Wie fit ist Ihr Einkauf?

In a series of ten regular posts published by the Procurement Leaders Global Intelligence Network I looked at the different facets to transform procurement to a partner of choice

Part 8 - CSR and the role of procurement

2013-08-02 13:08

The Procurement Leaders Global Intelligence Network publishes in its weekly newsletter a series of regular posts from experts from across industries and regions, looking at the issues procurement faces today. This is the eighth in a sequence of posts by former Deutsche Post DHL CPO, Hugo Eckseler looking at the different facets to transform procurement to a partner of choice.

The famous management guru Michael Porter and his co-author Mark Kramer have added with their 2011 HBR front cover story “Creating Shared Value” a new dimension to the corporate social responsibility discussion. Corporate responsibility programs - a reaction to external pressure - have emerged largely to improve firms’ reputation and are treated as a necessary expense, according to the authors.

Their credo: creating shared value (CSV) should supersede corporate social responsibility (CSR) and should be integral to a company’s profitability and competitive position, creating economic value by creating social value; businesses acting as businesses, not as charitable donors, are considered the most powerful force for reshaping capitalism and its
relationship to society.

It’s a visionary article but many of the issues outlined by the two thought leaders form part of our today’s world and need to be addressed here and now. So how does CSR effect procurement and supply chain management today and what is the role we are expected and able to play?

Well, the 2012 procurement surveys of Deloitte, KPMG, and others clearly indicate that CSR is one of the top priorities of many CPOs. First of all, their focus is on taking care of the CSR-related risks along the up-stream supply chain. This includes a proper handling of all contractual subjects in line with legislation and corporate guidelines, avoidance of corruption and fraud, protection of the environment and compliance with health & safety standards.

How real these risks are was brought to our attention in April this year by the shocking TV spots showing the crash of a textile manufacturing building in Bangladesh killing more than 1.000 people. It triggered intensive public discussions about the roles and responsibilities of global retail giants and their contract manufacturing practices in low cost countries.

The question is: how do we make sure it doesn't happen again?

Under the pressure of the public more than 70 western retail companies signed an agreement in the meantime to inspect (and repair where necessary) such plants on a regularly basis in the future. But the issue is not limited to the textile industry and will definitely lead to fundamental and critical discussions about current global sourcing practices.

It’s a difficult and extremely complex subject in view of the ten-thousands of suppliers that international companies often deal with; a sustainable solution across industries and countries will not be possible without a close collaboration between buying companies, governmental legislators, local authorities and other involved societal stakeholders.

There is no doubt from my point of view that the management of such risks will dominate the CSR agenda of procurement over the next years. However, we should not forget the role procurement can play to support corporate programs aimed at improving the company’s sustainability and reducing its CO2 footprint.

There are many suppliers around which have developed innovative solutions and procurement management should work as a “gatekeeper” and promote these solutions within their companies. The low hanging fruit like energy-efficient laptops or company cars has been picked already in many cases. Now it’s time to incorporate “green” aspects in TCO models for other purchased goods and services and ensure that they become part of specifications and RfPs/RfQs.

There are a lot of “MUST DOs” on the CSR agenda of procurement, some of them may form the foundation stones of new business models that better combine societal and economic needs toward what Porter and Kramer call “Creating Shared Value”.

Hugo Eckseler has been working more than thirty years as CPO and manager in manufacturing,
logistics and quality management at Deutsche Post DHL, 3M, WELLA and other multi-national companies. Today he works as senior consultant looking for innovative solutions in procurement and supply chain management.

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