In the lead up to the 7th annual Women in Procurement and Supply Chain conference, we interviewed CIPS Australasia Young Talent 2020 award winner, Alice Bray, from the NZ Transport Authority, to discuss the obstacles and challenges procurement professionals face when using social procurement to unlock positive community impacts. Read on to discover:
- How you can make sure you are putting people first in your supply chain
- The best strategies for to drive supportable social procurement in your organisation
- The critical points to look out for to ensure new suppliers are not just paying lip service to social procurement
- Overcoming the biggest challenges in implementing a social procurement strategy
- How you can continue to support a social & ethical procurement strategy going forwards
Senior Procurement Advisor – Sustainable Procurement
Waka Kotahi NZ Transport Agency (CIPS Australasia Young Talent 2020 Winner)
1. Using supply chain and procurement practices for social good is gaining a lot of focus and traction. What are some ways procurement directors can ensure they're putting people first in their supply chains?
The best place to start is with your procurement team – are they ready for the fundamental shift sometimes required going from a cost-driven lowest price confirming approach to procurement to an outcomes-focused approach that is value and values-driven. We are quick to change a template or workflow or create a toolkit, but who are the people using them and are their hearts and minds ready for this shift. By understanding your procurement team, their capability on how this shift will require a potential change in hearts and minds, you can start with making sure they are equipped and supported to do their role in this value chain, which helps the business procure!
The next place to look is at your key customers, clients, stakeholders, and supply partners and ask the same question. Where are they currently with their understanding of the procurement lever being used for social good? There’s no use having a stellar policy with a highly motivated and capable tendering team if your wider procurement stakeholders aren’t on board at all. This creates friction between a procurement team driving change and the business not wanting to go on that journey.
The third place to look is across your people leadership. Social good, social impact, social and sustainable procurement uses the procurement lever, but it's not a 'procurement thing' to own or guard. How are your non-procurement leaders across your business or organisation talking about social impact? Do they immediately think of procurement as a key lever to achieve this? Do they understand how procurement can effectively partner across the value chain or the organisation to connect teams and supply partners to create positive social good efficiently?
You soon see how using the procurement lever to activate social change and a positive impact is equally a communications and change management initiative as it is a procurement initiative. The more you lean on the procurement process, tools, and templates to create change and ignore the people component, the less effective your impact will be.
2. What are the best strategies to drive social good in your procurement practice?
Measuring social outcomes can be a complex task, and often it requires dedicated resources above and beyond your typical contract management. Some common approaches to targets, KPIs or other reporting approaches for social procurement are:
1. Direct target outcomes
2. Impact indicators
Whichever is most fit-for-purpose will be down to what is important for your organisation and wider reporting obligations (government, other value chain partners, commitments). The key question is which one will you pick, and how will you track them consistently?
Direct target outcomes can be straightforward if quantitative contract metrics are used, such as 'number of apprenticeships created' or '$ sponsorship given to community activity.
Impact indicators are more complex but equally important if you're serious about measuring social impact and your progress towards particular high-level (usually population in the social context) related outcomes. For example, these may monitor outcomes like employment through indicators such as '% of the population accessing unemployment welfare'.
Social-return-on-investment can be either evaluative or forecasted and are usually measured through a ratio of the net present value of benefits to the net current value of the investment. For example, an SROI ratio of 12:3 shows that for every $3 spent, $12 of social value is realised. The idea is that the greater the social value to the benefit, the greater the investment.
For meaningful reporting, it is important to ground any approach to reporting at an organisational level. It is becoming increasingly frequent that organisations must report on particular metrics for legislative, governmental or corporate social responsibility type reporting or audit requirements. If your project or contract is reporting on 'number of apprenticeships created' but your organisation wants to report on 'total number of new jobs established', you're stuck!
3. What are some of the critical points to look out for to ensure new suppliers are not just paying lip service to social procurement?
Your evaluation and due diligence processes are as important as it has always been in these circumstances.
If you have robust social procurement requirements, strong evaluation criteria, purposeful due diligence, and a contract management approach that's s proactive and built on mutual trust and transparency with your supplier(s), your ability to be confident in contract delivery, including those social outcomes will always be higher.
Key elements to look out for – accreditation and certification; sample/examples of success or trials, case studies or industry awards; visibility of objectives or outcomes, i.e., are mission statements or targets publicly available; evidence of authentic partnership, i.e., testimonials, reviews from communities or other supply chain partners. Any of these elements are requirements in a tender process. Activities that form part of your due diligence seek to reaffirm anything stated in a tender to be delivered on in a contract. We've seen examples globally of a great tender being written due to an employed and highly skilled tender writer with no understanding of what has happened or will happen on the ground. When it comes to partnership or social impact initiatives with minority groups, it is critical that they have a voice in evidencing how genuine and mutually beneficial that partnership was.
We often see generic policy, which creates generic procurement application, which guarantees generic tender responses and outcomes that are not fit-for-purpose for the communities they are meant to impact positively. In addition, broad-brush stroke approaches to social procurement leave the door of greenwashing, de-prioritisation of outcomes and vague or incomplete reporting wide open.
4. What are some of the key challenges you face with social procurement, and how can the supply chain and procurement industry overcome them?
It would come as no surprise that resourcing is a challenge – on both the procurement side and the supplier side – finding people who understand and are committed to social procurement as a growth field/emerging career path. However, we can overcome this through more investment by procurement functions and suppliers in their social procurement resources and upskilling people. This creates a greater pool of resources for the whole social procurement sector and uplifts practice across the globe.
The other key challenge is strategic direction tension – how many 'strategic' things is your organisation trying to do at once? Procurement at the best of times can have difficulties with visibility across organisations. Despite the meaningful impact and positive legacy social procurement can have, it still depends on buy-in and activation from key people. Senior leadership, procurement leadership, champions across the organisation outside of the procurement team. It needs to be clear that social procurement is critical, gets the visibility and backing it requires to succeed, and feeds into other strategic directives the organisation has to limit the tension between other directives.
5. What's next? What can procurement professionals do to ensure ongoing support of social procurement?
I’d challenge the thinking that social enterprises are the only means to achieve social procurement – you’ve got two options—the direct and indirect approach. The direct approach is contracting with social enterprises or other diverse social impact-model businesses whose establishment has a direct social impact cause their business is centred around. The other option is the indirect approach, which utilises everyone else in the market who is not a social enterprise type supplier to achieve social outcomes. The indirect approach requires more effort, collaboration, and focus because outcomes generated will likely be in addition to the core business instead of a social enterprise business where they're embedded in the core business.
The construction and infrastructure sector has been a great example globally of how contracting with non-social enterprise businesses to achieve social outcomes like job creation, community impact initiatives, indigenous partnerships, wellbeing activities, or diversity initiatives has succeeded. However, you can create a mixed approach requiring a prime contractor to sub-contractor partner with a social enterprise to leverage size, scale, and core business to achieve social outcomes. Typically, large businesses have more resource and capital to draw on to achieve these outcomes, so should always be considered alongside social enterprises to create long-term, meaningful social impact.
Join us at Women in Procurement & Supply Chain, 8-10 March to hear more from Alice Bray during her session: International Keynote: Unlocking positive impact through social procurement.
Join the the conversation on all the procurement issues of today, and tomorrow: social and sustainable procurement, diversity measures in the supply chain, risk management, governance, technology for more efficient and agile transactions and collaboration, as well as how to develop and improve the crucial leadership, negotiation, critical thinking and relationship skills this unique function needs to harness to succeed.
Register today or give us a call on +61 (0)2 9977 0565.