Tag Archives: corporate social responsibility

No More Excuses: Procurement Needs To Take Ownership Of CSR

Supply chain is one of the most critical areas of CSR. So why aren’t more procurement teams taking greater ownership when it comes to establishing policy?

CSR, ethics and sustainability – three topics that it’s hard to get away from in procurement. The greater focus enabled by the Internet and social media means there’s no hiding place for organisations. And there’s certainly no acceptance of organisations burying their heads in the sand.

Organisations are now including these activities in strategic objectives. And as procurement’s strategic influence grows, the profession has greater responsibility for its role in CSR objectives as a whole. In light of this, it’s hard to understand why procurement and supply chain aren’t taking ownership of CSR activities in their organisation.

The Expert View

Gaining better insights into the current situation means speaking to the people on the ground. And that’s exactly what has been done by the ISM Committee for Sustainability and Social Responsibility. The Committee surveyed its members exclusively for Procurious on three questions relating to current CSR practices.

While the responses highlighted a wealth of knowledge in the profession, they also showed that there’s still plenty of work for procurement to do to take more ownership. Happily, there were also some practical suggestions on how procurement can help their organisations improve their CSR efforts.

Here’s what the members had to say:

To what extent do you think that Procurement and Supply Chain professionals “own” CSR?

The responses highlighted that procurement’s ownership was very much dependent on the organisation in question. However, there was a consensus that, in all cases, procurement and supply chain professionals needed to play an active role in the development and execution of CSR policies and initiatives.

While some aspects of CSR strategy are not supply-chain related, the majority of risks and opportunities are. Both social and environmental ‘hotspots’ exist within the extended supply chain, leaving it exposed in the event of any issues. Members stated that most organisations started with a materiality assessment. This assessment was usually focused on mitigating, or improving, financial and reputational loss. Importantly, supply chain was frequently seen as a critical area.

As a result, it was felt that procurement and supply chain professionals needed to be engaged in the process.

What is the real damage of a CSR breach?

The general consensus was that a CSR breach caused major damage in three key areas:

  • Shareholder Value
  • Brand
  • Human Cost

Consequences of a major or public CSR breach include:

  • An inability to recruit and retain top talent.
  • Losing the ability to differentiate the firm by its products, services and values in the marketplace.
  • Losing the opportunity to create an internal culture of commitment founded on ethics and a broader view of the firm’s role in the marketplace.
  • Financial loss through litigation, high cost of supplier replacement, brand, disruptions from labour disputes, etc.

Brands can be quickly damaged. A firm’s exposure can be quickly played out on social networks, within hours and minutes. However, one member of the Committee made an interesting observation on where the impact fell. “If the supplier has brand recognition, the buyer gets off the hook more for a CSR breach in the supply chain. If the supplier is unknown, (e.g. the contractor running the BP Deepwater Horizon rig), then the big brand takes the full brunt.”

This highlights the importance of strong policies, regardless of the size of the organisation.

What are your tips for professionals looking to improve CSR in their organisation?

Each member was asked to give three tips on how professionals can help make improvements in their organisation. There were so many good ones that we’ve been able to come up with a list of 8!

  • Understand the premise of sustainability – it’s not just being good, but meeting the needs of stakeholders impacted by decision. Any resulting actions by investors, business partners, employees, regulators and civil society will be of consequence. Top-down support is key.
  • Establish “rules to live” by and measure compliance across the entire organisation.
  • Create internal incentives for professionals to engage in sustainable purchasing. It’s important to use carrots as well as sticks.
  • A supplier code of conduct – with teeth – is considered best practice.
  • Collaborate with other parts of the organisation – procurement shouldn’t operate in a vacuum.
  • Use data to build the business case for sustainable supply chains.
  • Develop processes to identify risks in the supply chain and teach your suppliers these tools, so that they may employ them in sub-tiers.

Take Ownership Now

With CSR being such a critical activity for organisations, procurement can’t afford to be left behind. It’s time to step up to the plate, put procurement in the spotlight and take greater ownership of policies, processes and outcomes. With a wealth of supporting knowledge out there and so many professionals willing to help shape a robust CSR program, there’s really no excuse any more!

Big Ideas Summit 2016: Big Idea #13 – Maximise Social Impact

Procurement is no longer just about cost. Professionals should be looking put their organisation’s social impact at the heart of purchasing decisions.

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

Increase Social Impact

Hugh Chamberlain, Commercial Procurement Lead at Johnson & Johnson, challenged procurement professionals to buy from social enterprises in his Big Idea.

