Tag Archives: sustainable procurement

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.

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.

Autism Works for Johnson & Johnson

Big Ideas can help provide greater benefits than cost savings. Timo Worrall tells Procurious how Johnson & Johnson are working with organisations like Autism Works to help a wider community find work.

Timo Worall - Autism Works

For people with autism, finding a job can be a near-impossible task, with recruitment processes stacked against them from the very beginning.

However, Johnson & Johnson, one of the world’s leading consumer healthcare organisations, is supporting organisations like Autism Works, proving that thinking outside of the box to include the people farthest away from employment opportunities is achievable. 

This Big Idea is part of J&J’s ‘Social Impact through Procurement’ initiative, which has committed to spend £15 million with social enterprises, like Autism Works, by 2020.

Timo Worrall, Senior Category Manager (FM EMEA) at J&J, heads up the team responsible for driving this procurement-led initiative through the J&J business in the UK.

At the Big Ideas Summit, Timo will join a high-profile panel to discuss social and sustainable procurement and ethics, their impact on the procurement profession, and what procurement leaders could and should be doing to embed these practices.

Procurious caught up with Timo ahead of the Big Ideas Summit.

I am excited to meet with people who may already be or are open to working with Social Enterprises. I hope by the end of the meeting everyone feels the same.

Tell us a bit about Yourself

I am a father of two boys, and live with my family in Woking. We have just started to renovate our 1950’s bungalow, and are presently living on a building site. The kids seem to like it more than my wife and I do, but we are looking forward to the end result!

What are the main challenges that face social enterprises in the UK?

Making the connection to companies who don’t yet know the value of working with Social Enterprises. Once they find these opportunities, how they can meet our sometimes complex requirements, and then grow in a sustainable manner that works for us both.

Can you tell us a bit more about Johnson & Johnson’s work with social enterprises?

We have a program called Social Impact through Procurement. Our goal by 2020 is to spend £15 million with Social Enterprises and create 150 jobs for those people furthest from the jobs market. We are presently working with a wide range of Social Enterprises across many categories.

One of these companies is Autism Works, who we made a video with to show how this particular social enterprise helps those with autism and other autism spectrum conditions.

What should procurement leaders be doing to help drive the social and sustainable procurement agenda?

Firstly understand it and tell your business stakeholders the benefits of doing this. Give your teams a little extra time to look for good social enterprises, and work with them to build sustainable solutions. Then tell the good news stories and build on the success.

Timo Worrall will talk about these topics in more detail during one of our panel discussions at the Big Ideas Summit on April 21st.

If you’re interested in finding out more, 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 2016 – Meet Our Speakers: Peter Holbrook

The Big Ideas Summit is just a couple of weeks away! We caught up with Peter Holbrook, CEO of Social Enterprise UK, to discuss the rising prominence of the social enterprise agenda.

Peter Holbrook

Peter Holbrook is the Chief Executive of Social Enterprise UK, the UK’s national trade body for social enterprise. The organisation works with its members to raise awareness of social enterprise, generates political engagement for social enterprises, and works with private sector organisations to explore and connect with social enterprises, helping them integrate these businesses into their supply chains.

Peter is passionate about the potential of communities and non-profit organisations to be much more enterprising and involved in business, and is helping to drive the social enterprise agenda across all sectors and industries.

Peter was awarded a CBE in 2015 for his service to social enterprise.

At the Big Ideas Summit, Peter will join a high-profile panel to discuss social and sustainable procurement and ethics, their impact on the procurement profession, and what procurement leaders could and should be doing to embed these practices. Peter says:

Meeting pioneers and enlightened leaders is always a privilege. Procurement has huge impact, potential and possibility – I’m looking forward to meeting kindred spirits, and agreeing further progress.

Tell us a bit about yourself.

I’m a practitioner, networker and advocate for social business – the growth and innovation in this sector is astounding. I’ve been happy to be a part of it for over 20 years.

What are the main challenges that face social enterprises in the UK?

Public awareness of social enterprise still requires a great leap forwards, and many social enterprises still require greater scale.

What’s the biggest success story in the Social Enterprise industry you have come across?

There are plenty of examples but my current favourite is the FairPhone – a crowdfunded social enterprise that has brought to a much needed market the world’s first fair trade smart phone.

