{"id":8028,"date":"2026-07-18T09:53:23","date_gmt":"2026-07-18T09:53:23","guid":{"rendered":"https:\/\/malaysian-business.com\/portal\/?p=8028"},"modified":"2026-07-20T09:54:47","modified_gmt":"2026-07-20T09:54:47","slug":"procurement-has-changed-has-procurement-measurement-kept-pace","status":"publish","type":"post","link":"https:\/\/malaysian-business.com\/portal\/2026\/07\/18\/procurement-has-changed-has-procurement-measurement-kept-pace\/","title":{"rendered":"Procurement Has Changed. Has Procurement Measurement Kept Pace?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong><em>Why Sustainability Indicators Are Essential for Modern Procurement<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Ahmad Khushairy Mohd Nor\u00b9, Dr. Adura Ahmad\u00b2<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u00b9Doctor of Business Administration Candidate,<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u00b2Senior Lecturer,<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>This article is based on the author&#8217;s Doctor of Business Administration (DBA) research on sustainability indicators for procurement conducted at the Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Introduction<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Procurement has never been more important to organisational success.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the last twenty years, the way companies buy things has changed a lot. It is no longer just about getting the best price or managing contracts with suppliers. Now, procurement is a key part of a company&#8217;s strategy. It helps the company stay strong, come up with new ideas, make good decisions, and create value in the long run. Companies expect procurement teams to do more than just negotiate prices. They need to manage risks in the supply chain, build strong relationships with suppliers, make sure they are buying things in an ethical way, and support goals related to the environment, society, and how the company is governed. All of this helps the company stay competitive and successful. Procurement is now seen as a partner that helps the company achieve its goals, rather than just a team that buys things. This change has made procurement a more important and strategic part of the business.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This transformation reflects the realities of today&#8217;s business environment. Organisations operate within increasingly complex global supply chains characterised by geopolitical uncertainty, climate-related risks, resource constraints, evolving regulations and heightened stakeholder expectations. Investors demand greater ESG transparency. Customers expect responsible sourcing. Regulators require stronger governance and due diligence. Consequently, procurement decisions now carry implications that extend far beyond financial performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When it comes to judging how well procurement is doing, most of the time we still look at old-fashioned measures like how much money is being saved, how good the suppliers are, how quickly things are delivered, how long it takes to complete a procurement cycle, and whether contracts are being followed. These things are still important because they show how efficiently and responsibly the procurement process is being run. But they do not tell us much about how procurement is affecting the environment, how it is impacting society, or how it is being governed within the organization. We need to think about more than just the basics if we want to get a complete picture of how procurement is really performing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This creates an important paradox.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The way we buy things has changed a lot over time, but the way we measure how well we are doing it has not kept up.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Many organisations proudly communicate their sustainability commitments through ESG reports, responsible sourcing policies and corporate sustainability strategies. Yet when procurement leaders are asked a simple question \u2013 <em>&#8220;How do you know your procurement is becoming more sustainable?&#8221;<\/em> \u2013 the answer is often far less certain.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The challenge is not a lack of commitment.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The challenge is a lack of meaningful measurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When companies do not have real ways to measure sustainability, they cannot be sure if their buying decisions are actually helping the environment, making suppliers more responsible, improving worker conditions, or creating lasting value. This means sustainability might just be a goal, rather than something that actually happens in daily operations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This article argues that procurement performance measurement must evolve alongside the changing role of procurement. Drawing upon international guidance, emerging procurement practices and insights from ongoing doctoral research, it proposes that sustainability indicators should become an essential component of modern procurement performance measurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Ultimately, organisations will not achieve sustainable procurement simply by adopting ESG policies or publishing sustainability reports.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They will get there by focusing on what really counts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Procurement Has Changed<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The traditional purpose of procurement was relatively straightforward.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the past, procurement teams were mainly focused on getting the right products or services from the right suppliers, making sure they were of good quality, and delivered on time. They also had to keep costs under control. Back then, success in procurement was often measured by how well they could save money and make purchases more efficient. Procurement was seen as a behind-the-scenes function that helped the organization run smoothly, rather than a key part of the overall business strategy.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Today&#8217;s procurement environment is fundamentally different.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Organisations increasingly recognise procurement as a strategic function capable of influencing business performance across the entire supply chain.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Several global developments have accelerated this transformation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">First, supply chains have become considerably more interconnected and vulnerable to disruption. The COVID-19 pandemic demonstrated how supplier failures, transportation disruptions and material shortages could rapidly affect organisational operations worldwide. Procurement therefore plays a critical role in strengthening supply chain resilience through supplier diversification, risk assessment and collaborative supplier relationships.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Nowadays, companies see sustainability as a key part of their business plan, not just something they do to look good. People who invest in companies, government regulators, customers, and society as a whole expect businesses to be responsible when it comes to the environment and social issues. They want to see this responsibility throughout the entire supply chain. Because the procurement department is in charge of a lot of the company&#8217;s spending and deals with suppliers, the decisions they make have a big impact on how sustainable the company is overall.