The strategic role and impact of buyers within organisation is about to undergo some pretty fundamental change. This coming spring a new ISO 20400 norm for sustainable procurement will be launched, building on the ISO26000 norm for Social Responsibility. This new ISO norm will help buyers to create shared value through their operational activities and actively contribute to the health and welfare of society in an ethical and transparent way.
This article provides insight in the complexity and the obstacles buyers are facing in effectively shaping their changing role. It will further outline two crucial, interlinked skill sets along with some tools and processes that will help buyers working through complexity and obstacles.
Sustainable procurement practices will require buyers to redirect their goals toward a more complex set of social, ecologic, and economic (SE€) goals. SE€ value creation is generated by a system of co-dependent value chain partners. To optimise this co-dependent value generation trust is needed through transparency, open communication and shared planning. Dealing with this expanded view on shared value-creation will result in a higher complexity in transactions, interactions, and relations. Managing these complex relationships through transparent dialogue and collaboration will take more time and attention. Remote suppliers may for instance face different labour and environmental issues. These will all need to be incorporated into the design and goal setting for the supply chain.
Building trust and transparency plays a central, enabling role in shaping stakeholder relations. They form the foundation for effective and efficient work relations. In the process, buyers learn how to deal with the related changes in engaging collaboratively with their internal customers as well as their suppliers, bridging the gap of understanding between the two ends of the value chain. The strategic (re-) positioning of procurement is key to an organisation that aims to integrate, amongst others, circular-economic processes and closed value cycles into its operations. ISO 20400 prescribes the processes that are needed to align buyers and suppliers in managing this higher level of complexity.
Implementing the new ISO 20400 builds on two interlinked skill sets: the first, process-oriented skill set is focused on implementing the procurement processes that are prescribed by the norm itself. The second, engagement-oriented skill (and tool-) set helps in the daily operation of ISO 20400 by enabling a broader, facilitative managing of procurement stakeholders. Stakeholders that are crucial for a successful implementation and generation of the intended shared (SE€) value creation.
Developing the latter skill set depends largely on buyers’ own (inter-) personal ambitions along with an organisation that appreciates closer social engagement as a stepping-stone for growth for value-creation. And this happening in a work field that, so far, has been predominantly motivated by cost and economic value.
Initially, when implementing ISO 20400, the buyer is likely to be confronted with diverging ambitions, mind-sets, behaviours, cultures and systems; within her own organisation as well as with suppliers. By taking on the process leadership role around the central question “do we create or destroy value”, she learns to address the core issue and navigate the complex force field of change that lies before reaching sustainable (procurement) processes. Tools, such as the Buyers Compass, help her navigate the higher SE€ entanglement when engaging a broader and deeper range of process stakeholders in the supply chain.
She learns forming work alliances and networks that are motivated by shared purpose and vision, and that build on trust and transparency. In doing so, she increasingly stimulates collaborative skills and behaviour and employs these seamlessly in the traditionally competitive procurement work field.
Active learning processes help her and her internal stakeholders in a socially engaging way of getting things right faster when developing (material or product) specifications. Facing her supply chain, co-creative tools or processes like market consultations help her to engage with suppliers through balancing collaboration and competition.
Here is where trust and transparency are her keys that unlock innovation and progress towards sustainable procurement. Her is also where she forges supplier partnerships for the organisation that are needed to ensure (or enforce) a sustainable buying processes. This way she reaches sub-suppliers deep in the supply chain who trust that value is indeed shared and who understand that safe-guarding human rights is in fact one key to creating it.
Sustainable procurement and, ultimately, sustainable growth grows from the buyer’s ability of managing into supply chains and into layers of relations and maintaining a fluent link into her organisation. This is much affected by the size and the capability of the organisation. It makes a significant difference whether she is a buyer in a small or mid-sized enterprise SME like the 3rd generation, family-owned Dr. Bronner’s, an American producer of organic soap and body care products, or if she works from a multi-national like Unilever.
Dr. Bronner’s maintains lasting fair trade supplier partnerships through frequent personal visits. Living shared value is also the basis for its co-owning employees who work in a 1 to 5 capped ratio benefit scheme, placing the CEO within reach of the factory plant worker. Between 2002 and 2016 Dr. Bronner’s saw a sales increase of more than 2000% that reflects customers’ desire for sustainably produced body care products.
At Unilever, the buyer works through and from an extensive network of subsidiaries. Here, the organisation’s convincing marketing power helps her win over the loyalty of the brands’ wide range of suppliers and sub-suppliers. Within the organisation, she builds on the Sustainable Living Plan; launched in 2010. The plan is her platform as much as her shared value strategy link to a web of co-motivated internal customers and stakeholders.
Whether SME or multi-national, the core drivers do not differ: Shared purpose, value and trust remain the enablers of sustainable transactions and, hence, relations. They lead to a collaborative ecosystem of value and supply chain partners whose growing skill set stimulates new sustainable behaviour. From that emerges a shared mindset that eventually transforms the culture and systems needed to make sustainable procurement an integral part of a shared, SE€ value-based economy and thus a sustainable society.
February 17th, 2017
author: Stephan Jackmuth
co-authors: Tiina Obando, Peter de Ruijter