Ethical Sourcing – Procurement’s New Role

Procurement isn’t a straightforward process; it’s not just about sourcing and buying the cheapest products, or hiring services at low rates. Procurement is central to many critical business functions and the expectations on the department have increased significantly in recent years. Is your procurement process up to this level of scrutiny?

Customers are asking questions

Now, more than ever, customers are demanding to know that the companies they do business with are ethical, honest and reputable. They’re asking questions about the labor force and want to know where the raw materials come from (think of child tailors in the garment industry or gang-led miners digging sapphires from strip mines in Africa). While those examples may seem extreme, it serves as a wake-up call to do a bit of an audit on your procurement process; are you sourcing ethically? Paying fairly? Do you have the records to back it up?

What’s your Code of Conduct?

If it isn’t crystal clear to your procurement team what the company stands for, how can they uphold and defend those values? Creating a Code of Conduct for procurement doesn’t have to be a complicated process; in fact, it can be one where your staff get involved and can take part in creating it. Then it’s not just a wall of words someone in corporate tacked to the bulletin board; it’s a mantra that everyone has had a hand in creating.

Before: costs at all costs. Now: ethical sourcing

To varying degrees, procurement has always been about cost savings, but ethical sourcing is a newer idea for many professionals. Where a decade ago, mostly all that mattered was getting the cheapest goods or services, today it’s about ensuring your suppliers pay a living wage to their workers—and that they’re taking care of their communities too.

Sustainability

Ethical sourcing forms an important part of the broader topic of sustainability. Is your company, and by extension its suppliers, doing its part to meet the economic, environmental and social needs of the present without compromising the ability of future generations to meet their needs? It’s an incredibly important topic and your action, or inaction, in this regard is being judged, whether you like it or not.

Diversity

While historically, diversity and sustainability efforts have been managed separately in many organizations, leading companies are bringing these two together under the one roof.

It’s important to build a procurement team that understands ethical sourcing and sustainability to be top priorities, and that is comprised of a balanced slate of individuals who reflect the diversity found across the markets and communities that you, as a business, your suppliers and your customers exist and operate in.

Proactively creating and promoting diversity and inclusion of all kinds within your team, and across your supply chain is both the right thing to do and proven to improve sustainability and innovation. If you don’t have a formal program in place already then get on it.

Ethical sourcing: from start to finish

At its core, ethical sourcing is about finding, purchasing and deploying services and products that were attained at the highest possible standards. For responsible brands and companies, ethical sourcing extends beyond the act of seeking out goods or services. It also includes how you search for, interact and evaluate—not to mention how well you develop relationships with suppliers. Not sure your processes are up to snuff? Now’s the time to start asking questions—because if you don’t, your customers will. And no company wants to get into a public debate or be forced to defend procurement practices on social media, which is invariably where these issues arise.