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Technology has really changed the way companies buy things. Now, they have digital platforms, tools to analyze suppliers, artificial intelligence, and can see the whole supply chain in real time. This means procurement teams can do more than just buy stuff &#8211; they can make important decisions. They can give valuable information about how suppliers are doing, what is happening in the market, how to manage risks, and plan for the long term.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Finally, procurement has become increasingly responsible for organisational governance. Supplier due diligence, anti-corruption controls, ethical sourcing, human rights assessments and regulatory compliance now form integral components of procurement activities in many organisations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These changes show that buying things for a company is now about more than just doing the basic jobs it is always done.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Procurement no longer simply purchases goods and services.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It influences how organisations manage risk.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It influences organisational resilience.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It influences supplier innovation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It influences environmental performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It influences ethical business conduct.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It influences long-term organisational value.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">International standards reinforce this broader perspective.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">ISO 20400 positions sustainable procurement as an approach that integrates environmental, social and economic considerations into procurement decisions throughout the procurement lifecycle. Rather than treating sustainability as an additional reporting requirement, ISO 20400 encourages organisations to incorporate sustainability into supplier selection, contract management, supplier evaluation and continuous improvement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Similarly, international guidance on responsible business conduct increasingly emphasises the importance of supplier due diligence, stakeholder engagement and responsible sourcing throughout organisational value chains.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Collectively, these developments illustrate a fundamental shift.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Procurement is no longer merely responsible for buying efficiently.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Procurement is increasingly responsible for buying responsibly.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But even though the role of procurement has grown a lot, the way we measure how well it is doing has not kept up.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The Procurement Measurement Gap<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Performance measurement has always influenced organisational behaviour.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Within procurement, key performance indicators shape priorities, guide decision-making and influence supplier behaviour.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When procurement teams are evaluated primarily on cost savings, they naturally focus on reducing expenditure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When supplier performance is measured through delivery reliability, suppliers prioritise delivery performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Measurement determines management attention.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For decades, procurement scorecards have been built around a familiar collection of operational indicators.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These commonly include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Procurement savings<\/li>\n\n\n\n<li>Delivery performance<\/li>\n\n\n\n<li>Supplier quality<\/li>\n\n\n\n<li>Procurement cycle time<\/li>\n\n\n\n<li>Contract compliance<\/li>\n\n\n\n<li>Purchase order accuracy<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">These indicators remain valuable because they measure procurement efficiency.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But they were not meant to assess how well something is doing in terms of sustainability.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A company might say it is saving a lot of money by buying from suppliers who do not take care of the environment, treat their workers poorly, or do not have good leadership. This can be a problem because it does not consider the bigger picture and the potential harm these practices can cause.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When companies buy from suppliers who are good at sustainability, it can bring a lot of value to the company in the long run. This is something that the usual ways of measuring how well the procurement team is doing might not show.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This represents one of the most significant challenges facing modern procurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There is currently a mismatch between what organisations expect procurement to achieve and what procurement performance measurement actually evaluates.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Organisations increasingly expect procurement to reduce supply chain emissions, improve supplier governance, strengthen resilience, support responsible sourcing and contribute to ESG commitments.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Yet procurement scorecards frequently continue measuring only cost, quality and delivery.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This measurement gap has important implications.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Without sustainability indicators, procurement professionals cannot objectively evaluate whether procurement activities contribute to organisational sustainability objectives.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They cannot identify improvement opportunities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They cannot benchmark sustainability performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You cannot really control something if you do not know what is going on with it.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As the well-known management principle suggests, <strong>what gets measured gets managed.<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If sustainability is expected to become an integral part of procurement, then sustainability must also become an integral part of procurement performance measurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Why Sustainability Indicators Matter<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If procurement has evolved into a strategic business function, then the way procurement performance is measured must evolve as well. Performance measurement is more than an administrative exercise; it influences organisational priorities, drives behaviour and shapes decision-making. In procurement, what is measured often determines how procurement professionals evaluate suppliers, negotiate contracts and allocate organisational resources.