A sticky situation
Imagine that a small manufacturing company makes an active effort to go green. The company decides to replace a long-standing plastic distributor with one that produces recycled materials. The minor cost increase for the recycled material motivates the company to seek savings elsewhere, resulting in the elimination of other suppliers. Shortly after, the company’s two main competitors produce reports on their spending with diverse suppliers over the past year—suppliers that are 51% or more owned and operated by an individual or group that is part of a traditionally underrepresented or underserved group. In an effort to produce a similar report, the company discovers that they eliminated a number of certified, diverse suppliers, leaving only one diverse incumbent supplier. Now, about that report…
Sustainability in procurement goes beyond saving money and going green
People, planet, profit – the Triple Bottom Line. It may seem simple, but when it comes to procurement in 2022, making progress in all three areas simultaneously is no easy task. Let’s break it down.
- People or Social Sustainability is gaining increasing attention, as companies examine diversity and equality; fair treatment; ethical labour and governance; health, safety, and security; and relieving poverty.
- Planet sits squarely in the spotlight. It comes as no surprise 2022 that many global corporations are doing climate assessments, tracking their carbon emissions, buying more environmentally friendly materials, sourcing renewable energy, and more. Maintaining a long-lasting environment for conducting business is as essential as conducting the business itself.
- Profit is innate. One simply cannot establish a for-profit business without sourcing cost-effective suppliers and producing income. Revenue is the fuel for the engine—the means to a business’s long-term success.
D&I as a business leadership priority
While cost-effective contractual terms with suppliers are the main procurement objective, procurement professionals have a heightened understanding today of the social aspect of sustainability. There are people behind supplier names, and because people represent different races, genders, cultures, religions, sexual orientations, socio-economic statuses, and many more unlimited components of individualism, those people must be recognized and treated fairly and equally. Diversity and Inclusion (D&I) is gaining enormous traction as a business leadership priority, a leap towards establishing socially all-inclusive work environments for people to thrive in.
Measurement begins with transparency
So how does one see or measure diversity as a procurement consultant? At Efficio, we believe it begins with transparency. Data serves as an effective lens into the truth about who clients are and who they are working with, small and large alike.
Collecting the data
Within the Workplace
Improvements to social sustainability can begin with a simple survey of the client’s workforce. While some employees may be uncomfortable with the idea of reporting some types of personal information, there are ways to achieve positive outcomes:
- Being clear with the intention to build a more inclusive workplace
- Ensuring anonymity
- Acknowledging that the survey is not the be-all and end-all answer but instead a way to jumpstart the beginning of a positive transformation
These are important points to make in the process of collecting sensitive, personal information. If executed with proper consideration, simple survey results transform into an extremely valuable tool for social success. Need gaps to become apparent, hiring goals can be established, funds can be allocated towards events and training… the possibilities are limitless to increase D&I within one’s own four walls, and the data will point towards the most logical action to become more distinctively diverse.
Outside the workplace (supplier diversity)
While internal diversity is pivotal in creating an all-inclusive work environment, supplier diversity is key to replicating that same work environment with external clients.
Diversity certifications are public information, however, and tracking for clients with hundreds or even thousands of suppliers is a complex process. Data-aggregators like Supplier.io (formerly known as CVM) provide quick, accurate diversity certification information for suppliers that are 51% or more owned by minorities, women, veterans, members of the LGBTQ community, and many more underrepresented groups. Partnered with Efficio on several recent projects in North America, Supplier.io provides both client-specific supplier diversity statuses and diversity statuses of suppliers by location, industry, type of certification, and more.
Without utilizing a data-aggregator, a simple survey or request for information (RFI) can be utilized to collect certification information from incumbent suppliers and, if desired, prospective suppliers as well. No matter the collection method, diverse information allows procurement teams to draw conclusions about the client’s current level of D&I within the supply base and perhaps never-before-known diverse candidates.
Establishing balanced goals for maximum resilience
Post-data collection, it becomes more clear which routes to take to improve D&I within both the client’s workplace and supplier base. Perhaps the client spent 3% of the total spend in 2021 with certified, diverse suppliers—while a solid, achievable suggestion would be to kick it up to 5-7% for 2022, establishing balanced goals might avoid a scenario like the manufacturing company experienced in the introductory “sticky situation” scenario.
Whether it’s onboarding new suppliers, eliminating current incumbents, or negotiating terms and conditions, asking the following questions can help retain balanced focus in all three realms of sustainability:
- Does this decision establish a socially inclusive environment?
- Is this decision an environmentally conscious one?
- Does this decision achieve savings?
While barriers to change are inevitable, these questions set the bar high for the type of success that doesn’t cause collateral damage to other sustainability initiatives. People, planet, profit, with every move. Learn more about Efficio’s sustainability services here.
If you are interested in obtaining a more holistic view of a beginner’s consulting world, check out Janae Isaacs’s “Day in the Life” article here.