People, Planet And Profit

The Role Of Procurement In Doing The Right Thing

In today’s climate, talking the walk and walking the talk in procurement are not just buzzwords. They are a very real business approach and strategy, for which companies are increasingly being put under pressure to demonstrate within their operations, in partnerships and with the various suppliers they work with, and throughout their global supply chains.

Procurement provides an immense opportunity for businesses to highlight their “right” credentials, while demonstrating their seriousness and commitment to changing their way of working. Ultimately, they know and understand that the “right” approach can achieve positive social impact on people and the planet while delivering a competitive advantage that results in growth, profits and increased shareholder returns.

Doing the “right thing” makes absolute business sense. From embedding ethical business practices and ensuring there is diversity and inclusion in workforce and suppliers, to carrying out risk and compliance audits with appropriate follow-up processes, and embracing sustainability, businesses can create positive change to deliver real value throughout the global supply chain while safeguarding people, profits and the planet we inhabit.

Ethical And Responsible

The global supply chain does not function in a vacuum. By making supply chains ethical and responsible, businesses consciously own the management of the economic, environmental and social challenges they encounter, while exerting purchasing power to effect positive change. They do this while retaining an ethical, respectful and fair approach and by collaborating and building strong and transparent relationships and partnerships with their suppliers.

Over the past few decades, we have seen a visible change take place in supply chains. While outsourcing, cost mitigation, globalization and technology have brought the world closer and created the global manufacturing village, concepts such as corporate citizenship, social responsibilities, ethical business practices, sustainability and circular economies have gained strength as many multinationals embraced them. What drove this commitment was the realization that the supply chain cannot be divorced from corporate social responsibility. Neither can the industry ignore concerns about the environment, ethical business practices, and health and safety compliance.

All these issues, including the business risks facing global brands, the reliance by purchasing departments on incessant and expensive audits and assessments, the spotlight on exploitation in the global supply chain and the recent introduction of The Modern Slavery Act in the UK, still occupy many corporate agendas. They demonstrate the need for an approach that not only “talks the walk, but walks the talk.”

Tackling Diversity And Inclusion

Multinationals such as Intel that have embraced diversity and inclusion, now talk about increased innovation and creativity, new opportunities and a velocity to market. As part of this journey, they have signed up for well-executed strategies which they deployed throughout their workforce and supply chain. They have gained competitive advantages stemming from stronger partnerships, collaborations and market insights that are caused by diversity in thought and investments in diverse enterprise. They drive transformational change in their total supply chain and in turn, propel economic empowerment in communities and sharpen their own competitive edge to realize growth in profits.

Working with a diverse and inclusive supply chain allows for increased innovation and an opportunity to thrive in the business. The different backgrounds, experiences and cultures all lead to a myriad of perspectives which bring a wealth of ideas to the table, helping to build a better solution. Likewise, diversity in suppliers opens up new routes to markets—for new products, new technologies, new customers and new suppliers. The ability to give equal access to purchasing opportunities across all qualified diverse suppliers empowers the organization which embraces this approach. Whether the suppliers are from a minority group, a women-owned business, those with disabilities or from other diverse groups, they should all be part of the chain that provides capabilities and innovations to all organizations. Such suppliers are agile. They are innovative and they are also flexible. They bring thought diversity to the table, and increase values to the companies that deal with them.

Focused global initiatives such as the Stonewall Equality Index (WEI) and WEConnect International for certified women-owned businesses are all extending their reach as they assist organizations to improve their diversity and inclusion with advice, guidance, best practices and accredited programs.

Driving Change Throughout The Supply Chain

While supplier audits and assessments are used throughout purchasing to identify ability, compliance and the use of ethical and sustainable practices and processes, the feeling in the industry is that it is too easy to create a climate of audit-fatigue, even when using ethical and sustainable audits. International organizations such as SEDEX (Supplier Ethical Data Exchange) in part have reduced this audit-fatigue, however the overload on suppliers, with requests for multiple audits and assessments, has raised questions as to whether audits are the best tools to mitigate reputation, legal and operational risks.