Buying from social enterprises allows procurement to add value to society, as well as meet CSR requirements. Hugh argued that buying social can also give buyers immense personal satisfaction, and a feeling they are making a real difference.

Catch up with all the delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

Want to find out more about Big Ideas 2016? And maybe what we have planned for 2017? You can visit our dedicated website!

If you like this (and you haven’t done so already) join Procurious for free today. Get connected with over 16,000 like-minded procurement professionals from across the world.

The Circular Economy Demands Procurement Collaboration

Faced with the dual challenge of sustainability and growth, businesses are looking to procurement collaboration to help.

Procurement Collaboration

Since the Global Financial Crisis in 2008, most established firms have reduced costs, focused their resources, and become more lean and efficient. Now, however, they face the challenge of how to grow. This will require the development and implementation of truly innovative products, services, and business models.

In this challenging economic climate, procurement professionals are being asked to do more with less. The efficiency of Procurement, as well as procurement collaboration, is now seen as a critical part of moving the business forward.

Research confirms the new picture

Recent research by Oxford Economics for Ariba and SAP shows that more than two-thirds of senior procurement executives and employees say procurement is “becoming more collaborative with other parts of the business”. These figures are also valid for Responsible Procurement.

According to Procurement Leaders Research from 2012 on how procurement aligns with other functions on CSR topics, 33 per cent responded that, “there is an informal communication between procurement and other functions”. 47 per cent stated that there is formal communication between procurement and other functions.

The Supplier Coach

Procurement collaboration with the supplier is also key, though it is also critical for the process, and the sustainable outcome, that procurement acknowledges its role as a ‘supplier coach’. Typically procurement is responsible for the Supplier Relationship Management part of collaboration, although there is a need for a more open interpretation of the relationship.

The relationship should build on a joint relationship with win-win approach, where both parties will be engaged in driving the sustainable agenda on an equal basis.

As a coach, the procurement professional should:

  • Ensure that the supplier is motivated to work with the company’s agenda.
  • Ensure that the supplier continuously improves by providing input for improvement.
  • Promote the supplier’s interest within the company.
  • Ensure that the supplier has the strategic capabilities, or the willingness, to contribute to the company’s long-term growth.
  • Develop effective communications both internally and externally with the supplier.

Need for Business as ‘Unusual’ 

Typically, a supplier will encounter CSR at the very beginning of the relationship via the supplier selection and evaluation process, through the risk management process, or through the settling of the contract.

No business can escape the fact that global economic conditions, the status and future availability of affordable resources, energy supplies, and a growing global population are creating an ever more complex business environment.

The limitations and growing problems of the linear economic model, that has served organisations well for many decades, demands that ‘business as usual’ is unlikely to be a winning strategy in the future. The winning strategy lies within the circular economy.

The Circular Economy

The Ellen McArthur Foundation defines the circular economy as “one which is defined as an industrial system that is restorative or regenerative by design”, essentially replacing the end of life concept with restoration.

It shifts business towards the use of renewable energy, eliminates the use of toxic chemicals, which impair re-use and aims for the elimination of waste through intelligent design of materials, products, systems, technologies and business models. We could call it circular innovation.

Supply chains are getting more complex every day in terms of the number of involved partners and the quality and degree of interdependency between them. One of the predictions in relation to the integration of circular thinking, is that complexity will increase.

Businesses operate in a globalised world, where the volatility of markets, the speed of technological progress and the pace of change in the economic and business environments, will continue to rise rapidly. As a result product life cycles are getting shorter and market demands become more and more unpredictable.

Collaboration with all types of partners, and their willingness and ability to share their knowledge, will be crucial and key to a successful development and integration of circular thinking.  

Key Questions

The key question is how procurement can advance procurement collaboration with suppliers on circular thinking in an effective way? How can procurement ensure that the suppliers are willing and able to share their knowledge?

In many companies it is typically a challenge to include suppliers in the front end of the innovation process. Procurement teams are often disconnected from the functions they serve and the markets they engage with. They are not fluent in the nuances of the business and hence lack experience and authority.

Also in many companies, procurement are used to innovation being an internal capability. They are not used to working together with external partners on delivering it.

For procurement to be successful in these innovation oriented supply partnerships, I believe that it requires new models for relationship building and collaboration. It also requires procurement collaboration and integration across the whole organisation.

