Engaging in "Procurement with a Purpose"
Businesses can no longer focus solely on their own interests and the interests of their shareholders. Although profitability will always be a top priority, companies must also recognize their place in the community and the environment.
Every decision the procurement department makes has an impact on the world around it. Decisions around spending, supplier partnerships, technology deployments, and more must all be weighed against the potential harms or benefits they’ll have for society.
Procurement leaders now recognize that they play an outsized role in their companies’ environmental, social, and governance (ESG) strategies. They also recognize that a robust ESG strategy can benefit the company as much as it benefits the world around it.
As such, pursuing "procurement with a purpose" is now an integral part of business. Here’s what you need to know about this movement.
What Is "Procurement with a Purpose?"
According to UK procurement publication Spend Matters, "‘Procurement with Purpose’ broadly means organizations using their third-party spend to support causes that go beyond the immediate needs and operations of the firm—whether that might be carbon reduction, supporting diversity, encouraging local enterprise, or reducing plastic waste."
The central idea behind procurement with a purpose is ensuring the business acts as a net positive for the rest of the world or at least for any impacted communities. Companies can pursue this concept in a variety of ways. For example, many companies focus on building sustainable and equitable supply chains that support both people and the environment.
Nonetheless, the most important aspect of procurement with a purpose is that the procurement organization works directly with its supply partners to pursue specific goals, not just internally. For example, even if the procurement organization operates in an environmentally friendly way, they can’t claim to be engaging in procurement with a purpose if their suppliers don’t meet the company’s pollution and carbon emissions standards.
How to Engage in Procurement with a Purpose
Creating a more purposeful procurement department and supply chain requires strategic inputs from across the business. It must also be considered alongside core organizational objectives.
Procurement leaders can spearhead the movement by starting with some basic steps.
Highlight the Benefits
Procurement leaders can spearhead the procurement with a purpose initiative. In discussions with decision makers, they can start by outlying the benefits procurement with a purpose could have for the business.
Pursuing social good is an important part of building a reputation for the company, for example. It could also be beneficial for risk management. Partnering with suppliers that are not only compliant but go above and beyond to engage in sustainable and equitable business practices can significantly reduce risk to the organization.
It’s also important to highlight that sustainability, equity, and environmental stewardship are now core objectives across industries. Companies that don’t act on the areas may not be as competitive as those that do.
Decide What’s Important
There are many different issues that procurement and supply chain leaders can focus on. Ultimately, it’s up to the entire organization to decide which issues are most important.
This may depend on the type of organization in question, its industry, or its supplier network. Issues that are relevant to the organization may be more worthy of attention.
For example, a manufacturer that sources materials from several different countries via ocean freight would benefit from policies that reduce emissions in their supply chain. They would also benefit from supplier policies that ensure workers in those countries are treated and paid fairly. Suppliers must be able to meet these standards to continue to do business with the company.
Document Your Strategy
Once the company decides which issues are most important, it can lay out a strategy for improving operations. Furthermore, the company can set specific goals and establish metrics for determining if they’ve been reached.
For example, a company that intends to focus on the environment may choose to reach net-zero emissions in its supply chain by a specific date. Likewise, a company that relies on goods sourced from other countries may decide to ensure 100% of their suppliers’ workers in those countries have access to equal pay and benefits.
Start Your Procurement with a Purpose Journey
Procurement leaders have a significant role to play in the future of business, especially when it comes to how businesses interact with the communities around them. Through a "procurement with a purpose" mindset, procurement and supply chain innovators can help transform the organization into a force for good in the world.
If you’d like to know more about how you can transform your procurement department into a force for good, don’t miss the next ProcureCon Supply Chain Virtual Event, happening online at noon ET from January 19th to January 20th.
Register now to reserve your spot.