Fairphone is the world’s first modular smart phone. It has been designed to be easily repairable by users, to last years longer than other smart phones, and is free from any conflict materials or minerals in its supply chain.

You can find out all you need to know about the Fairphone here.

Many procurement professionals think that buying social or sustainable goods is more expensive – in your experience, is this true?

Our evidence shows that in over 50 per cent of cases social businesses are more competitively priced than their private sector competitors. It’s about creating added value not necessarily added costs.

What should procurement leaders be doing to help drive the social and sustainable procurement agenda?

Become champions for social procurement! Procurement can ensure your brand and company values are reflected within your supply chain. Be bold!

Peter Holbrook talk about these topics in more detail during a panel discussion on turning social enterprises into your ‘ideas suppliers’ at the Big Ideas Summit on April 21st.

If you’re interested in finding out more, 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.

The Value Companies See With Sustainability Standards

As societal responsibilities grow, many organisations are turning to sustainability standards in order to demonstrate their supply chain transparency.

The discussions on Procurious reflect a number of questions procurement professionals face when trying to implement a sustainable procurement policy. Just what is sustainable procurement? Does it cost more to source sustainably? Have I got the time and resources to meet my own or my company’s targets? What value will sustainable sourcing bring to the business?

With the focus extending beyond environmental and sustainability issues to fair and ethical treatment of labourers and producers, the responsibility can be broad.

Increasingly, procurement managers are recommending sustainability standards as a way to ensure independent, transparent assurance of their supply chains. Partnering with a sustainability standard can help companies, which do not have the knowledge or capacity, to manage all aspects of responsible sourcing on their own.

Certification can work as a tool for managing the full range of issues. This is particularly the case for commodities, where environmental and social sustainability can be complex, and where the producer can be many links down the value chain.

Changing Procurement Process

However, making changes to well-established procurement processes is easier said than done. Businesses need to be clear on the value of choosing sustainability standards to meet their sustainable sourcing goals.

ISEAL Alliance interviewed existing users of sustainability standards – retailers, manufacturers, traders and others – on what they saw as the value of working with credible sustainability standards (certification systems), like those that are members of ISEAL.

It became evident that the value of certification was high, but it varied depending on the type of business, the sector, the geography, or other factors.  The interviews also showed that certification was not always valued in the way one might expect.

While market differentiation and increased sales were mentioned by a few companies, the potential value of a visible ‘ecolabel’ was never the primary reason for the partnership.  Instead it was often about supply chain challenges.

Companies revealed the value of sustainability standards to their business in five key areas:

  1. Making complex supply chains more understandable. This included providing better traceability, simplifying what is asked of suppliers by using agreed standards, and generating better relations with producers.
  2. Mitigating risk. Rigorous auditing, transparency of origin, and outsourcing assurance of responsible practices to local experts, helped companies mitigate risks of sourcing from complex supply chains.
  3. Ensuring sustainable supply for the whole industry. Several companies noted that by their investment in certification, they were strengthening the reputation and ensuring a sustainable future for the whole sector.
  4. Meeting consumer expectations. By communicating compliance with sustainability standards, companies said they were increasing consumer awareness of sustainable sourcing and creating market differentiation for their products.
  5. Reflecting a company’s values and heritage. As well as aligning companies’ goals with their values and maintaining trust, certification also provided a way to engage more deeply with employees.

Click here to read interviews with M&S, IKEA, Mars, Woolworths, Wilmar, De Beers, Domtar, Bumble Bee Seafoods and Tetra Pak.

Strengthening Commitment

ISEAL also recently created an online tool for companies to understand what good labels look like.  The site, called Challenge the Label, explores five universal truths of a credible claim or label. It aims to help procurement professionals have deeper conversations with their suppliers and partners, before choosing to develop or use a green claim on or off product.

Many companies also use their own codes of conduct or auditing programmes, and they see these as complementing their use of certification. While those interviewed agreed that the sustainability landscape is changing dramatically, they also said that their company’s commitment to certification will only deepen over time.

The goal for procurement professionals has to be to embed sustainability into everyday business. Using sustainability standards can help to deliver cost savings, address supply chain risks and ensure transparency. Making procurement decisions today in a manner which preserves resources for future generations as well as for future business makes good sense.

Is Procurement Serious About Sustainability?

When price is king, and procurement is often accused of “bullying” suppliers, can we really say procurement is serious about sustainability initiatives?

