How an inclusive sourcing strategy can strengthen supply chains

Improving inclusive sourcing policies will help empower vulnerable communities, improve supplier diversity, and strengthen supply chains, according to a report.

The report, by Business for Inclusive Growth, said the right procurement strategy can boost sustainability and social responsibility while improving lead times, supplier quality and competitiveness, and innovation throughout the value chain. The report identified “significant opportunity for companies to promote inclusive practices and maximise their inclusion footprint.”

It said: “Many companies have already taken important steps to ensure the respect of fundamental human rights and labour rights within their supply chains. Embedding the concept of inclusion into their sourcing practices is an additional step forward in the journey towards a truly inclusive growth.”

Business for Inclusive Growth’s methodology guide aims to build a procurement strategy that meets business performance standards as well as social impact goals. Inclusive sourcing involves providing supply chain access to people in vulnerable situations, diversity of suppliers, and responsible supplier policies.

Jean-Gil Saby, chief sourcing officer at BNP Paribas, said inclusive sourcing had helped drive a continuous enhancement of sourcing standards. “Participating to develop inclusive sourcing through collective methodology is a foundational step to support more diversity, innovation and agility to serve BNP Paribas commitments.”

There are three key stages to implementing an inclusive sourcing strategy.

1. Drive engagement

For procurement teams and company leadership, a common vision will ensure everyone is on the same page. Understanding the challenges, building strong managerial commitment, and ensuring access to resources will follow.

This stage begins by assessing the current state of supply chains, understanding where inclusive suppliers are and where improvements can be made. With that baseline in mind, procurement can then set an overall ambition and objectives. 

Building the business case for inclusive sourcing could involve a project team capable of working across functions. The business case could include:

  • Brand and product differentiation

  • Mitigating risks and fostering reputation

  • Building partnerships with non-profits and institutions

  • Decreased supply chain risks and increased savings

  • Improved and reliable partnerships with newly-trained suppliers

  • Access to impact financing opportunities like social bonds

2. Build roadmaps

Focus on priority areas – whether improving in a specific area or with regards to a specific demographic – and assess the potential impact and feasibility of different procurement categories in these priorities. Accountability throughout the value chain will help ensure these assessments are accurate.

Once assessed, pilot programmes can be deployed, which will inform the bigger overall roadmap. Use these pilots to help define KPIs for monitoring and measuring progress, and improving social, environmental and business impact.

3. Ensure transformation

Formalising the inclusive sourcing commitment ensures both internal and external communications reflect the actual values of the company, and integrating it into governance will demonstrate dedication to the journey.

With the roadmap certain, procurement teams can adapt processes to begin meeting set objectives. If training is required, this can be completed in tandem with employees and partners.

Communicate strategy and achievements to enrich other companies on their inclusive sourcing journeys. Additionally, the support of external stakeholders will be critical in order to scale up – ensure communications include evidence of impact and lessons learnt on scaling up.

The report added: “NGOs and development agencies have specific expertise related to the theme of inclusive sourcing. Engaging with them as early as possible in the process can help capitalise on their expertise and improve the legitimacy and credibility of your inclusive sourcing approach.”

The report was produced by Business for Inclusive Growth and a partnership involving the OECD and companies including Danone, Keurig Dr Pepper, L’Oréal, Mars, Pret A Manger and Veolia.

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