procurement

By OMX | October 30, 2019

When we talk about procurement today, it should be viewed as much more than a simple financial transaction. In fact, when considered strategically and applied correctly, social procurement can help local communities achieve their government’s economic, environmental and social objectives while underpinning a productive supply chain. With the right implementation, social procurement can easily become a critical tool for achieving a stronger triple bottom line for corporations, helping them meet investor and customer objectives and reduce their risk over the long run.

 

Previously, traditional procurement policies have been primarily predicated on driving immediate economic outcomes (ie. reducing a corporation’s costs). The world, however, has changed and evolved, and an important discourse around ethical capitalism has entered the public debate and shows no sign of receding.

 

According to the Canadian CED Network, an estimate of $2 trillion worth of goods and services were produced in 2016. When we look at figures such as these, it’s important to highlight the significant power businesses have in leveraging their spend to drive impacts to local communities. In this article, we will cover everything you need to know when asking yourself “what is a social procurement policy?” and the ways to secure both a profitable and strategically advantageous supply chain.

 

Social Procurement Policy

 

What is a Social Procurement Policy?

Business writer, Ian Linton, defines the term “procurement policy” as a way in which corporations provide guidelines for procurement professionals. Establishing such policies can, therefore, help ensure that the business can buy efficiently while obtaining its value for money from their suppliers. Social procurement, however, doesn’t diminish the economic value of such a policy but rather increases the overall value for all of its wider range of stakeholders by weighing the social impact into the procurement evaluation.

 

By implementing a social procurement policy, organizations can start leveraging the social value that’s being added to communities through purchasing certain goods and services. The Canadian CED Network offers two main ways of achieving social procurement: purchasing goods and services from social enterprise suppliers, and through various Community Benefit Agreements in sectors such as infrastructure, which provides goals towards procuring from local, small and diverse companies that meet certain socio-economic objectives. Simply put, social procurement encourages organizations to embed a social, cultural or environmental purpose into their business practices. In turn, companies can benefit from a myriad of social and economic advantages.

 

The Benefits of a Social Procurement Policy

As every purchasing decision has an economic, environmental and social impact, it’s important that companies strive for positive contributions to their communities. As a result, the following benefits can be expected:

  • Increased supplier diversity by opting to partner with small-to-medium businesses (SMB) and social enterprises. Incorporating smaller partnerships in a supply chain can result in higher levels of investments, better-skilled staff, and many more advantages that are covered in our article that can be found here.
  • Job opportunity creation while upholding local Community Benefit Agreements (ie. hiring locally)
  • Building a stronger triple bottom line as well as an advantageous brand image that bodes well for stakeholder engagement
  • Fair and ethical trade practice promotion
  • Addressing complex community development through attainable ESG goals which is beneficial for a company’s public image too.

 

Workforce

 

Take an example from the Victoria state government in Australia: Victoria’s Social Procurement Framework offers a number of case studies and initiatives that support the benefits that come with employing such a policy. For example, Green Collect is a social enterprise that strives to deliver a range of resource recovery services. For organizations, this means that they can achieve the highest environmental outcome for their office waste while supporting sustainability goals, job creation, and local businesses.

The Best Way to Implement a Social Procurement Policy:

As mentioned, the two main ways of implementing a social procurement policy are through responsible purchasing of goods and services, and Community Benefits Agreements. Responsible purchasing can easily be achieved by working with local SMBs and thorough supplier research. CBAs, on the other hand, are pre-determined and are an expected part of infrastructure and other development projects (think: the resource sector or other sectors where Government is a stakeholder). For more on CBAs and their frameworks, click here.

 

Buy Social provides the following solutions that organizations can easily implement too:

  • Consider the social value that existing purchases bring
  • Relook the purchasing criteria for products and services
  • Analyze the level of social good current vendors are providing and whether or not they’re supporting the business’s goals

 

Supplier paperwork

 

The Bottom Line

In today’s world where economic, social, and environmental distress is being seen globally, it’s essential that businesses start taking action. Not only because it is the right thing to do, but because their investors, customers and other stakeholders are demanding it and it will reduce overall business risk. Asking yourself “what is a social procurement policy” and exploring the options related to this strategy is the first step in achieving sustainable business operations.

 

Luckily, with OMX’s growing list of suppliers, we can easily connect buyers with businesses that are committed to delivering social good as well as measuring impact. To learn more about our ethical suppliers and to start fulfilling your ESG goals, visit our site here.

 

OMX

OMX is the world's most powerful procurement database and platform. We provides access to over 140,000 international companies by region, size, local content, certifications and capability, with effective web-based software tools to manage supplier and customer relationships collaboratively across an organization.

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