As we await publication of the Levelling Up White Paper addressing issues such as social inequality – as foregrounded by the Conservative Party’s 2019 manifesto – we would do well to remember Anne Frank’s words when she was in hiding from the Nazis: “How wonderful it is that nobody need wait a single moment before starting to improve the world”.
As procurement and commercial specialists, 4C consultants are passionate about making a difference for our clients and their customers. So much so that we have dedicated a whole section to it in our forthcoming book, “Private Sector by Head, Public Sector by Heart”. Be Responsible is about getting us to deliver sustainable outcomes as well as thinking about how we become a good citizen.
The following is an extract from our chapter on Deliver Sustainable Outcomes where we focus on the procurement professional’s role:
‘Be careful what you wish for, lest it come true!’ is timeless advice from Aesop’s Fables. It is also particularly instructive in how specific you have to be in articulating what it is you want to achieve with your supplier.
Consider two scenarios: The first, a council which lets a contract for a playground with an output- based specification that includes the latest and best playground equipment to be built in an area not far from a large housing development; the second, a council that lets a contract which defines the outcome as happy, active children. Which one of these is going to deliver long-term sustainable outcomes?
In this chapter, we explore the concept under the twin headings of outputs and sustainable outcomes. Take time to think about the outcome and not just the output. How does your organisation deliver sustainable outcomes?
Often, organisations are defined by reference to their outputs alone: the goods and services the organisation produces to meet the market’s demand. It can be straightforward to pin down what outputs are needed to meet the needs of your customers, such as the first council in our scenario above; however, unlike outputs, outcomes are often forgotten or excluded from an organisation’s strategic objectives. They are much harder to define and even more difficult to measure.
Society’s demand for sustainable outcomes is justifiably increasing. Stakeholders do not simply expect goods and services, works or supplies that just meet their needs at the lowest price. Your customers, organisation partners or suppliers should also consider how every purchase or supply they make or every service that they consume is generating benefits – and not only for themselves as individuals or as an organisation. They now need to factor in what impact their actions have on the environment, the economy and society as a whole.
Furthermore, anyone who contributes to the organisation’s internal function, such as employees or investors, should also think how everything they do could contribute to delivering sustainable outcomes to society as a whole.
As an organisation focused on increasing social value, you should take time to think not just about your outputs, but also how you deliver continuously sustainable outcomes. This should be a golden thread through your organisation’s strategic objectives.
Sustainability should be incorporated into every function of your organisation. To assess how these are effectively implemented, ask yourself the following questions for each of the three factors – Environmental, Social and Economic (ESE):
- What ESE outcomes do we want to achieve as an organisation and what are the stakeholders’ expectations?
- How will the organisation drive optimal client ESE outcomes?
- How can ESE outcomes be measured and evidenced?
- After all, what do we gain from this?
Looking across the organisation, how do we actually achieve these outcomes?
Building stronger relationships with stakeholders while making sure that they have a clear understanding of what services the commercial function can offer to the organisation is central to the procurement function. It is a recurring theme in other chapters for good reason. A strong relationship will give you the opportunity to have regular contacts with your stakeholders. This should provide you with vital information and a broader understanding of the potential for future procurement requirements which will enable you to put together a procurement forward plan. You will then be well placed to engage with your stakeholders at the beginning of the purchasing cycle when needs are identified and specification determined.
You should not hesitate to challenge existing culture and/or practices within the organisation if they are not best practice or appropriate. Make sure that you offer your expertise so that any goods or services that are being procured are in alignment with the organisation’s strategic objectives and will contribute to delivering sustainable outcomes. Some key points to consider include the following:
- What is the whole life cost of the goods or services? Think about areas such as value for money, environmental, social and economic impact as well as the usual considerations (such as price, quality, lead time, functionality, compatibility, transactional costs and so on).
- Is there a more sustainable version of the goods available within the marketplace?
- Can services be delivered in a more sustainable way?
- Is sustainability included as part of the service specification?
- Who are the potential suppliers? Are they ethical providers who reflect your sustainability goals?
- Does the specification make your expectations clear regarding the sustainability of the goods or services?
As a procurement professional, you would not be expected to draft the service specification, especially if you are not the subject matter expert; however, you can review or input into the service specifications from a purchasing or commercial point of view. Is the specification clear, accurate, up-to-date and complete? For example, do you engage a landscape gardener to cut grass and control weeds six times a year? Or do you contract for regular maintenance of grassed areas to ensure a certain aesthetic with measurable and qualitative standards (outputs vs outcomes)? Is the specification a combination of the function that needs to be performed (outputs) and the results (outcomes) that need to be met by the solution?