There is a great opportunity for Procurement to take a leading position within an organisation and transform the company approach from a linear economy to a circular economy. In order to do this, procurement has to facilitate the change of supply partnerships from a pure cost orientation, towards a strong focus on joint collaboration and innovation.

Supply Chain Sustainability as a Competitive Advantage

Industry leaders understand that supply chain sustainability can be a competitive advantage. Utilised effectively, it brings a wealth of opportunities.

Sustainability Competitive Advantage

Read the first part of this article here.

Global brewing giant SABMiller embraces the idea that water is strategic. It cut its water consumption by 28 per cent, now only using 3.3 litres to make 1 litre of beer. It is on track to achieve its objective of 3 litres by 2020. Iconic sports brand Nike has adopted 3D printing to eliminate waste.

Companies not focusing their supply chain efforts on differentiation are at risk of falling behind. Innovation can also involve changing consumer behaviour. Here again, collaboration is key between different functions, from R&D to marketing and procurement and supply chain.

One of the three pillars of Unilever’s Sustainable Living Plan is to halve the environmental footprint of their products by 2020. They have developed a purpose-driven strategy to double their revenues, while still having a positive social impact. Their business model has put supply chain sustainability at the heart of strategy, and they use innovation to embrace it.

Cost of Sustainability

A common misbelief is that sustainable solutions cost more. In most cases, they are more profitable, with a faster return on investment. Business and sustainability go hand in hand, and better solutions have emerged, both for businesses and the planet.

True, there are more expensive examples. Traceable palm oil, which ensures zero deforestation during production, is one of these. However, renewable energy solutions, such as windmills and solar panels, can be profitable immediately.

Many companies also put a lot of effort in reducing transportation, with the objective to decrease gas emissions, as well as the transportation cost itself. From a labour perspective, the overall cost could be diminished by improving productivity and respecting minimum wage.

When companies take the long-term approach that sustainability requires,
 initiatives can be cost neutral or 
better. Some companies have increased their revenue by as much as 20 per cent, while reducing supply chain costs by up to 16 per cent. According to the World Economic Forum report written with Accenture, this has been done by implementing sustainable supply chain practices.

Best practices have been identified to support companies achieve a “triple supply chain competitive advantage” of increased revenue, reduction in supply chain cost and added brand value. The result is improved competitiveness and reduced operational risk.

Employee Engagement Key to Sustainable Success

46 per cent of CEOs reported that employees would be among the most influential groups in guiding their action on sustainability over the next five years – second only to consumers.

When it comes to employee engagement, it is important to communicate internally to all levels of the organisation. Best practice should come from within, and companies should ensure that their external actions on sustainability are also reflected internally.

Taking care of the workforce, engaging them in implementing a corporate commitment to sustainability, will drive greater productivity, and thus greater profitability.

Giving employees a purpose and empowering them to have ideas and find solutions at a local level could make a real difference in supply chain sustainability. It is more challenging to have sustainable operations in some global regions than in others. Leading supply chain executives encourage their teams to go beyond their own boundaries, inspiring, guiding and supporting them.

Companies who are leveraging supply chain sustainability as a competitive advantage are outperforming their less sustainable peers. Many studies show that these sustainability leaders have higher, faster-growing stock value, better financial results, lower risks, and more engaged workforces.

Aligning employees’ engagement with supply chain sustainability strategy is key to building an innovative, environmentally responsible, and socially conscious business. Workers on the front line are often in the best position to identify inefficiencies and propose solutions.

The best companies integrate their sustainability strategies into their employees’ day jobs. This is done by incorporating sustainability targets into the employee’s annual objectives, and incentivising them.

Shared Responsibility

Sustainability is the responsibility of everybody, but especially those involved in the supply chain who are in a position to act.

Communication and training are important factors in generating awareness across the workforce. To attract talent, particularly millennials and future generations, companies behind on the subject will lose in this battle too.

Many multinational organisations have set sustainability targets to be reached by 2020. Winning companies will master the balance between commercial gains and “it is simply the right thing to do”. They will embrace internal and external collaboration and will drive supplier and consumer behaviour.

In a world where social conscience is fed by social media, and fear of the speed and scale at which information can disseminate globally, it is crucial to behave responsibly. Those organisations which do not act now on supply chain sustainability face the risk of long term brand and reputational damage.

Reap the Benefits of a Structured Approach to Responsible Procurement

You are about to set out on the journey to make Responsible Procurement more integrated into your procurement processes.

Responsible Procurement

To reap the benefits – and win recognition – you will have to be well prepared, implement the right tools and processes, and communicate every achievement. But where to start? In this article, I share some things you should consider.