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This principle explains why sustainability indicators have become increasingly important.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For many organisations, sustainability remains a corporate aspiration communicated through ESG reports, sustainability strategies and responsible sourcing policies. While these initiatives demonstrate commitment, they do not necessarily demonstrate performance. Without meaningful indicators, procurement professionals have limited ability to determine whether procurement decisions are genuinely contributing to sustainability objectives.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Consider a procurement team responsible for selecting suppliers for a major capital project. If supplier evaluation focuses exclusively on price, technical capability and delivery schedule, procurement decisions will naturally favour suppliers that perform well against those criteria. Sustainability considerations may be acknowledged during discussions but receive limited influence during final supplier selection.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When companies start using scorecards that track sustainability, like how much greenhouse gas they produce or how well they treat workers, it can really change how suppliers behave. Suppliers start to realize that how well they do on sustainability affects their business relationships. The people in charge of buying start to care more about sustainability when they are deciding who to work with. This helps the whole company&#8217;s goals line up better with what the procurement team is doing. As a result, companies start to make more sustainable choices and suppliers are more likely to follow suit. This shift can have a big impact on the environment and on people&#8217;s lives, and it is a step in the right direction for creating a more sustainable future.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Measurement therefore becomes a catalyst for behavioural change.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is particularly significant because procurement decisions influence a substantial proportion of an organisation&#8217;s environmental and social impacts. For many organisations, the majority of sustainability-related risks and opportunities exist beyond their own operations, within supplier networks and extended supply chains. Procurement occupies a unique position because it directly shapes supplier expectations, supplier relationships and purchasing decisions across these value chains.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Consequently, sustainability indicators should not be viewed merely as reporting metrics.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They are management tools.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They enable procurement professionals to monitor progress, evaluate supplier performance, identify risks, prioritise improvement initiatives and demonstrate procurement&#8217;s contribution to organisational strategy.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">More importantly, sustainability indicators provide evidence.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Rather than asking whether procurement supports sustainability, organisations can begin asking more meaningful questions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Are suppliers reducing environmental impacts?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Are procurement decisions strengthening responsible sourcing practices?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Are supplier development programmes creating measurable improvements?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Is procurement reducing long-term organisational risk?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These questions change the way we buy things, focusing on what we actually get instead of just what we do.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">That distinction is important.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Traditional procurement metrics often focus on efficiency.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sustainability indicators focus on effectiveness.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When we look at things from different angles, we get a better sense of how well something is working, like with procurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>What Should Procurement Measure?<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">One of the greatest challenges facing organisations is not recognising the importance of sustainable procurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is really about figuring out what matters most and what we should be paying attention to.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sustainability metrics are not as straightforward as traditional procurement benchmarks. This is because different industries focus on different aspects of sustainability, depending on what the law says, what stakeholders want, and how the company and its supply chain work.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For example, a manufacturing organisation may focus heavily on supplier emissions, resource consumption and circular economy initiatives.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A financial institution may place greater emphasis on supplier governance, responsible business conduct and information security.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A healthcare organisation may prioritise ethical sourcing, product traceability and labour standards.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When we look at what companies prioritize, we see that they are all different, but if we take a closer look at what experts around the world are saying and what is being written about it, we can break down sustainability in procurement into a few key areas that are all connected.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Rather than representing isolated indicators, these dimensions provide a holistic perspective of procurement performance.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Environmental Performance<\/strong><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Sustainability is a big deal when it comes to buying things. One of the most talked about parts of this is how it affects the environment.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Procurement decisions significantly influence greenhouse gas emissions, energy consumption, waste generation, resource efficiency and the use of sustainable materials throughout organisational supply chains.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Examples of environmental procurement indicators include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Supplier greenhouse gas emissions.<\/li>\n\n\n\n<li>Carbon reduction initiatives.<\/li>\n\n\n\n<li>Sustainable or recycled material usage.<\/li>\n\n\n\n<li>Resource efficiency.<\/li>\n\n\n\n<li>Waste reduction programmes.<\/li>\n\n\n\n<li>Circular procurement practices.<\/li>\n\n\n\n<li>Environmental management system certification.