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  • Getting social enterprise in to supply chains

    By Charlie Wigglesworth, Head of Business Development

    One of the most interesting and consistent trends to emerge from my work with SEUK’s corporate partners has been around their desire to look to integrate social enterprises into their supply chains. Whatever the business, from telecoms to banking to construction, there has been strong interest in working with social enterprises and much of my time recently has been spent meeting with heads of procurement to look at how this can be achieved.

    Their reasons for doing so are as diverse as their businesses, however there have been a few key drivers.

    First is a commitment amongst businesses to doing things differently – why create expensive CSR programmes that distract from core business when you can potentially achieve much greater social impact through simply procuring differently?

    Secondly, there has also been an increasing realisation that businesses are only as strong as the communities and society they represent. This view has been espoused by academics such as Michael Porter (on shared value) and influential business leaders such as Paul Polman, Chief Executive of Unilever, who has talked about how “most businesses think how they can use society and the environment to be successful, while we think about how we can contribute to society and be successful.”

    Thirdly, the Social Value Act also has the potential to accelerate this process for public sector-facing businesses – what better way to demonstrate your social value than by showing the number of social enterprises who will be part of your supply chain in a successful bid?

    The potential for social enterprises themselves is clearly huge – at a fundamental level, procurement budgets dwarf CSR budgets and so the potential spend on the sector is greatly increased, and there is clearly an increasing appetite from large businesses to engage. These large businesses do put out large contracts, however, which is a major barrier: the size of contract is beyond the reach of most in the sector. As a route into procuring from social enterprises, we have strongly encouraged corporate partners to look at their “discrete spend” i.e. areas not covered by centralised procurement such as away days, events and corporate gifts or spend below central procurement regulations. Success in these areas can be critical to establishing confidence that buying from social enterprises can be the same as buying from any other supplier.

    Furthermore, where size of contract is a barrier there is the potential to exert pressure on tier 2 suppliers to change their procurement practices on smaller contracts creating a ripple effect through the private sector. Much of the success of Marks & Spencer’s Plan A initiative has been in the pressure it has exerted on its supply chain to change their behaviour – while in that case, it has largely been around environmental targets, there is no reason the same cannot occur for social ones as well.

    There are a number of positive examples of this. SEUK have recently entered into an agreement with Wates, the construction group, to run a new social enterprise brokerage service. Wates, who have a long history as a responsible company and through their charitable foundation, have set themselves a target of having a social enterprise supplier on each of their new construction sites with a total spend of £5 million by 2015. SEUK will be helping Wates to identify relevant social enterprises, broker deals and promote Wates’ procurement opportunities across the sector.

    Wates are certainly at the forefront of the push amongst large corporates to embrace social enterprise and proactively integrate them into their supply chains. A number of other large organisations are hot on their heels however including O2, PwC, RBS, Deloitte and Telereal Trillium, all of whom have made significant commitments to increasing their social enterprise engagement in the past year.

    While there is much positive news and progress on the private sector side, there is also a central challenge on this side of the equation too – for social enterprises to prove that they can deliver on quality and price against existing suppliers and, as the market develops,  at scale. While there is appetite at the moment, failure to do so will make this a short-lived experiment for many companies. If social enterprises can deliver consistently however, there is the potential for ‘buying social’ to become a no-brainer given the additional benefits outlined above, creating a better deal for everyone.

    Social Enterprise UK would love to hear from members and social enterprises trading with other businesses, as well as businesses interested in getting social enterprise in to their supply chains. Please contact charlie.wigglesworth@socialenterprise.org.uk

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