Define your commitment

Corporate Social Responsibility (CSR) is a major item on a CEO’s agenda. No annual report is complete without making reference to CSR performance, including the performance of an organisation’s suppliers. CSR is set to be the most influential mega-trend affecting the procurement function by 2020.

Many companies have worked towards Responsible Procurement for a while through a Code of Conduct. A Procurement Leaders CSR Survey in 2012 highlighted the following reasons for pursuing a Responsible Procurement approach:

  • Reduce reputational risk: 71 per cent
  • Moral obligation: 49 per cent
  • Create business opportunities: 36 per cent
  • Legal obligation: 34 per cent
  • Respond to consumer demand: 34 per cent
  • Satisfy investors: 23 per cent
  • Reduce cost: 18 per cent
  • Satisfy the management: 8 per cent
  • Repair reputational damage: 3 per cent
  • Other: 7 per cent

However, in order to reach new heights with your approach to Responsible Procurement, it is time to become more specific. You need to be able to communicate your commitment. This includes your approach to Responsible Procurement, as well as all the achievement targets that you have set out.

Focus on What is Relevant to You

I know of a lot of companies who have copied what everybody else is doing, only to then realise that the massive amount of data that they had collected was a massive waste of time – for both the company and the suppliers – as they had no system or processes in place to handle it, or react to it.

End-users and consumers are demanding. They read your website before they buy from you, and they’ll likely do the same before applying for a job in your company. The mistake many companies make is continuing to focus on everything – environmental, social and economic aspects. Are they all relevant to your business?

Start by asking some of the following questions:

  • You want to take your approach to new heights. Which heights?
  • What is it exactly that you would like to achieve with your Responsible Procurement approach?
  • Where would you like to be in 3, 5 or 7 years time?

You could also:

Conduct a workshop – Gather your most important stakeholders and try to find out how you will combine your company’s CSR, Procurement and Business strategies in one vision. Make sure outcomes are measurable and actionable. Use your own words and your company’s DNA, and don’t be afraid to prioritise. A brand needs a stand. What is your stand?

Gather a fact pack – Understand your company’s drivers, which industry sector standards your company needs to comply with, and what ‘footprints’ you and your suppliers are leaving behind. Most importantly, do some benchmarking.

What kind of approach do your competitors have to Responsible Procurement Management? How does it fit into your current supplier base? I often see that companies forget to look at the supplier base and try to apply a ‘one size fits all’ approach. For example, if you are a bank you don’t want to answer questions on animal welfare.

Develop a strategy  In order to create a strategy, it is important to define your expectations towards your suppliers and procurement professionals. Turn it around and look at what expectations they could have of you as a company. How will you communicate your approach? How will you measure on your progress? What kind of training will you conduct (if any)? Which kind of processes and tools will have to be “reworked”?

Develop a Code of Practice – Right now you might have a Code of Conduct. A ‘Code of Practice’ is a document which not only indicates what your commitment is, but also a document where you indicate what you want suppliers to do in order to meet your requirements.

You need to be much more specific, because that is what consumers expect you to be. And understand that this will show on the bottom line, because the more you share your ‘best practice’ with your suppliers, the more return on investment you will see.

One Last Piece of Advice

Do not underestimate the change management part of implementing a Responsible Procurement approach. Make sure that the top management, not only from your company, but also from your procurement organisation, is involved. You are starting out on a journey which will change your company over time.

Supply Chain Sustainability: A Strategic Responsibility

Supply Chain Sustainability is in the spotlight, thanks to the influence of social media. Companies realise that they must lead the way in this area.

supply chain sustainability

The supply chain function has evolved significantly over the past decade, becoming a key strategic pillar of business. Going beyond its core role
 of delivering goods on time, in full, it has a vital role to play in customer experience and brand perception.

Supply chain now has a seat in the boardroom in many organisations. Barely a week goes by without a supply chain issue – be it supplier failure or reputational risk – hitting the headlines and the share price.

The proliferation and influence of social media has put supply chain sustainability and risk firmly in the spotlight. Companies are publicly held to account for the actions of all tiers of their supply chain. This is why companies must lead the way on sustainability issues.

Supply Chain Sustainability

The sustainability discussion evolved from companies purely focusing on taking from society and wanting to give back, to realising there are risks to reputation from non-compliance.

Sustainability issues are often supply chain issues. For example, the introduction of the Modern Slavery Act aims to ensure that slavery and human trafficking is not taking place in businesses or supply chains.

