There are many pieces of legislation that currently help govern procurement behaviours within a workplace such as the Equality Act 2010 and The Public Contracts Regulations which both provide for a legal duty to eliminate discrimination and advance equality of opportunity.
When coupled with the knowledge that procurement itself is the process of acquiring goods and services from third parties to achieve the optimal combination of costs and benefits to meet the needs of stakeholders, it is sometimes surprising that the advancement of equality of opportunity is not always at the forefront of every procurement professional’s mind.
Procurement decisions should always be made based on business requirements, market and supplier analysis and available market opportunities, however, various industry surveys suggest that still, by number, over half of decisions on procuring goods and services do not meet these criteria nor provide for an even playing field for all.
If you or your procurement team have not yet tackled the question of equality in procurement and supply chain, now is the time to start. It does not matter whether you are a procurement professional, an internal or external customer, a senior executive, or a direct or indirect supplier, you are likely to be negatively impacted by procurement decisions, no matter how inadvertently, being unethical in their nature.
So, what are the benefits of promoting equality and diversity within procurement policy and processes?
Well, initially it helps to ensure legal compliance whether this is in the shape of national or international legislation and it will also help potentially future proof the environment, with legal frameworks increasingly being adjusted to reward equality advancement, sustainable and/or ethical choices, with heavy penalties for those that don’t fall into this category.
In addition, the promotion of equality and diversity helps to ensure value for money from procurement activities carried out. By proactively managing the supply chain in this manner, sourcing is highly likely to become more efficient and has often been proven to reduce overhead costs by more than 10 percent whilst also helping drive enhancements to the quality of service and ensuring that business requirements and corporate policies are delivered.
The further benefits of developing a genuinely diverse and integrated workforce and supply base should equally not be overlooked with diversity shown to help provide more responsive and flexible services whilst building stronger and more cohesive communities around the organisation.
We should also not forget the fact that equality in procurement and supply chain is becoming more and more essential for brand loyalty. Many surveys across the past decade have indicated clear and common ethical messages including the fact that corporate reputation is now being driven by sustainable and ethical behaviours which in turn drives Millennials (born 1981 to 1996) and Generation Z (born 1997 to 2012) towards both, where they choose to work and just as importantly, where they choose to spend their salaries.
Delivering equality-based and sustainable behaviours, therefore, is not only important but is becoming critical to the future prosperity of organisations or at least those that position themselves to attract the wide and growing number of higher disposable income customers.
So how do we change the functional approach?
Primarily we need to review the processes that we are currently conducting and as part of this process we should logically consider:
- The scope of the procurement team’s ambition
Historically it would be normal to review just a small number of categories at a time, which would result in slow but incremental enhancements in comparison to the breadth of the full equality-based sourcing opportunities. To accelerate impact in the new world, procurement should take a much broader view and consider for review all categories with latent value in a much shorter timescale. This, of course, may depend upon the availability of temporary resources to complete the activity however often the benefit will significantly outweigh the cost.
- The structure of the procurement function’s organisational design
Is the functional design set up for success to eliminate discrimination and advance equality of opportunity or has it simply developed to the current status over time in a fairly fluid manner? Probably unsurprisingly, procurement functions need to be well thought through and should be structured in such a manner that ensures it is aligned to the achievement of the business goals and are able to operate in an effective and efficient manner.
- The ways of working within a procurement function
Value driven through eliminating discrimination and advancing equality of opportunity will, in part, be achieved through optimised category, contract and supplier relationship management whilst developing mutually beneficial partnerships. Historic non-strategic behaviours delivering isolated or myopic approaches should be re-considered and re-developed where appropriate.
Finally, in the current environment procurement and supply chain functions will not only need to know what they want to achieve but also the pathway that they are going to need to follow to do so. We should not forget that success is far more likely to be achieved if we have the key people in the same room, talking the same language with a common goal, the right sense of urgency, a well thought through plan and the right levels of communication.
Transforming your organisation’s procurement and supply chain behaviours is not simple but it is imperative and 4C Associates are very well placed to support you through the changes that are required to ensure you can genuinely say that you have market leading equality embedded within your procurement and supply chain functions.
In a highly uncertain world, looking retrospectively to improve procurement functionality will not be sufficient. If you would like to understand more about 4C’s transformation services and/or want to review our 2021 Procurement Professionals Annual Survey on ‘The Case for Change: Procurement Reinvented’, please contact Allison Ford-Langstaff.