Progressive procurement: Shifting the corporate mindset

"Buy locally and buy with impact!" That is the sentiment behind the Public Services (Social Value) Act 2012, more commonly known as the Social Value Act. The primary aim of this legislation is to encourage the public sector to move away for ‘lowest cost’ to ‘best value’.
 
So far, the Act is working well - but not, as was originally envisaged, by encouraging councils to spend more. Rather, it is encouraging suppliers to do more through a Social Value weighting within the procurement process. For instance, an evaluation weighting might be 45% for price, 40% for quality, and 15% for Social Value.

Overarchingly, the benefits of the Social Value Act should not be the preserve of the public sector, and it strikes me that businesses wanting to take a conscious and progressive approach to their spending can make a real tangible difference in terms of social, economic and environmental wellbeing.

So, let’s address the approach.

Is progressive procurement the same as sustainable procurement?

The short answer is that they should be. But in my experience, it is more often the case that sustainable procurement focuses on an important but very narrow niche: protecting our environment and preserving biodiversity.

In many cases, sustainable procurement also includes issues such as adherence to the Modern Slavery Act and ethical issues like employment rights and fair wages. These are all massively important to address; in my books though, they are hygiene issues.

This is not to demote modern slavery in significance. Rather, it should be an absolute given that no business should have any form of slave labour or dangerous working conditions within its supply chain. As I said, there is no debate - it’s simply a matter of hygiene.

Progressive procurement is somewhat different. It looks to promote value creation. It offers a more socially responsible supply chain by requiring potential suppliers to compete, not only on price and quality, but also on how ‘good’ they are and how much they would contribute to society if they were to win work with you.

This is, in effect, what the Social Value Act has been doing for the public sector, and it can provide a successful blueprint for private sector procurement, albeit with a few teaks.

Making the public pound go further

Some of our corporate clients who already work with local authorities, and the UK, Welsh, and Scottish governments, will be familiar with the need to meet price and quality standards in their contracts. Now, they must also prove that local impact is planned in and delivered as part of a contract.

And for every £1 a UK Government team spends with you, they are targeting to deliver another 20p of tangible Social Value.

In a nutshell, this is what ‘progressive procurement’ is all about: maximising the value delivered by tax payers’ money – ultimately, the power of the public pound.

And now, making the private sector pound go further

So, what if local authorities or government bodies are not your clients?

It may be that your only link to the pubic sector is that you pay business rates and tax, and employees’ national insurance and tax. Actually, this is the same across many of our clients. As a corporate, you have the chance to lead the way in progressive procurement.

When we address our private sector clients’ needs, the desire to be socially responsible with the organisations’ spend seems to be less ingrained. And whilst many private sector businesses want to be sustainable and ethical, this rarely features in the final decision-making - and it is even rarer for it to be a part of the competitive process.

Truthfully, this makes no sense, given the private sector is afforded significantly more freedoms within their decision-making. The public sector is bound by rules and regulations, whereas the private sector can make their own. And yet, in this one area where there is an opportunity to take the lead, the private sector is lagging as much as five years behind fellow procurement colleagues within the public sector.

Time to lead

Ultimately, your business has a choice; it can choose to build a supply chain that creates and nurtures Social Value, or it can choose to work with suppliers that have little care for societal needs, and in some cases, actually destroy value. As a business owner, I know what I would prefer, and where the lowest risk profile rests.

Here’s how some of our clients are progressing procurement into new areas of Social Value:

• Imagine if for every £1 you spent with suppliers, you asked them to commit to a 20% delivery of tangible Social Value as part of that contract - just the same as UK Government has done. And imagine if that Social Value was to be delivered into communities that were important to your business.
• Imagine if you deliberately set a policy of buying a certain percentage from local small and medium sized enterprises within 20 miles of your offices. That action alone would create 75p of Social Value per £1 spent, as calculated by the Social Value TOM System™, because of the well-researched power of local money.

This is not imagination - it is reality for some of our clients, and it can be done. Your business has a choice and it won’t cost you more. Make it count.

Of course, it’s true that the Social Value Act was written specifically for the public sector. But given the way that it has transformed the supply chain, it’s now time for the private sector to step up and embrace its spirit to develop their own progressive procurement strategies.

It’s now time to take control of your own narrative, rather than let the outside world decide. The products and services you deliver every day impact people’s lives. It’s now time to tell your 'Social Value creation story'.

Learn how to embed Social Value in your operating model with our dedicated report: Creating real Social Value in the CSRD era.