Today, however, organisations are now seeing supply chain sustainability as a strategic opportunity that can increase competitive advantage.

Two main streams have emerged:

  • The risk dimension: what do companies have to do to avoid risk of brand damage?
  • The aspiration dimension: what is the strategy for the long-term survival of the  business?

Creating a Positive Impact

Supply chain sustainability is increasingly seen among senior executives as essential to delivering long-term profitability. A sustainable supply chain captures value creation opportunities and offers significant competitive advantages for early adopters and process innovators.

At the same time, supply chain is one of the key components for organisations 
to create a positive impact in the world, with an estimated 80 per cent of global trade passing through supply chains. Many large corporations, such as Nestlé and Nike, want to do good business and do the right thing.

A recent study on the global supply chain community saw three current trends emerging on supply chain sustainability in 2015/2016:

  • Industry collaboration is the biggest opportunity
  • Eliminating supply chain risks is the main driver
  • Traceability and environmental concerns are the biggest risks to watch out for

Industry Collaboration

Starting with ethical and responsible sourcing, supply chain professionals have begun to understand the importance of building long term relationships with suppliers. Having a win-win partnership is crucial. Companies who are a valuable customer to their vendors will have a considerable competitive advantage.

Organisations are demanding more 
from their suppliers. Traceability and transparency are key requirements. Companies sharing their big picture vision with their suppliers, and their role in the long-term strategy, will get more from their partners. Too many businesses are still failing to achieve this. Partnering with suppliers empowers them to unlock innovation quickly.

Working on more collaborative partnerships helps to minimise the risk factors too. Companies are liable for all tiers of their supply chains. Increased collaboration with others is vital to be
 able to efficiently assess all layers of the supply base.

Organisations can never 
be too informed if they want to prevent risk. They also need to demonstrate they have acted responsibly when risks are exposed. Companies must start with themselves, and build open and transparent relationships with their suppliers.

Codes of Conduct and Audits

Some pharmaceutical organisations,
 like Takeda, have recently established
 a supplier code of conduct in line with
 their international business ethics. They proactively audit and monitor their vendors to review performance in line with this code. It helps Takeda to have a much stronger supplier selection process, as they are able to build stronger relationships and reduce risk exposure.

Collaboration with other industry leaders can be very valuable in sharing information when it comes to supplier audits. Takeda recently joined the Pharma Supply Chain Initiative, composed of 20 companies. It has a supplier audit program and engages with the suppliers on behalf the member companies to make sure they comply. It also raises awareness from an environmental and ethical point of view.

Collaborative Platforms and NGOs

However, collaboration between businesses from the same industry is not widespread. Many companies fear a loss of commercial control and competitive advantage by working closely with others. As a result, there is an emergence of collaborative platforms. One of these is EcoVadis, which works with many global brands to provide supplier sustainability ratings for global supply chains.

Collaboration can also take the form of partnering with NGOs. They can help and guide organisations on environmental
 or ethical issues. Greenpeace is one such organisation. In the past they have worked with Kimberly-Clark to practice responsible forestry management, as well as Unilever and others on palm-oil sourcing. In building those partnerships, the willingness to talk is key, particularly when there is a history of conflict.

Supply Chain Sustainability can also be a source of competitive advantage for organisations. Stay tuned for the second part of this article to find out more.

Burritos and Ice Cream – Supply Chain Failure and Success

Burritos and ice cream – the contrasting fortunes of two organisations and the difference between supply chain failure and success.

Supply Chain Failure

Burritos and ice cream. Who doesn’t love them? Carne asada and guacamole. Chocolate and cherries. The combinations are endless, and so are the places that offer these tasty treats. So what can a burrito chain or an ice cream brand do to stand out from the crowd?

Chipotle and Ben and Jerry’s (known for burritos and ice cream, respectively) have both come to the same conclusion: leverage the supply chain and use it as a brand differentiator.

They have decided to draw customers in with high-quality ingredients and a transparent supply chain. Chipotle and Ben and Jerry’s as brands have both become champions of local suppliers, fresh produce, and organic and non-GMO foods.

However, if you’ve been watching the news over the past months, you’ve probably noticed one of these companies has been more successful in their mission than the other.

Supply Chain Failure

Chipotle has been plagued by outbreaks of food-borne illnesses in the past few months, to the point where they shut down all their restaurants for a day to address food safety issues. As a result of these outbreaks, there have been calls for the chain to centralise their procurement strategy and source from large, well-known suppliers, rather than working with small farmers who may not adhere to as stringent food safety standards.

