The insurance company is increasing its spend with social enterprises along the value chain, boosting engagement with executives and suppliers
Insurance firm LV celebrated its 175th birthday last year. The mutual was founded in 1843 to provide financial schemes for the funeral expenses of working class people in Liverpool. This history now translates into procurement strategy.
“We were founded with a deep social purpose,” says CPO Karl Poulsen. “Our ‘Green Heart’ procurement strategy draws from that history.”
Poulsen is referring to LV’s commitment to buying from social enterprises, announced on Valentine’s Day 2018. In April, it joined Social Enterprise UK’s Buy Social Corporate Challenge, a coalition of firms aiming to collectively spend £1bn with social enterprises.
“We spend about £750m [annually],” says Poulsen. “If we could spend that with social enterprises, it would reconnect us with our purpose. It moves beyond CSR.”
The team started off with quick wins, transferring several facilities contracts like soap, coffee and office supplies to social enterprises. Now the challenge is to move engagement with social enterprises further up the value chain, where it could have an even greater impact.
The company is already working with Auticon, an IT consultancy that employs people with autism. Poulsen is currently considering how to engage more social enterprises in the customer services part of the business, specifically around claims repayments, which use garages and builders.
“We spend a lot in those areas,” he says. The challenge is making sure the services are available to deliver at volume, and all over the country. “The biggest challenge is scale,” he adds. “It’s tough because we don’t know what our claims profile is going to be. It only takes a couple of big weather events to push volume up, putting stress along the supply chain.”
That’s why it’s critical that procurement acts as a business mentor and coach with social enterprises. Given LV works in a highly regulated environment, this education piece becomes even more important.
“Procurement is moving into that mentoring role,” says Poulsen. “It’s different from that traditional procurement skillset of analysis and negotiation.” This shift is proving popular with his team, who feel it is aiding personal development.
Increasing interaction with social enterprises has engaged Poulsen’s executive colleagues more with procurement, he says. “They are energised by us doing something different. It makes them feel good.” This is aided by the fact the procurement strategy fits well with the overall business mission: “It’s not about going massively altruistic.”
An additional challenge is measuring success. LV is looking at how many lives are impacted. Such a powerful message can then be spread throughout the supply chain. “It’s in our DNA,” says Poulsen. “We are not just jumping on the bandwagon.”
Share the journey
LV recently held a conference for its top 80% of suppliers by spend, sharing its vision around working with social enterprises. “We are taking it into our existing supply chain,” says Poulsen. “It’s about challenging them as to how they are going to help us in this journey.”
The response from the suppliers was “great”, with some legal services suppliers already signing up to buy office supplies and coffee from social enterprises and IT providers considering a partnership with Auticon.
Engaging partners in this discussion will help to deepen the penetration of social enterprises into the supply chain of large corporates, and spread it into a wider variety of sectors. “I have been massively encouraged by the response of our supply chain,” Poulsen says.