Tag Archives: social impact

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.

Why Procurement Should Invest In Social Enterprise?

Have you ever bought the Big Issue? Watched Jamie Oliver’s Fifteen? Shopped at a Co-op?

These are social enterprises which are in our communities, on our high streets; and range from coffee shops and cinemas, pubs and leisure centres, to banks and bus companies.

social enterprise

What is a social enterprise? The simple answer is an organisation that seeks to be financially successful while creating social and/or environmental impact. Social enterprises can be structured as a for-profit or non-profit, and may take the form of a co-operative, mutual organisation, a social business, or a charity organisation.

As the diagram below indicates, what differentiates social enterprises from other businesses is that their social mission is at the core of their offering, with profits reinvested in the company or local communities.

Social Enterprises
Social Enterprise Structure

 

The unique structure of social enterprises means that a financial goal may not exist to benefit investors, but rather local communities and social activities.

Social Enterprises in Action

Social enterprises are an integral part of the United Kingdom. The Key Fund is the biggest UK regionally-based social investor, operating across Northern England. The Key Fund focuses on supporting disadvantaged communities, offering to invest in community projects which aim to have an impact on the local community and the environment.

Other examples of social enterprises in the UK include:

  • Higher Rhythm Ltd – a not-for-profit company established in 2001 to offer high quality musical, media and creative services, and  opportunities to local communities.
  • The Create Foundation – a debt information provider aimed at helping people get themselves out of debt and living a normal life, free from financial problems. Their social goal is to provide education on finance and making informed decisions with money.
  • Refurnish – a company which aims to reduce landfill waste by providing both new and pre-owned furniture and electrical goods to the community.

Social Enterprises UK is the national trade body for social enterprises. Members comprise of social enterprises, private businesses, charities and public sector organisations, who all support the vision of a world where social enterprise involvement in business is common practice.

Society Profits: Social Enterprise UK 

Peter Holbrook & Social Enterprise UK

Peter Holbrook is Chief Executive of Social Enterprise UK. Social Enterprise UK’s key activities centre on informing and influencing the policy agenda, promoting the benefits of social enterprise, and undertaking research to expand the social enterprise evidence base.

Holbrook says that, through Social Enterprises UK, “we have a unique opportunity to promote an economic model that can change not only the way we do business, but also society at large.”

The Guardian has highlighted Peter Holbrook’s innovative, community-led approach to regeneration, tackling health inequalities, and providing public services in some of the UK’s most deprived regions. This has also lead to a host of admirers, including the former prime minister, Gordon Brown, and current Prime Minister, David Cameron.

Timo Worrall & Social Impact Through Procurement Initiatives

Timo Worrall is responsible for the procurement of Facility Services at Johnson & Johnson. He is a key driver in implementing the ‘Social Impact Through Procurement’ initiative in the UK, and introducing social enterprises into the facilities supply base.

In 2012, the UK passed a law designed to transform the way public bodies buy services. It required all relevant organisations in England and Wales to consider how the services they commission and procure might improve the economic, social and environmental well-being of an area.

One way for companies to meet this legal obligation is by working with social enterprise suppliers. J&J choose to buy from social enterprise suppliers, as it aligns with the company’s initiatives of backing supplier diversity, improves the company’s reputation, and can potentially increase revenue over time.

J&J are leading the way in taking these steps, and ensuring that their procurement activities generate positive social impact. Commercial Procurement Lead at J&J, Hugh Chamberlain, stated that they are taking action and supporting people often termed “furthest from employment”. The ‘Social Impact through Procurement’ initiative aims to create at least 150 jobs for these people by 2020.

“From a procurement perspective it means we can help people to lead happier, healthier lives simply by the way we spend money in our supply chain,” Chamberlain  says. “We can provide a holistic healthcare solution and play our part in things that we wouldn’t normally. It’s a tremendous opportunity and it really resonates with procurement folks.”

J&J’s current social enterprise suppliers include film company Inside Job Productions, and grounds maintenance and facilities services supplier Blue Sky, both of which support ex-offenders. Another is Haven Products, which employs disabled people and provides contract packing, quality inspection, secure storage, printing and mailing.

