Corporate social responsibility is commonly defined as an initiative taken by the organization to assess the impact of the organization’s activities on the society and take responsibility for the same. This could be in the form of society welfare programs, using environmentally friendly products or any activity that is undertaken for the benefit of its employees and society at large.

Today organizations are at a juncture wherein consumers are demanding transparency into how the products are being manufactured and at the same time are concerned of the impact it has on the society. The wide media coverage, pressure from consumers, human/society welfare groups and strict regulatory norms put the global procurement organizations in a very difficult spot as they need to keep a close watch on the supply chain which runs into tiers of suppliers all across the globe.

In recent times there have been many incidents like;

• Clothing factory in Bangladesh that was on fire
• Collapse of storage area at a footwear factory in Cambodia
• The horse-meat scandal that created havoc for Tesco

The list goes on..

These incidents echo the need for procurement function to be conscious of its activities and also that of its suppliers and the impact they have on the surroundings.

With rising commodity costs, cut throat competition procurement function is under tremendous pressure to achieve its primary goal of generating savings. Goods are often sourced from developing economies to get that necessary cost advantage. Given this to ensure ethical compliance across the supplier base is a challenge that daunts the organizations.

In the next blog post we will attempt to explore ways in which procurement too can be socially responsible.