Many multinationals, including Oxfam, have adopted a more strategic approach, helping to drive change through various mechanisms. They have developed long-term relationships with their diverse suppliers and together work to identify areas where they can eliminate risks and reduce the impact and pressure on the supply chain caused by late orders, late payments and last minute changes.

Ending Labor Exploitation And Unethical Practices

Other corporations have moved beyond their internal corporate purchasing programs and audits to tackle global labor exploitation. Although international mechanisms, such as The International Labour Organisation Declaration on Fundamental Principles and Rights at Work, have been put in place to safeguard the rights of workers employed within the supply chain, in reality, labor exploitation is practiced under the radar in many countries. In the UK, the Modern Slavery Act, which was recently signed into law, has a much wider impact that extends beyond national borders to tackle slavery in the UK and help eradicate it throughout the global supply chain.

Unethical or illegal practices such as bribery, facilitation payments and corruption may be widespread practices in certain countries and communities operating within the supply chain, but a refusal to pay bribes and operate unethically or illegally shows the integrity which is being demonstrated among brands, both big and small. Engaging in such activity could have costly consequences and may mean getting the wrong suppliers for the wrong reasons, not to mention a loss of confidence in the integrity of the company and its products.

Ensuring A Sustainable World

Regardless of where the corporate operation is located, the supply chain is typically operating within a wider environment that is susceptible to impact caused by that same supply chain. Examples extend from carbon and other greenhouse gas emissions to accidental pollution, damage to biodiversity, water, energy and other resource usage and efficiencies, and waste. The list goes on.

The United Nations Global Compact, the world’s largest corporate sustainability initiative, together with the Sustainable Development Goals that are agreed to by all the UN countries, brings governments and businesses together to align strategies and operations, and demonstrate a commitment to sustainability. In parallel, corporations and businesses worldwide must consider the impact of their activities and take action to minimize their effect.

In such a connected world, businesses must step up. As an industry, there are many forums and meetings taking place to raise awareness, such as discussing how businesses can influence their employees, suppliers, partners and consumers to be inclusive, responsible and considerate. Ultimately they can only succeed and reach their goals with the commitment and real support of governments, business leaders, responsible corporations and businesses, and a cohesive, ethical and sustainable global supply chain.

Managing Your Supply Chain Responsibly

You need a strategic and collaborative approach to manage your supply chain responsibly. Indeed, you cannot do it alone. Collaborate internally and within the industry to build leverage in the supply chain and this will create a ripple effect. These tips will help you develop a plan:

• Take the lead, know your supply chain.

• Understand your business and purchasing drivers.

• Carry out initial audits, reviews and risk assessments.

• Prioritize areas which are of immediate concern.

• Gather information on suppliers on identified risks.

• Develop policies and set targets for improvement internally and within the supply chain.

• Build the capacity of your people—be inclusive and diverse.

• Integrate throughout the purchasing process.

• Report externally and internally.

• Stay engaged, share best practices and back up your claims.

Gill Thorpe, FCIPS, is CEO and founder of distributor The Sourcing Team in Wallington, Surrey, UK and has been an active supporter of the industry for 25 years. She is a Fellow of the Chartered Institute of Purchasing and Supply (CIPS) and a Lifetime Fellow of the British Promotional Merchandise Association (BPMA), where she previously served as chair, president and board member. The Sourcing Team is a leading specialist in ethical, sustainable and compliant global sourcing and procurement of promotional materials, is qualified in supply chain management and has 28 years of expertise in managing reputational risk. The company is an established member of BPMA, PSI and PPAI, and holds green credentials which include EcoVadis Gold CSR, CIPS Sustainability Index Rating-Gold, AB Membership of SEDEX and signatories of The UN Global Compact. Contact Thorpe at gillthorpe@sourcing.co.uk.

filed under ppb | september-2016
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