Procurement is not only about money: Creating positive social impacts through procurement activities

Procurement, as we know it, focuses on obtaining goods and services for the best possible value. These goods and services are vital for the operations of the organisation. However, procurement can bring more to the table than just a focus on expenditure and savings. It can also create a positive social impact that can be achieved when organisations with purchasing power address social issues through procurement-related activities.

Creating a positive social impact through procurement activities, normally as part of a social procurement program, is becoming a priority within organisations in Australia and in overseas countries like the US and countries within the European Union. This includes public and private sectors, as well as single and multiple suppliers within the supply chain. 

There are a few guidelines that can be followed for any Procurement Function to make small contributions towards creating a positive social impact. These suggestions are:

Overall Procurement Approach

· Simplify the approval process for low-value/low-risk procurements to allow an easier engagement of targeted business (such as small and medium enterprises)

· Allow the engagement of low-value procurements via credit card

· Set goals for the engagement of social enterprises. For example, a percentage of all procurements should be with a targeted type of business (for example disability enterprises).

Engaging the market

· Allow tenderers to subcontract with targeted social enterprises

· Consider requesting tenderers with a work plan containing targets for the engagement of apprentices or have gender equality in their workforce as part of the evaluation criteria

· Review the required insurance levels to ensure that small businesses are not required to unnecessarily obtain costly insurance covers such as a High-Cover Professional Indemnity Insurance. 

Supplier Relationship Management

· Develop a plan for strategic suppliers to start adopting and aligning to social practices

· Partner up with suppliers and expand these requirements up and down their supply chain

· Identify employment opportunities for minorities through suppliers (people with disabilities, youth unemployment or marginalised groups).

Nowadays, companies obtain certifications to let their consumers know that their products meet the highest social and environmental standards. These certifications include Fairtrade, B Corporation and even ISO 20400 Guidance (Sustainable Procurement). Although these certifications can be a good help and provide clarity to consumers and businesses, Procurement Functions should evaluate if they are the best option for them as they are not the only way to ensure positive impact through an organisation’s activities. 

Always remember that small changes can create big differences and Procurement could be the driver of change within the market. It’s a matter of looking beyond money and savings and starting to look at how we can help others in a world that often places too much emphasis on money at too high a social cost.