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From compliance to value creation: How social procurement can create value in your corporate supply chain strategy 

As the call for sustainability intensifies across the entire stakeholder spectrum, ESG compliance in the procurement function is quickly becoming the standard, and value creation the new competitive advantage. But how can corporate supply chains create social and environmental impact? One clear answer is through social procurement.

Social procurement is a global movement that is slowly gaining momentum, where large corporations are integrating social businesses into their value chains. SAP for example, has committed to source 5% of its addressable spend from social entrepreneurs, alongside another 5% from diverse suppliers by 2025 (5×5 by 25). Similarly, French sneaker brand Veja is working with social business Groupe Ares to bring disability inclusion into its warehouse and logistics services. Cross-industry initiatives are also gaining traction, where multinationals such as Deloitte, Johnson & Johnson, and Siemens gather to collectively use their purchasing power for social impact by joining the UK Buy Social Corporate Challenge.

From the social business perspective, the benefit of social procurement is clear — working with large corporations can help social entrepreneurs to scale their business operations and increase their impact. But what is the benefit to the corporations? According to the global study carried out by Yunus Social Business (YSB) called The Social Procurement Manual, social procurement offers corporations a handful of strategic advantages, including:

Answering customer demand for socially sourced products and services which creates brand differentiation for the company

  • Reaching the company’s ESG targets
  • Improving employee engagement and talent acquisition

While social procurement offers procurement managers the opportunity to create value in their corporate supply chains, this opportunity does not come without challenges. Making the shift from traditional to social sourcing is not necessarily easy, requiring changes in mindset and operational practices along the way.

Supply chains as a strategic tool for change

As a pioneer in the impact sector, YSB calls on 10 years of harnessing the power of business to end poverty and the climate crisis, using corporate supply chains as one of their strategic tools for change. Their Social Procurement Manual offers a 5-S Adaptation for procurement managers interested in bringing social procurement to their organizations:

  1. Strategy — create a business case for social procurement combining financial and non-financial metrics.
  2. Stakeholders — get stakeholders excited about social procurement through a combination of a strong business case and an inspiring narrative. Be prepared to challenge myths of engaging with social businesses and bring facts to the table.
  3. Systems — enable your social procurement initiatives to shine by expanding your sourcing criteria to include impact benefits. By including impact criteria in your system for sourcing, social businesses gain a competitive edge.
  4. Scale — meeting the large-scale volume requirements of corporations can be challenging for social businesses. Address these challenges through capacity-building, long-term partnerships and collaboration with relevant intermediaries.
  5. Storytelling — social procurement is fundamentally different from regular procurement in the way that it touches people’s hearts. It has the potential to link everyday work with meaningful purpose and engagement. Maximize this potential by spreading the word about your initiative, your objectives, and always be transparent about your progress.

“Bringing social procurement into the corporate supply chain can seem intimidating at first, but it’s about starting small, focusing on less risky areas, and finding partners that can support you. It’s as much about bringing in innovation and diversity to your supply chain, as it is about social impact. Companies that are engaged in social procurement today will continue to succeed and lead in the future” says Oliver Hurrey, Chair of the Sustainable Procurement Pledge, a growing global non-profit community of thousands of procurement leaders wanting to more easily embed sustainability into procurement.

For greater transparency and better decision-making, procurement leaders can consider investing in digital tools that help them gain a deeper understanding of supplier data across the entire value chain. Spend Matters TechMatch is a great tool to identify and assess the digital solutions that are available.

For identifying opportunities for impact within the corporate supply chain and sourcing social businesses that are corporate-ready, YSB offers the Unusual Partners Program which ensures that procurement managers starting out in social procurement can derive the corporate benefits and positive impact that working with social businesses can bring.