The impact of sustainable procurement impact in supply performance and environmental outcomes

Abstract

Procurement is concerned with the identification and acquisition of materials, goods and services needed by an organization to support its operational activities towards the achievement of its corporate objectives. Procurement affects a firm’s financial performance to some extent since a greater portion of firms budget is spent on procurement of goods and service. Sustainable procurement is one of the key indicators for measuring organization’s economic, social, and environmental performance. Sustainable procurement is concerned with procurement of goods and services that are environmentally friendly. Sustainable procurement and green supply chain learning has impacts on supply chain performance in diverse ways. However, there was no literature on the effect of sustainable procurement on supply chain surplus or profitability on Marico. This study seeks to evaluate sustainable procurement on supply chain surplus and mediated by green supply chain learning. The findings revealed that both sustainable procurement and green supply chain learning have a positive and significant effect on supply chain surplus. Also, green supply chain learning was found to play a positive and significant mediating role between sustainable procurement and supply chain surplus. Managers should understand that the pursuit of sustainable procurement is potentially beneficial to the organization. Thus, incorporating sustainability strategies into the procurement system should not be seen as a burden, but rather an opportunity that has potential benefits for the organization and the entire supply chain. The model is proposed and tested only on FMCG industry.