Procurement with a Purpose

Procurement with a Purpose

Aided by business networks, Asian companies are both doing good and doing well

In the old days, procurement was focused on two things: minimizing costs and risk. Today, it’s all about sustainability and corporate social responsibility.

According to an MIT Sloan study, 70 percent of companies around the world have made sustainability a top priority. And procurement is leading the way in driving it through new models of operating that protect the environment, support local communities, uphold the human rights of workers, and provide visibility into the supply chain.

Gaining a Conscience

What’s driving the change? A Nielsen study reports that about two-thirds of consumers are willing to pay more for products and services from companies who are committed to positive social and environmental impact. Nine in 10 consumers expect companies to not only make a profit, but also operate responsibly to address social and environmental issues, according to another study by Cone Communications. Additionally, it reports that 84 percent of global consumers said they seek out responsible products whenever possible.

To align with their customers’ agendas, companies across the Asia Pacific region are embracing modern solutions that enable them to do well for their companies while also doing good.

Stamping out Slavery

Eight Australian businesses – Woolworths, Coles, Big W, Masters, Simplot Australia, Goodman Fielder, Inghams Enterprises and Officeworks – for instance, recently pledged to work together to reduce, and ultimately eliminate, forced labour, human trafficking and slavery from their manufacturing process and supply chains.

Slavery? Yes, you read that right. It was abolished centuries ago. Yet there are still more than 30 million forced laborers around the world today. And many of them are lurking in modern supply chains.

In today’s connected world, this doesn’t need to be the case. Social networks have no doubt transformed our personal lives. Chances are good you’re reading this article on a mobile device. You may even be riding in a cab that you hailed using Didicar after picking up your mobile order from Starbucks that you paid for using Paytm. And the same technologies underlying these services are now being used to tackle some of the most pressing challenges that global businesses face. Like slavery.

Leveraging the power of business networks like SAP Ariba and the intelligent, cloud-based applications underlying it, companies can gain a whole new level of transparency into the capabilities, performance, and social and environmentally responsible practices of their suppliers – and their suppliers’ suppliers. They can map the bill of materials for products and services right down to their raw materials and cross-reference this information with hotspots where there is a high propensity for the use of forced and child labor to determine their risk.  And more importantly, they can receive timely alerts they can use to drive actions and report on them in meaningful ways.

More than 2.5 million companies – including over half a million in Asia – are connected to the Ariba® Network. And they use it to conduct over $1 trillion in commerce. Collectively, these companies have the buying power to ensure that suppliers provide transparency and fair labor practices across their sub-tier supply chains. Those who choose to do so can make a real difference – not just for their companies, but for all of society.