Chipotle appeals to the coveted millennial market and a supply chain failure, and a failure to live up to their lofty supply chain goals, may have a severe impact on their brand value.

Ben and Jerry’s has succeeded in the arena where Chipotle has come up short. After being sold to Unilever, a multinational corporation, Ben and Jerry’s received certification as a B-Corp, essentially a company that doesn’t allow board influence to sidetrack their CSR efforts. In their case, their parent company may actually be an asset rather than an obstacle as Unilever itself is also known for ambitious environmentally friendly initiatives.

For example, the company has pledged to make a $90 trillion investment in infrastructure over the space of 15 years to build a sustainable economy and combat global warming. “Companies make up 60 per cent of the global economy. If they don’t play an active part, how can we solve this crisis?” said Unilever CEO Paul Polman.

The Role of Procurement

Procurement needs to play a central role in CSR efforts, especially when supply chain promises are a primary piece of the brand message. Procurement should be responsible for staying on top of current and potential suppliers, including second tier and beyond when possible, making sure they have the necessary qualifications to live up to your brand image.

Procurement also needs to be ready to pivot to new suppliers quickly in response to any supply chain disruptions, whether they are result of illness outbreaks, drought, or changing government regulations.

Where Chipotle failed, and failed big, was that it wasn’t just one outbreak — there were five in the space of six months. Even if they can’t be traced directly back to a weak link in the supply chain, rumours and public perception can still have damaging consequences. Of course, Chipotle isn’t the only company to have suffered from a supply chain failure. Read about a more extreme case here.

Both Chipotle and Ben and Jerry’s have proven supply chain doesn’t have to hide in the shadows; there’s a place for it in the limelight. After all, now more than ever, people want to know where their food comes from.

But from Chipotle we can see companies will suffer if they don’t live up to their brand promises. However, with proper alignment to business objectives and recognition as a strategic player, Procurement can help prevent this from happening.

Hillary Ohlmann is the knowledge base developer at DeltaBid, easy-to-use procurement management software.

Big Ideas in Procurement in Asia-Pacific

With a huge geographical area and diversity of cultures and industries, procurement in Asia-Pacific is both highly complex and fascinating.

Procurement in Asia-Pacific

Ahead of the Big Ideas Summit 2016 on April 21st, we are taking a look at the key issues facing procurement in the coming years. We have asked experts and influencers in our community to share their Big Ideas on the themes we will be discussing on the day.

Here, experts who work in procurement in Asia-Pacific, share their thoughts on the Big Ideas impacting organisations and industries in Procurious’ second largest market.

Gordon Donovan, Procurement & Supply Chain Manager, Metro Trains

Gordon DonovanTalent – With the release of the recent Deloitte CPO survey, attention has once again fallen on talent – acquisition, developing and retaining.

Over 60 per cent of CPOs feel that their teams do not have the skills needed to perform their roles. However training budgets have largely stagnated, if not fallen.

There is a feeling that the traditional methods of training are not delivering the results required, therefore the onus now falls on more applied learning programmes that have a direct correlation to the workplace.

The big idea here is to focus on these types of learning activities which will deliver an immediate ROI as well as taking the theory from the classroom to the application.

Supplier Pre-qualification – Procurement needs to be agile in responding to its stakeholders, both internally and externally. Procurement also needs to “get more done with less”. Therefore, attention is turning to dealing with a set of suppliers who have already passed the hurdles required to supply to an organisation.

The need to ask the same question multiple times adds to the lack of turnaround time in procurement, and frustrates suppliers. Pre-qualification allows these questions to be answered once, and also will allow procurement to have pass fail/rates for areas such as supply chain transparency and accreditation.

Accreditation – Accreditation of your supply chain is becoming the hot topic in procurement. Do you know who you are dealing with and how your suppliers operate? Are we are aware of the ethical and sustainable issues within procurement and within the wider supply chain?

The hot topic now for procurement in Asia-Pacific, and across the globe, is how do we accredit our suppliers/supply chains and how do we ourselves gain accreditation for our policy and process to deliver value to our organisation.

Madeleine Tewes, Project Manager, Australian Maritime Safety Authority

Madeleine TewesInternationalisation – Traditional, family-controlled businesses across Asia are increasingly choosing to internationalise. Some Governments are supportive of this internationalisation. For example, one of the core tenants in China’s 2016 – 2021 Five-Year Plan is internationalisation, with many Chinese companies expected to ‘go global’ in this period.