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Environmental indicators enable procurement professionals to assess whether purchasing decisions contribute to organisational climate commitments while encouraging suppliers to improve environmental performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is really important that we look at how well suppliers are doing when it comes to the environment, but we should also be thinking about how they can keep getting better over time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Procurement should encourage suppliers to progressively enhance environmental performance rather than simply meeting minimum requirements.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Social Performance<\/strong><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Procurement decisions also influence people.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Social sustainability considers how suppliers manage labour practices, human rights, employee wellbeing and community development throughout their operations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Typical procurement indicators include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Compliance with labour standards.<\/li>\n\n\n\n<li>Human rights due diligence.<\/li>\n\n\n\n<li>Occupational health and safety performance.<\/li>\n\n\n\n<li>Supplier diversity.<\/li>\n\n\n\n<li>Local supplier participation.<\/li>\n\n\n\n<li>Employee welfare initiatives.<\/li>\n\n\n\n<li>Community engagement.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">These indicators understand that the choices we make when buying things do not just impact how our organization does but also have a bigger effect on society as a whole.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Increasingly, organisations are expected to demonstrate responsible business conduct throughout their supply chains rather than limiting responsibility to their own operations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Procurement therefore plays a critical role in promoting responsible employment practices and ethical supplier relationships.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Governance Performance<\/strong><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Good governance forms the foundation of sustainable procurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Without effective governance, organisations face increased legal, financial and reputational risks regardless of their environmental or social achievements.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Governance indicators commonly include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Supplier code of conduct compliance.<\/li>\n\n\n\n<li>Anti-bribery and anti-corruption measures.<\/li>\n\n\n\n<li>Conflict-of-interest declarations.<\/li>\n\n\n\n<li>Supplier due diligence.<\/li>\n\n\n\n<li>Regulatory compliance.<\/li>\n\n\n\n<li>Information security.<\/li>\n\n\n\n<li>Transparency and reporting.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Strong governance indicators enhance organisational trust while reducing procurement-related risks.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They help make sure that the people they work with are accountable by setting clear rules for doing business in an honest and fair way.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Economic Performance<\/strong><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Sustainability is frequently misunderstood as focusing exclusively on environmental and social issues.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, sustainable procurement must also generate long-term economic value.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Traditional procurement savings remain important, but economic sustainability extends beyond immediate cost reductions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Relevant indicators include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Lifecycle costing.<\/li>\n\n\n\n<li>Total cost of ownership.<\/li>\n\n\n\n<li>Supplier resilience.<\/li>\n\n\n\n<li>Long-term value creation.<\/li>\n\n\n\n<li>Supply continuity.<\/li>\n\n\n\n<li>Financial stability of suppliers.<\/li>\n\n\n\n<li>Procurement contribution to organisational performance.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">These indicators help procurement teams find a balance between saving money now and making sure their company stays strong and successful in the long run.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Selecting the lowest-cost supplier does not always represent the greatest value.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sustainable procurement requires broader consideration of long-term economic impacts.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Innovation and Resilience<\/strong><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">The final dimension reflects the increasingly strategic role of procurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Today, companies want their suppliers to do more than just provide goods and services. They also expect them to bring new ideas, help with technology, and make sure the company can handle tough times.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Potential indicators include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Supplier innovation initiatives.<\/li>\n\n\n\n<li>Collaborative improvement programmes.<\/li>\n\n\n\n<li>Digital procurement capability.<\/li>\n\n\n\n<li>Business continuity planning.<\/li>\n\n\n\n<li>Supply chain resilience.<\/li>\n\n\n\n<li>Supplier adaptability.<\/li>\n\n\n\n<li>Continuous improvement performance.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Recent global disruptions have demonstrated the importance of resilient supply chains.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Organisations capable of maintaining supplier continuity during periods of uncertainty often achieve stronger long-term performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Consequently, procurement sustainability should also recognise supplier capability to support future organisational resilience.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Integrating Sustainability Indicators into Procurement Performance<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These five dimensions should not be used to replace the usual ways we measure how well our procurement is doing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Rather, they complement them.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Cost savings remain important.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Quality remains important.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Delivery performance remains important.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, procurement performance should no longer be evaluated solely through operational efficiency.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A modern procurement scorecard should balance operational excellence with sustainability performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Only then can organisations develop a more comprehensive understanding of procurement&#8217;s strategic contribution.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>From Compliance to Value Creation<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For a lot of companies, buying things in a way that is good for the planet and people starts with following the rules. They make sure their suppliers do what the law says, behave in a way that is fair and honest, check they are not doing anything bad, and meet some basic standards for being kind to the environment and treating people right. This is important because it sets a minimum standard for being a responsible buyer and helps avoid problems that could hurt the company&#8217;s reputation or cost them money.