Sustainable procurement and the importance of good partnerships
Chartered Institute of Procurement and Supply
Procurement has a responsibility to maintain sustainability credentials, to be good custodians of our planet and people, and to use scarce resources responsibly for future generations to come. Strong partnerships between procurement and human resources teams can ensure responsible recruitment, ethical hires and good practices that can ultimately result in positive benefits for the organisation, both financially and reputationally.
Sharon Morris, General Manager of the Chartered Institute of Procurement and Supply (CIPS) for Australia and New Zealand, believes procurement and supply management is intrinsically placed to be a real change agent and driver for the greater good. The Brief spoke to her about how strong partnerships with recruitment and staffing suppliers can encourage responsible procurement.
1. What is sustainable procurement and why is it so important for the future of the profession?
Sustainability takes into account social, economic and environmental factors when building sourcing solutions for an organisation. This is alongside the usual considerations of cost, quality, risk and ultimately creating true value across the supply chain.
Sustainable procurement considers the impact of the purchase through its entire lifecycle all the way to its disposal. It is procurement’s role to support the sustainability goals of the organisation and optimise the environmental, social and economic impacts over the lifetime of that product or service.
Why it is important, is not just about any feel-good factor. Procurement has a responsibility to maintain sustainability credentials, to be good custodians of our planet and people, to use scarce resources responsibly for future generations to come.
Procurement needs to build trust for the organisation the professionals are working for, so customers keep coming back and suppliers want to work with you. The benefits can be broken down into four key areas:
Risk and reputation
If there’s modern slavery or bribery and corruption anywhere in the supply chain, this impacts on your company’s reputation – let alone the real cost to human life and risk to a company’s finances.
Recent research from McKinsey suggests that something like a circular economy strategy where waste is reduced and sustainability ramped up is good for a company and 32% of the companies they surveyed about this agreed.
More and more investors and consumers are looking into the ethical and sustainability targets of the companies they want to deal with, and this is set to escalate as more awareness around the finite resources of the plant increases along with the need to support more diversity in a supply chain such as working with female-owned businesses, indigenous or social enterprises. Customers can be extremely loyal to the brands that deliver on such credentials, reducing the need to constantly find new markets. Using sustainable suppliers can also save money for the organisation – if they are local for instance.
Good use of scare resources means organisations can protect themselves against paucity of supplies in the future and that of the suppliers they rely on.
2. How can strong partnerships with recruitment and staffing suppliers encourage responsible procurement and labour hire licensing?
CIPS has worked with the Recruitment & Employment Confederation examining the effect recruitment has on supply chains and produced a report called Chain Reaction which looked into the effectiveness of a resource supply model for staffing. In summary, it seems procurement and human resources teams were primarily looking for the same thing – attracting the right talent to a role, but other factors were also important. For instance, 46% of procurement professionals in the study believed that reducing the cost of recruitment was key but only 34% of recruiters thought so it’s crucial for both sides to work together in an open and transparent way to look for seek out any malpractice and work to remediate it.
3. How can this partnership benefit both parties financially and reputationally?
Responsible recruitment is good for everyone. First and foremost, we have a duty of care to ensure that everyone working within our supply chains is being treated fairly. Recruiters can be sure there are ethical hires all the way down the supply chain so human rights are retained and good practices are getting the best out of everyone. The organisation can feel assured that there are no malpractices further down the supply chain offering nasty surprises whether financial or reputational and feel confident that they have the right talent to perform and grow their operations. Of course, for workers there is the confidence that they are engaged with responsible, ethical employers that are legitimate and trustworthy.
4. How can both employers and individual professionals actively engage with recruitment and staffing suppliers to ensure this?
Develop a strong partnership and a strategy for hires. Organisations and individuals gain from strategic insights from suppliers in support of stronger workforce planning, more sourcing innovation and attracting the best candidates for their needs.
Each party in a supply chain has their own part to play, their own partial view of the supply chain and own priorities so the first step must be to look at their objectives. There are a number of resource models that can be used, so understanding the need is crucial. As an example, a vendor neutral model uses an intermediary who works between the employer and recruiter to manage contracts or communication or a preferred supplier list where the organisation can select a smaller number of agencies they want to work with which the research found was the most popular method.
5. What resources are available to professionals who are looking to improve the sustainability of their labour hiring practises?
Visibility and transparency in supply chains is critical in order to identify and improve sustainability. Communication with suppliers, and their sub-contractors is critical to success, let your suppliers know the standards that you expect from them by asking them to sign up to codes of conduct, get accreditation to internally recognised standards of practice etc. it is then down to you as procurement professionals to monitor and assess the success of the supplier in meeting these standards. Supplier visits, third-party audits, interviews with employees, are all tools that can be used. However, building trust and encouraging open and transparent conversations has to be the bedrock for success.