In the previous blog post we discussed the need for procurement function to include corporate social responsibility in its agenda.
CSR as an activity is something that organizations adopt beyond the normal scope of work. (Though now many organizations have people dedicated to CSR.) For procurement to incorporate CSR in its agenda, the need to do so should flow strongly from the organization’s top level management.
At corporate level, organization policies, code of conduct, government regulations etc ensure ethical compliance. However, when it comes to procurement things get complicated as the procurement function has to deal with a vast supplier base that is mostly out of the organization policy purview.
So how does procurement function inculcate CSR in its role?
- Having a stringent supplier awarding and on-boarding process
Suppliers are the better half of procurement. While organizational policies take care of procurement function, it is necessary to ensure that procurement function has detailed out a stringent process for selecting and on-boarding suppliers.
A thorough background check should be done before signing on the dotted lines with suppliers. Apart from satisfying organization requirements, suppliers should also meet the government norms.
Most organizations today have a strict policy with regards to working hours, working conditions, wages etc for the workers, the manufacturing policy followed in the supplier factories, environmental risk, anti-corruption etc. However, just having it on the papers do not help, audits/inspection should be carried out occasionally at supplier factories to ensure they live up-to the norms.
Organizations should demand transparency in their supply chain by asking the suppliers to disclose if the product/raw material are being sourced by the supplier from other small vendors.
- Developing a supplier portal
This ensures suppliers can easily upload the required official documents. Organizations can keep a check on suppliers who do not submit the documents.
- Evaluating supplier performance
Based on various criteria – business and CSR related, as deemed fit by the top management, supplier performance should be evaluated periodically by the organization.
- Educating suppliers
Organizations can start programs for development of suppliers by giving them the necessary knowledge and financial help.
An organization actively involved in CSR not only creates a good image in the eyes of its customers but also improves the morale of its employees.
To talk about this topic in its entirety in 2 blogs is difficult. However the idea was to highlight significance of CSR in procurement and how it can be included by organizations in their procurement activities.