Third of buyers support cash incentives for suppliers to be more sustainable

Will Green is news editor of Supply Management
1 December 2014

A third of buyers would support paying suppliers cash incentives to be sustainable, according to a poll

In response to the question: “Would you give suppliers financial incentives to be more sustainable?” the SM Jury voted by eight to four against, but some jurors felt such a policy had merit.

Gary Moore, procurement performance manager at BAE Systems, was not persuaded. “Why incentivise a philosophy that, when a supplier applies the principles, it primarily benefits that supplier in many more ways than just cost base?” he said.

“We should encourage, support and provide coaching sessions for SMEs, or introduce sustainability measures as part of our scoring criteria. That should be our investment, rather than dangling short-termist cash carrots as though some sort of panacea.”

Elizabeth Love, senior buyer at Babcock International, added: “They should be following this route without the need for incentives if they want to remain competitive.”

Alex Martin, IT business services principal consultant at SAP, voted ‘yes’. “When it comes to sustainability, companies must keep the bigger picture in mind – it is not just them and their suppliers but other companies that are buyers and sellers within their ecosystem and, together, all can improve sustainability for the world,” he said.

“Sustainability is edgeless and we, as procurement professionals, should bear that in mind for our deals and include incentives in all deals from hereon in.”  

Emma Goodwin, procurement manager at Phoenix Group, was concerned incentives could widen the gap between the best and worst performing suppliers.

“There is possible risk of differentiation in those that are in receipt of the award and those which are not, whereby the gap could widen rather than decrease, with the poorest performers being removed, with consequences in the supply chain,” she said. “Is it not those who perform most poorly that require support to develop?”

 

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