More effort required to boost social enterprise, say buyers

9 March 2011

9 March 2011 | Angeline Albert

Organisations must do more to incorporate social enterprises in their supply chain, according to the latest SM100 poll.

Some 65 per cent of purchasers polled said firms could provide more support to help businesses that strive to improve social outcomes become suppliers to them. The opposite view was held by 35 per cent.

Buyers cited cost concerns and a lack of support from leadership as key barriers preventing progress in this area.

Karen Wontner, purchasing manager at CardiffUniversity, said: “We are also under pressure to reduce spending and to collaborate, which tends to result in aggregated spend and larger value contracts. Any additional cost will be paid by the procuring organisation as part of the overall contract price, unless the contractor is prepared to sacrifice profits to meet the cost. For some, this cost may be justified as a trade off (put people back into work and it costs them less to support them) however other public authorities may not be able to produce a cost-benefit analysis justifying this.”

Most buyers thought social enterprise firms could pose a greater financial risk. Although splitting contracts up over between vendors may mitigate this, purchasers said approving a higher number of suppliers would be resource intensive and costly, and diversifying the supply base would also push prices up.

Some respondents argued if purchasing influenced more spend, buyers would be in a better position to find opportunities where social enterprises could be integrated into operations.

Others highlighted a lack of corporate knowledge about social enterprises as another barrier. A senior buyer in the automotive sector, who did not want to be named, said: “We need to ensure that these social enterprises can be competitive and win business. Within some big companies, there is a lack of knowledge about social enterprises and the services they offer. If they wish to encourage this activity in large companies, then they need to start approaching these companies and getting themselves known, this maybe an area where they need some support.”

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