Social Procurement: A New Way of Creating Impact
What if you knew that $180,000 was going to be spent in your neighbourhood to improve the local infrastructure, and you could donate part of it, we’ll call it 10 per cent, to worthy causes, places that would use the money to give jobs to people who needed them, or training, or buying from local producers. Would you do it? Of course, you would. The local economy benefits, the people doing the spending benefit from that warm fuzzy feeling, also known as engagement philanthropy and the organization benefits from positioning itself as socially aware and caring.
“All that is needed is a desire to find the opportunity.”
Now, what if, instead of $180,000, it was $180,000,000,000 (180 billion). That little 10 per cent kick has turned into nearly $2-billion. That’s a lot of social benefit.
It’s not a dream either. It represents the spending estimates by various government departments over the next 12 years through infrastructure Canada. And the 10 per cent idea, that’s social prosperity in a nutshell.
The various business units of an organization tend to grow in stature and title as they are rethought. The stores of the 1950’s became the warehouses of the 60s and 70s and the inventory of the 80s. Later they fell under these more encompassing names: firstly logistics, before eventually becoming the supply chain.
In a similar vein, staffing started out as the wages office before adding the welfare and well-being of the worker to their fiefdom. This ‘personnel’ department later became human resources and is now toying with human capital, among other titles, to show the next step in the evolution.
Back to the supply chain. This title covers a multitude of tasks. Raw material acquisition, some production, component sourcing, storage of material, logistics, movements, and sourcing. Buying was the department at your workplace where people shouted at their computers and crashed telephones down into their cradles, all the while screaming about hidden price percentiles, latent delivery costs and maybe even delays caused by the weather in the South China sea.
Buying then became purchasing, before finally settling into its title role of procurement. The name changes were almost an indicator of the increase in importance that the organization placed on the function. Buying was exactly what it sounds like, people in offices on phones getting you what is needed for an organization. As this began to create specialization, purchasing, as a department, recognized that field experts could save a company money with their knowledge of the market and suppliers, and their avoidance of risk exposure by canny shopping and judicious use of their spending power.
Procurement, the next step in the evolution of the philosophy of sourcing, showed how it could become more than a science, more than an art form, more than a series of progressive statistical wagers. Contracted suppliers became important guarantees of supply. Timeliness was linked to incentives, open and honest bidding procedures were encouraged, and a need for organizations to be seen to be doing the right thing for the community and the world became an important market booster and recruiting tool in the corporations.
Procurement also became political; the Apartheid economic embargo was highly instrumental in effecting change in South Africa.
It became an instrument of social significance; product boycotts protesting child labour in third world countries caused many businesses to change their ways, to procure, as it were, more ethically.
It became environmentally conscious; corporations found they could be seen to be more societally aware if they could claim, for instance, that a percentage of their manufacturing was done with recycled materials.
It also became more sustainably aware, a direct consequence of the environmental movement. This more holistic approach meant that purchasing power was claimed as a tool of management to right some wrongs and to shape the image of a company to be a closer reflection of their philosophy as well as the market they wished to be in. The end stage of this osmosis may very well be social procurement.
What is social procurement? Adding the adjective social in front of any noun generally turns the phrase into something important and maybe even revolutionary, so social procurement must be the next big thing, right?
Well, in this case, that’s true, if you’re a caring compassionate person who wants to help make the world a better place. Social procurement essentially says, what if we make the betterment of society a part of the function of the organizations within that society. It is a practical means to effect change. Not next year or next month. Now.
Social procurement leverages the power of the organization by encouraging procurement to focus on the local economy, not just in terms of investment, but also as a way to add to the social prosperity of the community. Companies, corporations, and organizations make a conscious effort to leverage their buying power to seek social benefit for the community.
Well, here’s an example. Pretend you are a municipality looking to contract out your grass-cutting work for the summer. As is the usual case, the municipal buyers prepare the requirements for the contract. Typically these include the scope of the work involved, the timeline, the standards that have to be met and the length of the contract. To all these conditions, the municipality adds a community benefits clause. In this example, it could be something deliberately vague, allowing the bidders for the contract to be creative in the ways they see themselves benefiting the community.
