- Society’s biggest challenges are best addressed by organizations that view themselves not as a business or an industry, but as a diverse collection of people.
- It’s not new technologies in isolation that will make the shift to greenhouse gas neutrality – but rather people who want to make a difference will bring about the change.
- Sustainable innovation is strengthened by strong human-centric partnerships.
In the business world it’s sometimes easy to overlook the fact that we are all human with our own unique ambitions, challenges and capabilities. But why should that matter to us in purchasing who deal with numbers every day?
Procurement specializes in contracting across the supply chain, managing vendors and providing a template for business success and a more sustainable future. We have to take a more human-centric approach to the way we run our businesses and tackle major global challenges if we are to achieve those ambitions and collectively make a difference.
The time for hierarchical companies is gone – now the focus is on being flexible and empowering the right experts to take ownership of specific tasks, even between competitors.
This is particularly important for those of us working towards a carbon neutral future – where the decisions and investments we make today will directly contribute to the economic, environmental and social viability of the world tomorrow.
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The power of people
An organization is only ever as good as its people, and it is their intelligence, skills, productivity and loyalty that form the backbone of a strong business. You can copy processes and technologies, but you can never replicate human beings.
At Volvo Group, we call this human capital – the intangible, but no less important, qualities that shape a company’s balance sheet. Investing in the growth of employees is how a company can stay healthy. But losing good people can cause organizations, industries and even countries to suffer.
The International Monetary Fund (IMF), for example, ranked Iran the highest in workforce migration among 90 countries in 2006, with over 180,000 people leaving each year due to the political, social and economic upheaval of the time. This is what economists refer to as ‘brain drain’ – the loss of well educated people from less developed countries into countries that offer those people more earning potential and greater career opportunities – and it can have a devastating impact on essential services such as healthcare and education in those home countries.
The same is true on a smaller scale for organizations. Exacerbated by the Covid-19 crisis, many businesses have seen employees leave due to any number of poor decisions – from a lack of investment in technologies to allow for productive remote working through to a lack of safety measures available as workers begin to make their way back into offices.
In our own case, our supply chain partners have had to work seven days a week to mitigate industry shortages of semi-conductors, steel, plastic, rubber, chemicals etc, and there has been a high rate of absenteeism due to Covid-19 which has hampered production and deliveries.
Exhausted workers have reached their limit. In this situation it would have been completely counterproductive to put more pressure on our supply chain partners. Instead, we have co-operated on a level never seen before. Being absolutely transparent and open for discussions on how we together can change the situation makes us all stronger. Also recognizing hard work and extending gratitude to employees has been one way to strengthen motivation to endure and keep fighting together.
We are in a historical global supply chain crisis and the only way out is to continue to fight as one team and support one another by increasing transparency but also implementing innovative predictive systems.
To survive difficult times we also do need our supply chains to be resilient. One way to do that is to focus more on resilience through regional value chains. And we currently do see significant investment readiness in the US and in the European Union now to localize the semi-conductor industry. This is definitely needed for some core technologies where the high regional concentration has increased the vulnerability of the global industry.
However, one size doesn’t fit all. The regional approach should not take jobs away from people in economically challenged countries. We cannot increase the prosperity of some countries and forget others that are dependent on their export business. We need to secure a balance.
Collective change for a carbon neutral future
The many different competencies that represent our own unique human capital at Volvo Group, and those of our supply chain partners, are what allow us to deliver intelligent manufacturing and develop new and emerging technologies. It is these technologies, ideas and perspectives combined to continuously drive better and smarter sustainable transport solutions.
The thread that connects us all is sustainability. It is why sustainability is put at the heart of any purchasing decision we make. We not only work with our employees, but across the whole value chain, to encourage everyone to support and protect the environment.
Businesses should not put requirements on supply chain partners, but rather develop solutions together and learn from and inspire each other. At Volvo Group, we have set the target for net-zero value chain greenhouse gas emissions by 2040. For us in purchasing, it is our responsibility to set the direction of this CO2 neutral supply chain across all aspects of the business, from our own operations, materials and components all the way through to end of life and recycling. We need engaged supply chain partners across the whole value chain to make this happen – collectively this is achievable.
As in any industry, there are some challenges beyond our control, which is why we need the entire supply chain, as well as policy-makers, to support us in our mission towards carbon neutral societies.
Coordinated action can be difficult to manage because of complex ambitions and diverse drivers beyond the individual organizations, but these partnerships – built on strong human relationships – can accelerate game-changing innovations.
Partnerships between companies who share the same vision and values is what powers innovation – and particularly sustainable innovation. We have seen the combined might of Unilever and WWF, help set the standard for sustainable fishing practices through their Marine Stewardship Council (MSC) collaboration. This is just one example which shows that companies and organizations have the power to make a tremendeous difference and help create a more sustainable world for everyone.
The business world has a vital role to play in addressing society’s biggest problems, but in doing so we should also remember that the secret to its success lies in the power of its people. The greatest strategies in the world cannot be realized in companies that fail to cultivate a human-centric culture.