Last week we attended the third annual Amazon Business Exchange (ABX) event alongside more than 1,500 procurement leaders from all sizes of private and public sector organizations across Europe. It was another well-attended and well-executed success for Amazon Business and a great opportunity to learn from Amazon Business customers, senior procurement leaders and industry experts about their successes in driving procurement efficiency savings through streamlining their everyday purchasing processes.
A running theme for the day was how procurement can drive digitalization, have a strategic impact on the organization, and bolster its sustainability efforts and goals.
In the opening keynote, we heard from Nabil De Marco, Director of Europe at Amazon Business. He talked about the evolving purchasing landscape and gave some insight into how Amazon Business has grown to accommodate this evolution, focusing on what it has achieved to help customers turn their procurement into a driver of sustainable business.
From the Luxembourg office, he talked about the tremendous changes he has seen at Amazon Business since its European inception in 2017 — an investment of €78 billion in Europe alone, a rise to more than 135,000 permanent employees and more than 270,000 jobs supported by independent sellers, and business extended to nine countries since it began.
“This rapid growth,” he said, “has focused on starting with the customer and working backwards.”
“Amazon started with the customer,” he said, “making their lives easier by saving them time and money. But there have always been procurement organizations doing some sort of business on Amazon, so we asked ourselves, ‘How can we make it better for them? Can we combine the ease of Amazon with technology to save businesses time and money too, and help them conform to agreed procurement processes?’ ”
Essentially Amazon Business has evolved to take the convenience of its e-commerce site and optimize it for the needs of B2B businesses, with various intelligent tools and features to help increase efficiency and improve productivity.
“We now provide access to hundreds of millions of products and serve more than 5 million business customers worldwide, accounting for $25 billion in sales this year. But what really matters,” he said, “is that it allows organizations to dedicate their teams’ resources to more strategic work.”
He went on to explain how Amazon Business played its role in delivering critical medical supplies during the pandemic last year, but recognizes that challenges still exist in different forms for the business buyer. “We’ve learnt a lot about customer needs through that,” he said, “and the type of technology customers need that can pivot and scale as their purchasing needs change.”
With that in mind he highlighted two launches this year targeted at specific customer needs: a mobile app for buyers that need mobility, like in restaurants where purchases and approvals need to be done on the go, and a product sustainability feature that helps the buyer select more sustainable products.
Designing procurement to enable sustainability
Continuing the sustainability theme, a whole panel session was dedicated to how the guest speakers are positioning procurement to drive sustainability goals:
Christopher Kallscheid, Country Manager of Spain at Amazon Business talked to Fernando Hinojosa Perez-Montaut, Head of Global Strategic Sourcing & Corporate Procurement Processes and Systems at Acciona (specializing in the development and management of infrastructure and renewable energy), and Daniel Mendes da Silva, Procurement Director for Europe at Amazon.
In a recent survey of a cross section of 250 buyers conducted by Amazon Business, 39% said improving sustainability was their top priority (not one of their top priorities alongside the likes of savings or risk management, but the top priority).
“To achieve better sustainability,” said Kallscheid, “we’ve learnt that you need to look deeper into your supply chains and processes, and at establishing new policies, and you need to look at your partner ecosystems. Amazon Business believes it can help customers to build those sustainable supply chains.”
He explained the progress of building their end-to-end sustainable purchasing experience:
- Making it easier to discover Climate Pledge Friendly products with sustainable certification, to help customers’ commitment to zero emissions
- Frustration-free packaging that is right-sized and made from renewable materials to reduce waste
- AI-powered mechanisms to drive buyers to more sustainable products with progress reporting capability — critical for large enterprises and public sector organizations with legal mandates to satisfy
- New features for Business Prime members like the Guided Buying Preferred Policy
- Analytics to give visibility of spend on certified products
He then asked the panel some interesting and practical-based questions about how procurement can implement sustainable buying practices.
After answering why sustainability is important for their respective organizations, the panel talked about how procurement can be an enabler for sustainability.
Perez-Montaut explained that procurement is absolutely key to this. “The better the supply chain, the better it makes us,” he said.
At Acciona, procurement is managing 50,000 suppliers and €36 million of spend annually. They have been doing sustainability for a long time and were the first organization to build a wind farm in Spain. He shared his company’s roadmap for procurement.
From a risk management perspective:
“There’s a big window of opportunity,” he said, “for using technology to manage risk, not just financial but for reputation and sustainability.” They are promoting the transition from a “monitoring” model to a “feedback and reward” model, giving visibility to suppliers of their strengths and weaknesses, providing recognition and installing collaborative improvement programs.
“We also focus on ‘social safeguards’ — this is where we put people at the center: diversity, equality, training, health and safety, and so on. And we make sure all suppliers meet a minimum commitment to sustainability. That’s hard to do,” he said. “So you have to go beyond monitoring to helping and supporting them to achieve ESG requirements through training.”
From an opportunities perspective:
“You have to drive a sustainability commitment through a win-win SRM program,” he said. “This means identifying and promoting positive-regenerative alternatives to meet business demands and decarbonize the supply chain. So we co-innovate with suppliers to provide solutions towards achieving SDGs. And then this must be extended to suppliers’ suppliers.”
Mendes da Silva agreed and said that procurement has an opportunity to influence the supply base through process and policy:
- With high standards in onboarding, we can see how suppliers perceive sustainability, because it will vary.
- We have to understand the global sustainability agenda and look at where we can contribute, because procurement is the external-facing interface of the supply chain and must design a roadmap with the business.
- We are the internal interface for business too, and when we have input on the design or specification of a product, it can trigger a sustainability improvement, like CO2 emissions.
- We must align with the C-level roadmap and break it down in terms of projects that procurement can support.
- And we should proactively find new areas of opportunity.
From a practical perspective:
Perez-Montaut takes a 3Rs approach to their master plan:
- Responsibility — define their responsibilities to the stakeholders and to society
- Resilience — add a positive contribution, for example, a category management model that lets ESG decisions flow down to the projects across the globe, ESG training and build ESG objectives into employees’ KPIs
- Regeneration — have concrete systems and measurements, take collective actions and constantly revisit policies like human rights
Mendes da Silva advises:
- Communicate your mission statement to the business
- Consider a restructuring and creating a chief sustainability role, have clear KPIs and tangible targets
- Instigate a culture shift from cost savings to sustainability-driven value
- Have targets that correlate with the work the business teams are doing
- Look at the procurement process and establish requirements that correlate with sustainability in how we select suppliers and manage relationships
- Work with the business on clear opportunities where we know we can make a difference, be proactive, drive the agenda and take opportunities to the Board, without being asked to!
“Importantly,” he said, “remember that even the small contributions are important. They all add up — everything matters.”
That was an appropriate way to end a very informative session from people who are clearly putting deep thought and effort into this agenda for their organizations. You can hear the whole of this panel discussion by registering for the watch-on-demand session here.
And visit here to find out more about how Amazon Business supports enterprises to drive sustainability.
Summing up the success of the event in a recent press release, Molly Dobson, Country Manager UK & Ireland at Amazon Business, said:
“ABX has once again shone a spotlight on the most agile procurement teams and their best practices. It’s been exciting to see business leaders driving transformation in so many areas, from saving time, to lowering company costs, to developing and meeting sustainability goals. The vital role that procurement processes can play to enable sustainability was demonstrated by numerous speakers at the conference. Amazon Business is committed to supporting our customers’ broader organizational goals and empowering them to build a more sustainable supply chain.”
We look forward to next year.