You should be confident and provide guidance or advice as well as undertaking commercial activities (such as market research insights to understand what the market currently offers) based on your commercial expertise. Another way of supporting the stakeholders in drafting sustainable service specifications is by ensuring that they are fully aware of your sustainable procurement strategic objectives or contract procedure rules or policy. Disseminating your sustainable procurement policy can help establish a clear commitment to action and ensures that service specifications are developed in such a way that they include sustainable outcomes. A sustainable procurement policy should highlight your organisation’s top sustainability priorities and set your core procurement criteria. You might expect it to address such matters as emission reduction and waste minimisation, recycling, carbon footprints, low use or reuse of plastic and a process for conducting sustainability risk assessments for new contracts. Other ethical considerations, such as equality and diversity, child labour, forced labour, human trafficking, corruption, water monitoring, bribery and fraud could also be included.
There are many ways to successfully disseminate your sustainable procurement policy. Consider the following:
- Easy to read posters (online and hard copy): Summarising key areas in terms of sustainable outcomes to take into consideration when defining needs and determining specifications can be
- Presentations: Having a short presentation with your key stakeholders where you can talk about the sustainable procurement objectives and how, together, you can achieve these throughout the whole procurement
- Always refer to the policy and/or relevant legislation: In every professional conversation (emails or meetings), you should always refer to the relevant procurement policy or legislation (including Procurement Policy Notes). Your stakeholders are reminded that there is a collective commitment to achieve agreed sustainable goals.
- Market shaping: When engaging with the market via various procurement routes (such as Prior Information Notices (PINs), early market engagement or a market warming exercise), you should ensure that you inform potential suppliers about your organisation’s sustainable objectives and motivate suppliers to offer more sustainable products or services.
What would that result in for the end-customer and society in general?
A satisfied customer is vital in order for your organisation to survive, whether you are public or private sector. End-users or customers do not simply expect high quality outputs at the most economical or lowest prices. They are becoming more socially and environmentally aware and expect organisations to deliver sustainable outcomes.
Most customers are thinking more ethically about their purchases and may be willing to pay more for goods or services that provide sustainable outcomes if the longer-term benefits are properly explained to them. Keeping your customers satisfied will put your organisation on a trajectory towards success. Delivering sustainable outcomes may require more investment upfront, but will deliver more social value from your organisation for the people it serves and the environment in which it operates. It will enable you to build a reputable brand image based on behaving responsibly and providing sustainable outcomes.
To sum up, delivering sustainable outcomes should form part of your key strategic objectives. It is not about outputs alone; it is also about looking beyond the traditional way of conducting business where simply meeting the needs of the customers at the lowest price is the main goal. Delivering sustainable outcomes is to your organisation’s advantage: it promotes innovation which can help achieve best value for money; it reduces the adverse impact on the environment and the local economy; and it can promote resource efficiency for both suppliers and customers alike.
‘I have been working in supply chain management for well over 35 years and sometimes there is a contribution to the profession that you just know is really going to make a difference, I believe Ian’s book is one of those. I really enjoyed the collaborative style that comes through in every chapter, the examples that bring the points alive and the ‘how to’ pointers that allows the reader to relate to other practitioners in the ‘decision’. The procurement profession has seen a substantive rise in the use of shared outcome purchasing and this book shows why. Having started in procurement and ending up in sales, I can sense where Ian and his collaborators are coming from, an ethical profession, trying to drive ever-increasing value in a fast moving world and finding a way to share best practice between public and private sectors along the way. This book will be valuable to all involved in buying (and selling) both products and services and I congratulate Ian for having the foresight to pull it all together.’
Paul Brooks FCILT FIOD, Director, Go Further Consulting
‘This is a timely publication; indeed it must be said that such a publication is long overdue! The title alone must herald the ethos that professionals in public sector procurement and supply chain management environments must adopt in order to enable more effective performance for their respective organisations.
For too long there has been an approach in the public sector environment that is based upon not being open to criticism, with a need to ensure that rules and regulations must be adhered to at all costs – which leads to an ethos of caution with an assumption that one must prove that that they are not guilty of any supplier preference (and therefore suboptimal solutions).
Such an ethos frequently suppresses professional judgement, which can be overcome by the sound and successful approaches that are presented in this book. It recognises the challenges of procurement and supply chain management in such public sector contexts, yet provides proven approaches that can vastly improve organisational performance – and enhance the satisfaction of those professionals involved and thus encourage further professional development.
The contents enable belief, confidence and indeed courage, to be employed in contextual decision making through a straightforward, structured and enjoyable set of integrated relevant proven techniques and approaches. This is a valuable asset for all public sector procurement and supply chain management professionals, which I thoroughly commend.
Dr David M Moore, Director, Centre for Defence Acquisition Cranfield University, Defence Academy
Private sector by Head, Public Sector by Heart is due for release on 8th February