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, compliance should not represent the final destination.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Compliance asks whether suppliers meet minimum expectations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Strategic procurement asks whether suppliers create long-term value.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This distinction is important because organisations increasingly compete through innovation, resilience and responsible business practices rather than cost alone. Procurement therefore has an opportunity to influence organisational competitiveness by selecting suppliers that contribute not only to operational efficiency but also to sustainable value creation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sustainability indicators enable this transition.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Instead of just checking if suppliers meet our requirements, procurement teams can look at how they help us achieve our bigger goals. When suppliers show they are getting better at protecting the environment, have good governance, can innovate, and work well with others, they often bring value that goes far beyond just one purchase. This can help us make more informed decisions about who we work with and how we can work together to achieve our objectives. By taking a closer look at these factors, we can find suppliers who not only meet our needs but also help us create more value in the long run.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Consequently, procurement performance should be viewed through two complementary perspectives.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The first thing to consider is how well something runs, which is often measured by looking at things like how much it costs, how good it is, how quickly it is delivered, and whether it meets the rules.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The second is strategic value creation, measured through sustainability indicators that reflect procurement&#8217;s contribution to organisational resilience, responsible business conduct and long-term performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When we look at procurement from different angles, we get a better sense of how well it is working.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Practical Implications for Organisations<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Lots of companies say they care about buying things in a way that is good for the planet, but they do not always do it right. One problem is that they try to track too many things at once, like how much energy they use or how much waste they make. This can be overwhelming and does not really help them make better choices. It is like trying to change too many things at the same time, and it ends up being more trouble than it is worth.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A more effective approach is to begin with a small number of carefully selected indicators that align with organisational priorities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Procurement leaders should first identify the sustainability issues that are most material to their organisation and supply chain. For some organisations, environmental performance may represent the highest priority because of climate commitments or regulatory obligations. Others may focus more heavily on supplier governance, ethical sourcing or social responsibility depending on their industry and stakeholder expectations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Once priorities have been identified, procurement indicators should satisfy several important characteristics.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To start with, indicators need to be relevant and actually measure things that matter to the organization. They should be connected to the organization&#8217;s goals and help make better procurement decisions. This means they should focus on aspects of procurement that directly support what the organization wants to achieve.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is also important that these indicators are something we can actually measure. We need to have good data that we can trust, so procurement teams can keep track of how things are going over time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To really make a difference, indicators need to be useful and lead to action. Just measuring something is not enough to improve how we buy things. Indicators should help us make good decisions, work better with suppliers, and keep getting better at what we do.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Things need to keep changing with the times. The world of procurement is always shifting &#8211; new rules are being made, people&#8217;s expectations are changing, and we are facing new sustainability problems all the time. So, we should regularly check in on our procurement scorecards to make sure they are still working for us. This way, we can keep them relevant and make sure we are on the right track.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Technology will also play an increasingly important role.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With the help of digital tools like procurement platforms, supplier management systems, and advanced analytics, companies can now easily collect and track data on how sustainable their procurement processes are. As these digital tools get better, businesses will be able to make sustainability a regular part of their decision-making when it comes to buying things, rather than just doing it manually every now and then. This means they can make more informed choices that are good for the environment and society and do it all automatically.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To make sustainability work, you need to pick the right measures and also make sure they are part of how you buy things, evaluate suppliers, and make decisions in your organization. It is not just about choosing the right indicators, but also about putting them into practice in everyday processes. This way, sustainability becomes a natural part of how your organization operates, from buying supplies to making big decisions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Implications for Procurement Professionals<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The evolution of procurement presents both opportunities and responsibilities for procurement professionals.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Technical procurement competencies such as negotiation, contract management and sourcing remain fundamental. However, procurement professionals are increasingly expected to understand sustainability risks, stakeholder expectations, ESG reporting requirements and responsible supply chain management.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This changing environment requires procurement professionals to adopt a broader perspective of procurement performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Instead of asking:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>&#8220;How much did procurement save?&#8221;<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Procurement leaders should increasingly ask:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>How has procurement reduced supply chain risk?