More often though, the social benefits are targeted. The municipality, working with local social profits, identifies some way they would like to see the local community benefit. It could be the improvement of a public space in the community (while you are mowing all the lawns, could you please build us a shrubbery at the entrance to the city) training opportunities (while you are mowing the lawns, please help your staff qualify for the advanced machinery course so they can come back in winter and drive the snow blowers) or job creation where it is most needed (while you are mowing the lawns, would you please hire some of our marginalized citizens who need the dignity of a job to get back on their feet).
It sounds like a wonderful idea, and many of us might look at it and say, “Oh, if only.”
Well, the ‘if only’ part has happened. The Regional Municipality of Wood Buffalo has launched a pilot program that is focussed on social procurement as an important part of their procurement policy, and something not too dissimilar to my story above has already happened , and will happen again and again. Indeed it is being embraced by all levels of government across the country, and what was once nothing more than a hypothetical concept is becoming a very real way of doing business. The message is out there and it is being received by suppliers. If you want our business, you need to bring more to the table.
The good news is that the social value of the social procurement benefits everyone. Social prosperity for all, by learning to rethink and leverage social capacity.
Round about now, when an article in YMM magazine starts talking about social capacity and social prosperity, you just know that the people from FuseSocial are involved somehow. FuseSocial is the social profit innovation team that works for the betterment of the Wood Buffalo community. They work to find better ways to build capacity within the community by working smarter and leveraging what we have in such a way that it becomes more.
Social procurement has been on their radar for some time now as it is a cost-free way to improve the social capacity of the community.
Again, wait. Cost-free? How?
Let’s go back to our example. If some form of social procurement is written into the purchase process, the cost to the municipality is negligible, and there may also be a cost-saving. Take the example above. If the offer to the market states that a percentage of the contract has to go towards hiring and gainfully employing people who have struggled in the workforce, then several things will all kick into place to ensure that this succeeds. The contractee will already be aware of the feasibility of their contract and will work side-by-side with the contractor to ensure that the resources needed for the fulfillment of the contract are available. They will know that there are workers ready and willing to mow lawns, and will facilitate such. The contractee will end the contract with trained staff available within the community, the contractor will have the satisfaction of a fulfilled contract that also did good for the community, and the resources needed to support people who couldn’t find work will be less stretched.
The idea has been easy to sell to the Municipality, who despite the perception that they are slow and bureaucratic, is really nothing of the kind. The Procurement department at the RMWB is doing this because, well, quite frankly there is no downside to social procurement. If and when it rolls out across Canada, its effect will be easily seen. The burdens on the thinly stretched social profit sector will be loosened by the creation of these new opportunities. The RMWB will get the credit for working towards a better community, and we all will have, at the end of the day, more from less.
Of course, the next step is to encourage more buy-in, not just at the municipal, provincial and national government levels, but also in the private sector. The Municipality is not the only organization in town that has bought into the idea either. The Arts Council has always been socially about getting the most bang for their buck, and other groups are also looking to incorporate the ideas into their outsourcing.
This is also not the place to play emotional tug-of-war with the big oil companies, who are all huge supporters of the community and especially the social profit sector. What these companies do with their planned giving and their strong sense of civil responsibility has in many ways circumvented social procurement as a specific procurement tool. Syncrude, for example, actively seeks to procure goods and services from firms owned by First Nations development corporations and Aboriginal entrepreneurs. Suncor has a similar policy in place. They don’t need to be told to do more. They do it without being asked.
However, if they were to encourage all their local suppliers to become actively involved in the social procurement movement, think of the changes that could be made.
The region is standing at the forefront of potentially one of the biggest changes in how social capacity is enhanced. The RMWB has taken a grand first step; FuseSocial is once again at the forefront of this critical social thinking. Big Oil has shown the rest of us the correct careful, yet caring path for years. All it needs is one more push for everyone else to become involved.
Social Procurement. Buying our way into social responsibility.