Why should procurement invest in social enterprise?

An increasing number of organisations are ‘buying social’ and bringing social enterprises into their supply chain.  By procurement investing in buying goods and services from the social enterprise sector it will improve the company’s overall social and environmental footprint.

There are 70,000 social enterprises operating in the UK across almost every industry. They are reinvesting their profits for good, benefitting the people and the planet. When a social enterprise profits, society profits.

Social enterprises, and procurement’s role in supporting them and creating social value, will be a key theme at the Big Ideas Summit 2016.

There’s still time to register for the Summit! 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 Social and Sustainable Procurement

Considered by many to be the next key frontier for business, Social and Sustainable Procurement are finally getting the attention they deserve.

Sustainable Procurement

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 in the fields of social and sustainable procurement.

Matt Perfect, Founder of Something Great – “Impact Spending and Social Impact Measurement”

Big Ideas in Sustainable Procurement - Matthew PerfectI believe “Impact Spending” is the next frontier for defining ‘value’ in procurement. That is, spending on goods and services with the intention to generate a measurable, beneficial social or environmental impact, alongside economic benefits.

Some might say that the history of procurement can be traced by our broadening definition of value. In the old days, our decisions were mostly price-based with little regard for ‘value’ at all. The evolution of strategic procurement brought with it a greater understanding of the importance of quality and service and the ‘value for money’ equation was born. Increasingly, risk and innovation have been added to the mix, and evaluation models such as Total Cost of Ownership have become much more sophisticated.

It is becoming increasingly apparent (both in theory and in practice) that organisations can no longer separate their profitability and growth, from the impact their activities have in society. As such, procurement and supply professionals must be able to account for, and measure, the impact of their spending.

There is much the profession can learn from the emerging field of social impact measurement. By incorporating such measures as Social Return on Investment and Theory of Change into spending decisions, we will unlock the next wave of procurement value for our businesses.

Charlotte Spencer-Smith, Marketing at POOL4TOOL

Big Ideas in Sustainable Procurement - Charlotte Spencer-SmithRegulatory pressure on companies to report on CSR criteria in supply chain is increasing – the UK Modern Slavery Act and the Dodds-Frank Act in the US are recent examples. ISO/DIS 20400, currently under development, will provide clearer guidance about what is expected from organisations wanting to implement sustainable procurement.

Improved supply chain transparency will put pressure on procurement organisations to build category-specific strategies and make sourcing decisions with sustainability in mind. Criteria, such as sustainability and labour ethics, will be increasingly included alongside financial and risk data as factors that go into processes like supplier management, sourcing, and contract management.

Extended information and third party content, specialising in sustainability data for supply chains and procurement organisations, are on the rise. But it will soon be indispensable to have this information deeply integrated into people, process, and technology to make CSR-positive sourcing decisions as easy as possible.

It’s a crucial part of the wider picture of value-based sourcing: developing sourcing decisions beyond the purchase price.

Jordan Holzmann, Founder and CEO at Cruxcee

Big Ideas in Sustainable Procurement - Jordan HolzmannIn terms of the now, we are seeing procurement take an interest in what role they play in sustainability. Procurement is realising that they can make a huge impact in the way they source through the supply chain.

This is exciting to procurement professionals as their job now has a new lease on life, and they aren’t just feeling like they are saving money and going through the process of buying stuff. This will shape the procurement profession in the future too, as it becomes more strategic in achieving sustainability goals for the organisation.

In terms of the future, I see the concept of finite resources impacting the way we procure products. Concepts like cradle to cradle and circular economy are driving innovation through material use. Procurement will have to be more innovative than ever as the world shifts to more sustainable materials.

They must be on the lookout for sourcing decisions that make use of alternative resources, reduce waste and reclaim any unused materials. This also goes for materials that are toxic and do harm. Procurement must work to avoid these, and find materials that do not harm the environment.

Do you work in social or sustainable procurement? What are your Big Ideas in this area? 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.