<\/li>\n\n\n\n<li>How has procurement strengthened supplier resilience?<\/li>\n\n\n\n<li>How has procurement contributed to environmental improvement?<\/li>\n\n\n\n<li>How has procurement supported responsible business practices?<\/li>\n\n\n\n<li>How has procurement created sustainable organisational value?<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">These questions reflect the expanding strategic role of procurement within modern organisations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They also show why we need to change how we measure procurement as its role changes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the future, the people in charge of buying things for companies would not just be good at getting lower prices. They will need to be able to do a lot more than that.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They will be distinguished by their ability to create sustainable value through informed procurement decisions supported by meaningful performance measurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Future Directions<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The growing importance of sustainable procurement presents significant opportunities for both researchers and practitioners.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We need to do more research to come up with ways to measure sustainability that actually work in real-life situations. Right now, we have some general guidelines, but companies need simple and practical tools to help them make decisions about buying things and working with other businesses. These tools should be easy to use and understand, so companies can make informed choices that are good for the environment and good for their business. This is important because companies operate in different ways and have different needs, so we need to find ways to measure sustainability that can be applied in many different contexts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">From a practitioner perspective, organisations should move beyond viewing sustainability as a separate reporting requirement. Instead, sustainability should become an integral component of procurement strategy, supplier management and organisational performance measurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As stakeholder expectations continue to increase, organisations capable of effectively measuring procurement sustainability will be better positioned to demonstrate accountability, improve supplier performance and strengthen long-term organisational resilience.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The future of sustainable procurement therefore depends not only on stronger sustainability commitments but also on stronger sustainability measurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Conclusion<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Procurement has changed dramatically.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">What was once regarded primarily as a purchasing function has evolved into a strategic capability that influences organisational resilience, innovation, governance and sustainable value creation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Organisations increasingly expect procurement to reduce supply chain risks, strengthen supplier relationships, support ESG objectives and contribute to long-term organisational success.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Even though things have changed a lot, the way we measure how well procurement is doing is still based on old ideas that don&#8217;t really fit anymore.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Cost savings remain important.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Quality remains important.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Delivery performance remains important.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These indicators will continue to form the foundation of procurement performance management.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But that is not enough anymore.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Modern procurement requires broader measures that recognise environmental stewardship, social responsibility, governance excellence, economic sustainability, innovation and resilience.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sustainability indicators provide organisations with the ability to translate sustainability ambitions into measurable procurement outcomes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They also help people who buy things for companies make smarter choices.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They strengthen accountability.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They encourage supplier improvement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They support organisational resilience.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They show how buying things can help a company do well in the long run.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These days, what a company buys are just one part of what makes up its procurement process. It is about so much more than that now.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It is defined by the value procurement creates.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If procurement has evolved, procurement measurement must evolve as well.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The way we buy things is going to change, it is not just about making better purchases.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>It will depend on measuring better.<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>About the Author<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Ahmad Khushairy Mohd Nor is a procurement practitioner and Doctor of Business Administration (DBA) candidate at the Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia. His research focuses on sustainability indicators for procurement and sustainable supply chain management, with the aim of developing practical frameworks that help organisations integrate sustainability into procurement performance measurement.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Why Sustainability Indicators Are Essential for Modern Procurement Ahmad Khushairy Mohd Nor\u00b9, Dr. Adura Ahmad\u00b2 \u00b9Doctor of Business Administration Candidate, Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia \u00b2Senior Lecturer, Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia This article is based on the author&#8217;s Doctor of Business Administration (DBA) research [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34,39,36],"tags":[2100],"class_list":["post-8028","post","type-post","status-publish","format-standard","hentry","category-general","category-news","category-opinion","tag-longreads"],"_links":{"self":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/8028","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/comments?post=8028"}],"version-history":[{"count":1,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/8028\/revisions"}],"predecessor-version":[{"id":8029,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/posts\/8028\/revisions\/8029"}],"wp:attachment":[{"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/media?parent=8028"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/categories?post=8028"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/malaysian-business.com\/portal\/wp-json\/wp\/v2\/tags?post=8028"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}