Ethical procurement has become big news across many industry sectors, with the way that a supplier conducts its business and treats its own employees as significant a deciding factor as its prices and profit margins for many companies involved in the tendering process. Ethical sourcing has a number of advantages, including encouraging suppliers to work at the highest levels of responsible and sustainable business operations, extending ethical practices to delivery and health and safety protocols and reducing risk all the way along the supply chain.
As we start a new year, perhaps it is a good time to make switching to, or increasing your ethical procurement methods to play your part in raising standards, safeguarding vulnerable workers and protecting quality standards of products and services around the world. Here’s how to get started on your own ethical supplier database.
Do your research
Make sure that you know what an ethical supplier database looks like, namely which companies should be on it and why. Online research can get you started in drawing up a shortlist, but do bear in mind that an organisation’s website and social media platforms will only say what the company (or its PR agency) wants you to know about the way it operates, so dig a little deeper than simply dropping by for a quick read. The same goes for any brochures or sales pitches a potential supplier may provide you with. Check their records with Companies House, research the individual directors, check for any customer reviews – good and bad – and see what kind of media coverage they have been getting.
The internet has enabled us to find out more and be more connected to each other than ever before. It also enables rapid communication, instant updates and live following of news as it happens. Use this to your advantage to keep track of your suppliers’ operations and stated ambitions and values to check they still align with your own. There are several procurement software packages, such as database management systems and price tracking technology that can help you keep pace with your suppliers’ progress, contracts, vision and commercial behaviour.
Informal, in-person audits
No-one can get the full picture from desk-based research. It’s time to get to your feet and go and pay your potential suppliers a visit. A formal, pre-arranged appointment will give you some ideas about how this operate, but the best way to find out for sure about their factories, workers, health and safety and other procedures is to drop by unannounced. Find out if the company is happy for you to do this at an early stage in negotiations, as any reluctance can be a red flag. Keep things informal – no company will operate at its full potential if teams are feeling judged and under scrutiny. Rather, work to establish an easy, mutually trusting working relationship that enables you to ‘drop by’ for a chat without it seeming suspicious.
On the subject of a trusting working relationship, take time to find out how your suppliers react to collaborative working. Are they open to any suggestions or constructive criticism? Are they happy to share resources, working practices and to be open about how they finance their products and services? Do they show interest in the industry best practices and regulations that mandate your own business operations? Would they be willing to work with any already existing suppliers on your database to combine services, for example, or to share cost-savings through bulk orders? Again, any reticence to co-operate may be a warning sign.
Take it personally
Keep in regular contact with your suppliers and get to know them personally. It is crucial to know and understand how the individuals with whom you are working tick. Make sure they see you as a rounded individual too, rather than the name on a contact sheet to call only if there is a problem. If a supplier knows you better, they will be more likely to call you with a concern, rather than try to cover it up, which could lead to costly or even tragic consequences later on. Just as you want to be sure that your supplier is operating ethically, so too should they seek reassurance that you are also working within legal parameters and have the wellbeing of your employees, customers and the wider communities in which you operate at the heart of everything you do.
Finally, make sure that your ethical supplier database adds genuine value to your business. Keep it up to date and carry out regular analysis to ensure it remains diverse, sustainable and an asset to the company. Your database should help you increase market share through careful selection of sustainable, capable suppliers and it should display innovative thinking, integrity in all aspects of your procurement activities and a careful eye for detail. Your supplier database can give outsiders a clear idea of your priorities, geographical reach and level of risk as well, so give it plenty of consideration and always use an ethical approach.