As part of this process, many businesses are now looking to American, European and Australian consultancies and technology providers to radically overhaul their business functions and processes including procurement.

The overhaul includes tasks like introducing business English into meetings and contracts, expanding supplier bases, implementing technology to automate processes and provide greater spend visibility and even setting up procurement teams where before all that existed was purchasing clerks within a Finance team.

Mark Gibbs, President of SAP Greater China, notes that China is SAP’s second home, and that the trend of internationalisation is continuing to support the “massive cloud computing and e-Commerce expansion” that has been in progress over the past few years.

Innovation driving competitive advantage – Singapore has a focus on pioneering advances in innovation and driving competitive advantage for growth according to Teo Lay Lim, MD, Accenture Singapore and ASEAN.

More broadly in Asia, innovation is increasingly being recognised as the key to sustainable growth by companies around the world and as Capgemini research points out, innovation has evolved from a purely internal capability, to a collaborative process with the external network of supply partners.

Therefore, the ability of procurement to work with suppliers to identify and execute innovation within existing contracts, and to stimulate innovation outside of existing arrangements, is a key part of the procurement value proposition.

Some simple observations from Singapore include having incentive schemes in place relating to innovation in supplier contracts, having innovation as an agenda item on regular meetings with key suppliers as well as internal stakeholders, and having KPI’s in place which reward procurement team members for focusing on innovation, rather than relying purely on traditional savings or throughput metrics.

Corporate Social Responsibility – Research conducted by the Harvard Business School found that organisations who focus on corporate social responsibility (CSR) significantly outperform their competition in terms of stock market and financial performance.

One Singapore-based organisation, Fuji Xerox, describes their view of CSR very clearly, “…forging a link between long-term competitiveness and the sustainable development of society and the company…”. This seems to be a view echoed by a growing number of organisations across Asia.

Each of these organisations will have a different ways of using their procurement team to support their organisation’s focus on CSR. However, an IBM IBV CPO study found that 97 per cent of successful and influential procurement teams are significantly involved in their organisation’s CSR initiatives, compared to 61 per cent of average procurement teams.

Regardless of the current maturity of a procurement team though, or if it is the organisation driving these initiatives or procurement lobbying for them, clear KPIs (results driven rather than process orientated ideally) will allow procurement to demonstrate the value it is providing to the organisation.

Do you work in procurement in Asia-Pacific? What’s your Big Idea for the future of the profession? Let us know and we could be discussing them on April 21st.

Want to know more about Big Ideas 2016? Then visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.

Big Ideas in Procurement in Africa

Procurement in Africa receives a lot of press, not necessarily all of it positive. But as the profession develops, more ideas will be generated by its professionals.

Procurement in Africa

Ahead of the Big Ideas Summit 2016 on April 21st, we are taking a look at the key issues facing procurement in the coming years. We have asked experts and influencers in our community to share their Big Ideas on the themes we will be discussing on the day.

Here, our experts and influencers share their thoughts on the Big Ideas impacting organisations and industries in procurement in Africa.

Elaine Porteous, Freelance business writer in Supply Chain and Procurement

Elaine PorteousHow can procurement foster innovation from its key suppliers? Is it a case of triangulation or strangulation?

My contention is that many of the creative suggestions and innovative ideas arrive and die in procurement. Why?

  • I’m too busy for this
  • Not my job
  • Don’t know who to pass it on to
  • What is the supplier trying to get from us?
  • What’s in it for me?

If we talk about supplier innovation, we are asking our key suppliers to help us with a problem that we need to solve. But who engages with the supplier to discuss his ideas? Procurement.

And then what? The cycle begins again. My Big Idea is that procurement leaders need to teach procurement people how to deal with supplier innovation.

Procurement - Where Innovation Goes to Die?
Procurement – Where Innovation Goes to Die?

Mervyan Konjore, Managing Director & Social Change Measurement Specialist, Measure Value Ltd

Mervyan KonjoreMy Big Idea looks at Corporate Social Responsibility programmes and the gap between aspirations to make the world a better place, and creating a better world.

Many companies have adopted and integrated Michael Porter and Mark Kramer’s premise about the link between competitive advantage and corporate social responsibility (CSR), by finding ways to incorporate suppliers in their value chain, upskill, train and capacitate staff and give back to communities where they operate. 

