From administrative to strategic
As Head of Procurement Excellence at Danish insurance company Topdanmark, Henrik Nilsen has been focussed on establishing the procurement function as a strategic unit and reducing Procurement's administrative role. “Procurement was not on the agenda when we started this transformation journey to centralise the unit. Today, it is one of the organisation’s key strategic pillars,” says Nilsen.
Procurement is increasingly viewed as a key route to reducing costs. “Procurement is playing a multi-dimensional role in creating a sustainable and profitable product. We are taking a holistic approach to reach maximum value. It means evaluating both price, service, customer journey, ESG, as well as internal processes.”
However, Nilsen does not see Procurement as the core driver of ESG within the organisation. Instead, “ESG strategy should be owned by an ESG team that the procurement team would supplement. There should be a central unit making sure that there's a connected approach taken across the organisation.”
The need to establish standardised methods
Organisations have become increasingly concerned with the ESG credentials of their supply chains. As a result, suppliers are receiving tailored questionnaires from different organisations requiring detail of their ESG credentials.
“Many suppliers are tired of getting questionnaires and codes of conduct from all companies and customers in different forms. Suppliers want a standardised method. It is a burden for them.”
While progress can be made on an organisational level, cross-industry collaboration is needed to create a meaningful difference and mitigate against climate change. Nilsen says, “A joint effort is needed to really push the ESG agenda to the next level.”
“Topdanmark has an ESG strategy in place and recently signed the Science Based Targets initiative. We are trying to launch several initiatives to keep up and get ESG as an integrated part of our procurement journey. However, joint efforts in the industry, or together with governmental bodies, are needed to really push the agenda forward.”