Transport for London: Examples of Responsible Supply Chains

Brexit

One of the stand-out sessions at the recent London Universities and Southern Universities Purchasing Consortia joint conference came from Tim Rudin, Supplier Skills Project Manager for Transport for London (TfL). TfL is the “owner and operator of Europe's largest integrated transport network”. It runs London’s buses, Underground network and some of the London Rail network, regulates taxis, and much more.

TfL has huge commercial scope and scale, spending some £10.4 billion a year. That encompasses a huge and diverse range of goods and services, from major construction projects to uniforms and marketing. Rudin explained that despite its apparent wealth, London has huge social challenges, and the TfL “responsible procurement” programme aims to help address those as a major element of its work. The programme stems from the Greater London Authority Group’s Responsible Procurement Policy, published 10 years ago and currently being updated, which has seven strands:

  • Equality and supplier diversity
  • Community benefits
  • Skills and employment
  • Workforce welfare
  • Fair employment
  • Ethical sourcing
  • Environmental sustainability

Rudin touched on each briefly, but before that he laid out the benefits of responsible procurement.

  • Helps manage reputation risk
  • Builds scarce resources and skills in supply chain
  • Brings improvement and innovation through supply chains
  • Helps deliver value for money
  • Meets policy and organisational objectives
  • It's the right thing to do!

One initiative has been to support the introduction of the London Living Wage amongst certain contractors. The organisation has implemented it in areas such as cleaning, catering, and security, and Rudin reported that “suppliers find that it makes recruitment easier, they get higher quality staff, with lower turnover, better productivity, motivation, and improved customer satisfaction.”

He explained that those benefits mean that suppliers should not be passing on the whole cost of any wage increase caused by the Living Wage to TfL. Those benefits should offset the additional costs. We suspect that leads to some interesting discussion with suppliers, but he is right in principle.

In terms of equality and supplier diversity, TfL aims to engage directly with diverse suppliers, diversify the supply chain and monitor and report on progress. In the procurement process for relevant tenders, equality and supplier diversity policy, action plan and training plans are all assessed at an early stage of the competitive process; they are “gateway” factors, where a bidder must provide satisfactory submissions in this area before quality and price are considered. .

There was more during his session on environmental sustainability and on ethical sourcing, where TfL are genuine leaders, certainly in the UK public sector. TfL was the first public sector organisation to join the Ethical Trading Initiative and Sedex, and is now affiliated to Electronics Watch (as we mentioned here).

The area of skills development is a huge area of challenge given the UK shortage of engineers. The approach TfL is taking in this area really deserves a more detailed review – so we’ll come back to that another day. But to wrap up the report on his remarks, here are Rudin’s keys to success in terms of building a responsible procurement programme:

  • Internal buy-in (including senior management)
  • Needs resource – the responsible procurement team provides support and guidance to avoid “let and forget” (i.e. losing focus after the contract is let)
  • Partnership working between TfL and suppliers - articulate the "why are we doing this", address common priorities and mutually beneficial activities
  • Working with the right partners
  • Celebrate success!

All in all, it is a very positive story and whilst Rudin was not at all self-congratulatory himself, TfL is undoubtedly one of the leaders in responsible procurement in the UK public sector and probably beyond. Whilst there is the need to ensure compliance with regulation, and some of the steps the organisation takes are not as easily replicable maybe for smaller organisations, there is much that many public and private sector bodies could learn from their approach.

We particularly like the way he links the activities to hard business benefits whenever possible; as in the case of the London Living Wage. It is not just a “doing the right thing” initiative; it can bring real benefits to the suppliers and to TfL. Some of the actions are more purely around the general theme of responsibility (such as using wood from sustainable sources), but in many cases, these actions are simply good business practice, with a real payback, as well as being “responsible procurement”.

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