However, the impact of these social programmes are still largely assessed using either financial metrics or anecdotal reports, both of which fall short of capturing changes in behaviour such programmes strive to effect. 

As companies come under greater scrutiny regarding whether their social programmes transcend statutory compliance, the realisation that there is a need for different measurement metrics is slowly starting to dawn. 

There is a need for measurement metrics capable of helping companies determine the gap between aspirations to make the world a better place, and creating  a better world. Such metrics need to capture, quantify and determine the impact of and value created by CSR programmes. Quantifying the changes in behaviours can allow organisations to see the impact of these programmes in people’s lives.

Do you work in supply chain or procurement in Africa? What’s your Big Idea for the future of profession? Let us know and we could be discussing them on April 21st.

Want to know more about Big Ideas 2016? Then visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.

Is Your Company’s Product Responsible Enough to Buy?

Is your company’s procurement ‘responsible’ enough? Which pressures and stakeholders are the most powerful ones for your company?

socially responsible procurement

According to a 2012 study by Procurement Leaders, 61 per cent of organisations are driven by end-customers. Governments and regulations represent the second-most influential pressure that organisations face, followed by 48 per cent of organisations that embed CSR principles in order to meet employee expectations of working for a responsible company.

The above underlines that if you do not have CSR activities in place in the procurement function (and the company in general), then you take the risk that your end-consumer will abandon your brand. Conversely, there is also a business opportunity, as consumers are becoming increasingly willing to pay a premium for CSR labelled products.

What does responsibility mean?

Responsibility, or in procurement terminology Responsible Procurement Management, can be divided into 3 main categories: environmental, social and economic.

Practically speaking, Responsible Procurement is about defining a set of mutually compatible requirements, specifications, and criteria that favour protection of the environment, social progress, and economic development. You do this by identifying resource efficiency, improving the quality of products and ultimately by optimising costs.

In short, you could say that Responsible Procurement is about increasing a company’s profit, improving its strategic supplier relationships, and strengthening its brand, while remaining vigilant towards competitors and revolutionising their procurement strategy.

What does this mean to your company?

From an environmental point of view, your company should ensure that natural resources that are extracted and processed into goods and services are consumed in a more efficient way – getting more out of less. By changing the way we produce and consume goods, we can still limit the impact that climate change is bringing about.

From an economic and social perspective, your company has to ensure basic human rights and economic development, regardless of age, gender, nationality, religious belief or economic status.

How could your company get started with the journey?

Risk in Responsible Procurement is the probability that there will occur violations of the company’s or its key stakeholders’ values and perceptions. Determining a company’s risk profile is specific to each particular company.

Some companies will choose to focus on suppliers where the company has some bargaining power, or suppliers who have a strategic importance to the company. Others choose to target all of them.

Creating the risk profile must then take into account the following:

  • Risk level: Is it a strategic or an operational risk?
  • Probability: Indicate the probability of the risk occurring. Do you consider this as high, medium or low risk?
  • Impact: What impact on the organisation would there be in the event of the risk occurring? Again use high, medium or low.
  • Risk treatment: You should indicate the appropriate treatment for the risk. This could be: avoid risk, reduce or control probability, reduce or control the impact, transfer risk or accept risk.
  • Owner: The owner is the person who is accountable for taking action or carrying out the risk treatment.
  • Current status: Detail the current status of the risk. For example, has vital information been gathered?

Start managing your risks

Following the risk assessment the next natural step will be to look for ways to manage the risks. Risk management options will be particularly affected by the following factors:

  • What bargaining options does your company have over your suppliers?
  • Is your company a major customer or just one among many?
  • Who are the drivers of the value chain; is it producer or consumer-driven?
  • To what extent are subcontractors used, and how big a role do they play in the manufacture of products: for example, in situations where the supplier is a wholesaler, it may be necessary to identify the actual manufacturers.
  • How many financial and human resources is needed to work with it?
  • How far back in the chain will it be necessary to manage the risks?

Don’t give up – though the picture must be right

When Procurement Leaders carried out their research in 2012, they asked participants how important CSR was currently in their respective organisations. 42 per cent of the respondents said it was ‘Very Important’, while 38 per cent said it was ‘Important’.

When asked about how long their CSR policy had been in place, 36 per cent stated 1-3 years, while 30 per cent stated 4-6 years. What was clear from the research was that nobody wanted to be left behind, nobody wanted to be seen as a laggard in this field. Appearances matter.

The most important message is, though, that the actions you take must be equal to the picture you draw to the public.