Procurement is changing. You’ve probably noticed a change in the way the function is described. Strategic. Innovative. Transformative. If cost control and quality control have traditionally been the key focus, we are now seeing the potential of procurement to boost sales.
How does procurement boost sales? By broadening the scope of ‘best value’ to include both economic value and social value. Better procurement can now give your business a competitive edge over rivals by demonstrating to increasingly socially conscious customers that you understand their concerns about supporting both people and planet.
The rise of social value
From Australia to South Korea, social value is shaping public expenditure. This should come as no surprise. After all, ensuring value to society is at the very core of what public service provision is all about. There is also legislation to underpin this in the UK in the form of the Public Services (Social Value) Act, which came into force in 2013.
The Act requires people who commission public services on behalf of the NHS, local authorities, government departments and other public bodies to consider how those contracts can secure wider social, economic and environmental benefits. There have been a number of announcements from Cabinet Office ministers recently outlining the government’s commitment to extend the requirement of the Social Value Act in central government to ensure that all major procurements explicitly evaluate (rather than just consider) social value. Government is also looking at the idea that social value should make up a minimum of 10% of the weighting when assessing tenders for contracts. The direction of travel on social value is clear, and other public bodies will follow the lead of central government.
This makes it crucial to demonstrate social value in tenders. There are different ways to do this, but more and more businesses are looking to their supply chains to add this value. In a post-Carillion world we all know that bigger is not necessarily better. We also know that using local suppliers can bring large benefits by enhancing a company’s connection with its local community.
The good news is that more and more of these potential suppliers are social enterprises, with social value built into their DNA. SEUK’s latest research shows there are approximately 100,000 social enterprises in the UK, far more than previously thought, contributing £60 billion to the economy and making up about 5% of UK employment.
Changing the way procurement is done
Firms like Wates have led the way in showing just how many opportunities there are. The Wates Group is one of the UK’s leading family-owned construction companies, and changed the way it did procurement a long time ago. As far back as 2010, I remember hearing about the company’s commitment to work with at least one social enterprise supplier on each of its projects. These days they have as many as 14 social enterprise subcontractors on some of their construction projects.
One supplier working with Wates is Recycling Lives. The firm helps its customers to increase their reuse and recycling rates, keeping them compliant with the latest in environmental regulations. They also train, support and employ people distant from the labour market, such as ex-offenders. 67 out of every 100 people across the country released from prison will reoffend. If they are released to Recycling Lives, only 3 reoffend. The value of this to taxpayers and society as a whole is huge.
What goes around comes around
The ripple of social value is spreading wider and wider. What is happening in central government, local government and the NHS is influencing behaviour in larger businesses who realise it makes business sense to align priorities with their public sector customers.
The Houses of Parliament operates a Sustainable Procurement Policy, which ensures social, economic and environmental sustainability criteria are incorporated into tender scoring processes. It includes a mechanism to facilitate and monitor the presence of social enterprise contractors and subcontractors in the supply chains of each House. In 2018, Wates was appointed framework contractor for the renovation of a sizeable section of the Parliamentary estate. Wates committed to investing £1 million in social enterprises by giving them access to the project, and commitments such as this played a part in the contract awarding decision.
Talk to procurement – and talk to other businesses doing the same thing
If talking to procurement can help your business win more tenders then, we’d also encourage you to talk to other businesses that are bringing social enterprises into their supply chains. To make this happen we created the Buy Social Corporate Challenge: an ambitious initiative led by a group of high-profile businesses which are aiming to collectively spend £1 billion with social enterprises.
Together there is an opportunity to create a virtuous cycle of influencing and supporting procurement to ‘buy social’, whilst at the same time promoting other businesses which are also doing it, increasing their sales and their impact.
The Buy Social Corporate Challenge launched in 2016 with 7 Founding Partners and now has 16 partners signed up. We are keen to open it up to more forward-thinking businesses. To find out more about how the Buy Social Corporate Challenge could support your business to bring about better social outcomes and stay ahead of the curve on social value, email Andy.Daly@socialenterprise.org.uk.