This article is by Gerard Chick, Chief Knowledge Officer, Optimum Procurement Group.

As we entered 2016, many of us will have made New Year’s Resolutions. It strikes me that this is as relevant to our professional lives as it is to our personal lives.

Eating or drinking too much is as unsustainable as exercising too little. The above all have outcomes that are bad. We know they are bad, and we also know that to change them is hard.

Last year, the newspapers and other media outlets were teeming with stories about procurement professionals using “bullying” tactics against suppliers, and with claims that big brands were using their power to squeeze suppliers. Inevitably a breakdown of trust (amongst other things) began to emerge, and this clearly needs to be resolved.

We read about farmers protesting against Morrisons’ terms of contracts. We read about Majestic Wine dropping their chief buyer after its pre-tax profits dropped by almost half, and supply chain relationships became tense after it asked suppliers to give them cash towards new warehousing. We also read about Carlsberg facing hostility from its suppliers after it extended its payment terms to 93 days.

Regrettably, such practices are all too common. The tactics used by big business towards suppliers have become a standard feature of today’s marketplace, where price is king and any means of reducing costs seems to be considered valid.

Contemplating Behaviours

And yet procurement frequently claims it is in the van when it comes to issues regarding sustainability. Some supply managers are, but many aren’t. A more sustainable supply chain is needed, but it will only emerge when the breakdown in trust between suppliers and procurement is resolved.

Let’s take a step back. The word frequently used in the media was ‘bullying’, but perhaps if we are to put this right we should contemplate ‘behaviours’. A better word, I feel, and one we can focus on in a more professional manner.

Perhaps these behaviours reflect that many of these people are simply unskilled and, even worse, unaware of it. The difficulty being that it is hard for them to recognise their incompetence, which in turn leads to inflated self-assessments of their skills and abilities.

Bad relationships are not just about negative publicity and brand damage, but also impact on the ambitious sustainability targets many businesses are now setting themselves.

Take climate change. Up to 90 per cent of the greenhouse emissions linked to a company are generated outside its immediate operations, with the lion’s share often occurring in its supply chain.

Collaboration Over Compliance

Moreover, business’ struggle for economic survival must not come at expense just about anything else! Big business characteristically operates in a top-down manner. Supply managers issue suppliers with codes of conduct and environmental targets, and oblige them to comply. The result is an exploitative game between suppliers and auditors sent out to verify farms, factories, working conditions and so forth.

Not only is compliance difficult to achieve, especially beyond the second tier, but it’s only half the story. A more effective solution would be for procurement professionals and suppliers to work together to develop innovative solutions to supply chain issues and to help ensure each others’ sustainability.

It strikes me too, that the smaller, more agile supply organisations (as well as procurement organisations) are more likely to be able to innovate than the behemoths of big business, stuck in their cycle of annularity and the need to satisfy shareholders at all costs.

Tapping Supply Base Creativity

So how can companies looking to become more sustainable tap the creativity of their supply base? The first and most obvious answer is to cut the double-messaging. Corporate procurement teams are frequently blindsided by a ‘cost-out’ mantra. The risk this poses is it frequently supersedes all other agendas and that is simply not sustainable.

The perennial issues of time, cost, quality and service will always feature in procurement decisions, but social and environmental considerations must be factored in as well. Alignment is key. For example, Marks & Spencer prohibits its procurement teams from purchasing any product that can’t meet at least one of the goals of its corporate sustainability plan.

This often leads suppliers to view such demands as a box to tick. To remedy this, suppliers need to be incentivised. New ways of working need time, resources and dedicated attention – all of which are at a premium for small suppliers.

Changing Behaviours

What is needed is a change in behaviours and the development of more trusting relationships. Ideally procurement organisations need to co-invest in the long-term research and development with their key suppliers.

As mentioned above, annularity dominates the mind-set and behaviours of many large companies. They simply focus on the short-term and would rather sit back and wait for proof of concept, than stump up the cash and experiment.

Ultimately, talk of sustainability-focused supply chain innovation will only ever begin to take effect when the breakdown in trust between suppliers and buyers is resolved. That requires a shift from a model based on adversarial brinkmanship, to one of mutual interest and transparency. The more open and honest a corporate customer is about its sustainability challenges, the higher the chance of generating innovative solutions.

Perhaps now is the time for procurement professionals to make a New Year’s resolution.