ever-evolving regulatory landscape are three potential issues that procurement specialists should be prepared to overcome.

As we’ll see later, using technological tools that harness data to support sustainability initiatives is a viable solution to address these challenges. But let’s review these challenges first so that we can appreciate how a data-driven approach can provide numerous benefits.

Balancing Cost and Sustainability

One challenge that procurement specialists face during the tender season is balancing the dual goals of ensuring competitive costs while also pursuing more eco-friendly transportation options.

Indeed, the costs associated with adopting sustainable practices within the supply chain are still evolving as technologies continue to develop and grow in sophistication, and some costs might appear higher at first glance. Some carriers tout wind-powered and hydrogen-powered vessels as potential options for quick reductions in emissions, but scaling these options across the supply chain is challenging because of the higher costs and complexity associated with using these power alternatives.

Despite the evolving landscape, shippers today still have an opportunity to strike that delicate balance between financial efficiency and eco-friendly practices by incorporating nuanced and informed decision-making during analyses of route optimization. This might look like lowering both transportation costs and GHG emissions by using route optimization tools such as Searoutes’ Routing API tool, which calculates distances and arrival times and monitors fuel consumption. Routing API also estimates CO₂ emissions from the journey and computes deviation costs. 

Finding the Perfect Fit

Another challenge facing procurement specialists is convincing partners, such as suppliers and carriers, to get on board with adhering to a shipper’s sustainability initiatives during the tendering process. Some suppliers and carriers might be wary of considering sustainable and environmentally friendly practices because doing so might be a shift from established norms. 

However, rather than enforcing or toeing a hard line, shippers and their procurement specialists should consider encouraging collaboration with partners and keeping communication lines open. Shippers can also consider working with partners that have already built sustainable logistics or with partners whose operational footprint might match the shipper’s needs. 

Keeping Ahead of the Regulatory Wave

A third challenge is aligning procurement practices with the diverse and ever-evolving landscape of environmental regulations, particularly as different countries on different continents appear to each adopt their own standards. 

Indeed, navigating the complex web of global, regional, and industry-specific standards requires a comprehensive understanding of compliance requirements and a proactive approach to regulatory changes.

For instance, the European maritime sector is now taking part in the EU Emissions Trading System (EU ETS), which will compel ocean carriers to charge emissions-related surcharges for European container shipping. As carriers levy surcharges to compensate for their own higher operational costs, it’s vital for shippers to maintain an accurate understanding of their own emissions to avoid being overcharged. Doing so allows shippers to build more sustainable and more cost-effective shipping operations. 

Sustainable Procurement Begins with Accurate Data

While challenges persist in implementing sustainability initiatives during the tender process, having accurate data is the potential antidote that shippers and carriers can parake to see the cost benefits of deploying sustainability-friendly tactics. 

Indeed, route optimization data, the evaluation of shippers on sustainability-related metrics, and predictive analytics tools that can forecast future sustainability trends are just three instances where data can provide insights into how sustainability initiatives can be successfully deployed in tenders.

Data-Driven Supplier Evaluation

The ability to evaluate suppliers on factors such as their operational footprint and whether they already deploy sustainable logistics can greatly help shippers seeking to implement sustainability initiatives. 

What’s needed is accurate data to help facilitate and even potentially revolutionize that evaluation process. That entails procurement specialists collecting data and evaluating suppliers based on specific metrics. Eventually, using data to assess suppliers has the potential to foster a culture of responsibility within the supply chain.

Optimized Routing for Sustainable Logistics

Leveraging data based on route optimization can also be a key strategy in minimizing the environmental impact of shipping. Procurement specialists can use advanced algorithms and real-time analytics to identify and implement routes that significantly reduce carbon emissions.

Besides Searoutes’ Routing API tool, which monitors fuel consumption CO₂ emissions as well as predicts arrival times, Searoutes’ Co2 API uses proprietary algorithms and access to vast datasets to provide information on optimal routes and related carbon emissions. And Searoutes’ Vessel API helps shippers trace the position of a given vessel as well as provide an estimated time of arrival to the next port of call.

Utilizing data to optimize routing is also beneficial in situations where global events are ever-evolving, such as the effect of the Red Sea disruptions on maritime shipping.

Future-Focused Procurement Processes

Lastly, data analytics not only supports current decision-making but can also aid in forecasting future sustainability trends. Procurement specialists can use predictive analytics to anticipate changes in environmental regulations, enabling them to adapt strategies proactively and ensure sustained adherence to green shipping practices.

The Future is Bright for Sustainable Procurement

The challenges of sustainable procurement during tender season can indeed appear formidable, but the power to overcome them lies in the adoption and application of data-driven strategies. 

So, instead of being intimidated by the challenges of developing a sustainable tender, procurement specialists should embrace the opportunities that accurate data can provide to foster lasting supply chain sustainability in the dynamic landscape of tender season decisions.

Searoutes Can Help You Achieve Eco-Friendly Tenders

Using accurate data, such as data on a given vessel’s CO₂ emissions, its position, and its arrival time, can help procurement specialists work with carriers and suppliers to implement sustainability initiatives into tenders. 

Searoutes offers three tools: 

• Vessel API, which helps you keep track of a vessel’s position and provides historical trace information of numerous vessels.
• Routing API, which monitors fuel consumption, tracks carbon emissions, and calculates accurate routes and sea distances.
• Co2 API, which enables users to search for optimal routes and their related carbon emissions.

Contact Searoutes today to learn how our tools can help you effectively implement sustainability initiatives during tender negotiations.