Procurement’s Increasing CSR Role | Future of Sourcing

Traditionally thought of as just being responsible for dollars and cents, the function of today’s procurement team goes much further than purchasing supplies needed to run an organization’s day-to-day operations. Beyond managing the entire supply chain process, their responsibilities have expanded in the wake of the Corporate Social Responsibility (CSR) movement.

There are several reasons for this shift – from a stronger C-level partnership to increased digitization of AP functions to automate repetitive tasks, to supporting CSR initiatives. But one thing is clear: today’s procurement teams can actively shape and transform a business’s reputation. They can impact corporate responsibility efforts, support supplier stewardship and increase diversity initiatives all through day-to-day operations. Let’s examine each of these areas.

The Value of Corporate Social Responsibility to the Enterprise

The idea of CSR has come a long way. It has transformed from an applauded practice to an expected standard. It’s also shown to be a financial benefit to organizations with documented impact on market value, share price, risk reduction, brand reputation, production and staff retention. And the list goes on.

To achieve the organization’s CSR goals, the importance of communicating expectations to the procurement team is critical. The procurement team can also raise compliance concerns they might have directly with specific suppliers or to leadership. Working together, leadership, procurement teams and suppliers can all agree to basic CSR standards. Plus, advancements in technology frees up the procurement team to track, understand and monitor the complete environmental impact of their supply chain and ensure compliance.

Investing time and resources into CSR efforts is beneficial to an organization. However, to make a real impact, procurement teams need to be empowered to make decisions. Supplier stewardship is an importance component to both short- and long-term success. This is the concept behind the stewardship theory – that managers, left on their own, will act responsibly to support the greater good instead of self-serving behavior.

Done right, a stewardship program clearly supports your larger CSR values, principles and policies to partners, but also empowers your procurement team to hold suppliers to these standards and to make decisions that support and protect your organization’s CSR efforts. Given authority to make the right decision and the tools to monitor performance against standards adds another layer of support to your CSR efforts.

A major part of this CSR support is ensuring an inclusive and diverse supply chain. Expanding your list of vendors diversifies your supplier base while simultaneously supporting minority-owned and small businesses. It also increases spend and consumption while promoting job creation. Financially, it helps increase competition resulting in better prices and service levels along with increased flexibility, agility and resiliency.

In fact, Forbes suggested that supplier diversity will help businesses large and small recover from the pandemic. If your organization has the support for it, tap into platforms and tools to help identify diverse suppliers and their capabilities. If your organization does not have the budget or support to do so, consider creating a simple tracking spreadsheet or a database to capture diverse suppliers and their capabilities. Ultimately, a diverse supply chain is good for business.

Finally, it is important to note that reducing costs will always be an important priority in most companies, and until recently, managing many small suppliers would add costs to the procurement process. Today, however, digital procurement technologies can enable companies to work with small suppliers without significantly increasing indirect procurement costs. As a result, supplier diversity goals and cost savings goals are no longer necessarily incompatible.

A Greener Bottom Line

Procurement teams now have the responsibility to support CSR efforts. They have the tools and resources in place to fully vet a potential supplier and can set standards for doing business. When empowered with the proper authority, procurement can set standards for sourcing that not only supports an enterprises’ overall CSR efforts, but supports a greener, more sustainable and healthier bottom line.

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