Procurement professionals are in a unique position to step up and make a positive impact. Here are three areas where procurement professionals should direct their attention…
In an age when people want to work for companies who are doing good in the world, when consumers vote with their wallets and achieving supply chain transparency is easier than ever before there has never been more pressure for procurement professionals to commit to, and prioritise, making a difference in the world with the work that they do.
Tom Derry, CEO – ISM, discusses three areas where procurement professionals should direct their attention…
There was a time when sustainability was merely a PR strategy with minimal corporate effort put behind it. But those days are long gone and we’re at the tipping point where businesses can finally see the financial benefits of operating sustainability.
“I’m familiar with the CPO of a major food manufacturer here in the United States,” says Tom. “One day the Rainforest Action Network was protesting on their corporate campus. It came down to the sustainable sourcing of palm oils, which is a major food ingredient. What we’re realising now is our supply chains can create unexpected consequences. In this case, palm oil was being sourced from Indonesia, which incentivised local farmers to burn down the rainforests in order to plant palm trees. The food manufacturer was jeopardising the existence of this incredible biodiverse resource, without any sense of the consequence of sourcing palm oil to make their products.”
Tom also mentions the importance of catering to customer demands. “My own daughter makes her consumer purchase decisions based on how she views the sustainable practices of the companies. Companies have realised that if they lose that customer, consumers walk away and you never get that business back.”
But, according to Tom there’s another reason key you have to take sustainability seriously. “In the stock market, companies like JP Morgan are publishing reports on companies based on ESG – which stands for Environment, Sustainability and Governance. So it’s no longer just financial metrics that are driving stock prices. It’s your score on your environmental performance, how sustainable you are, and your governance around your sustainability strategy.
“When that starts to drive stock price, that gets everyone’s attention. Believe me!”
2. Modern slavery
With 21 to 46 million people in slavery around the world, procurement professionals have a huge responsibility in weeding it out of their supply chains?
As Tom points out, it’s a sobering statistic but companies are beginning to do amazing things. to tackle modern slavery. “Nestle, for example, investigated their own supply chain for fish used in pet food products and found that the Thai fishing flight was using impressed labour. They identified the problem and proactively went out to address it rather than waiting for someone else to discover it.”
This approach allows companies to avoid appearing defensive and reactive and Tom believes we’ll see more and more companies taking that kind of stance, “because they have to!
“It’s not just about protecting your company’s reputation, but it’s also a recognition that we all share as humans that it’s a morally reprehensible practice – and none of us want to be a part of it.”
3. Diversity and Inclusion
A third way procurement and supply chain professionals can make an impact in their organisations is to improve supplier and workplace diversity.
“We need to make sure our supply bases reflect the kinds of communities where we do business,” argues Tom. “We also need to make sure our teams, internally – and our leadership teams – reflect those communities too.”
“Diversity broadens our point of view. We become more sensitive to cultural issues.”
Remember the backlash last year when PepsiCo released an ad featuring Kendall Jenner that somewhat insensitvely echoed a Black Lives Matter protest? Criticised for trivialising and exploiting the movement the ad was soon removed but not without significant damage to the PepsiCo brand.
As Tom points out, “a diverse team will heighten your awareness to those issues before they get out into the public domain and embarrass you. You have a multitude of perspectives on how to solve problems.”
“ISM has got a long standing leadership position in this area . We’ve got a formal statement on the value of diversity to the profession we organise a conference and sponsor a certification to help people become leader of diversity efforts.”
Part 3 of Tuesdays with Tom is available now. Click here to sign up and hear ISM CEO Tom Derry talk on sustainability, modern slavery, and diversity.