Ethical Procurement Questions in RFPs - do we need them?
What are your thoughts on including ethical procurement questions in an RFP. Checking the supplier's supply chain for evidence on child labour, forced labour, good OHS practices, illegal activity, insurance claims etc. Are these issues of the past or should they always be asked.
I think there's a great expectation now that buyers will think about these things when they are coming up with a sourcing strategy. The reputational damage that having an unethical skeleton in your closet can do to your business means that, even if you're not wanting to ask these things as they are the "right thing to do", they certainly aren't things of the past.
For us in public procurement this sort of thing is definately expected, and for my organisation, the Procurement Reform (Scotland) Act is making sustainable procurement mandatory.
Save time and ensure your potential supplier is aware of your "mandatory minimum" requirements. Be transparent and ensure that they are aware that in selecting your suppliers you emphasize factors like Total Cost, quality, environmental awareness and compliance with your standards in the supply chain.
The potential supplier needs to be aware that in the long term you cooperate only with suppliers who place as much value on Sustainability as your company does. Also make them aware that in order to continuously monitor and improve the performance of your suppliers you will utilize a consistent Supplier Management System.
So save your time and your potential suppliers time by making them aware that all suppliers must be compliant with your "mandatory minimum requirements". If necessary get them to sign up to your Code of Conduct and Terms and Conditions at this early stage. It is no good going through the whole process of the tender and selecting the "perfect" supplier, to find that they do not accept or comply with your "mandatory minimum requirements, T&Cs and Code of Conduct.
Hi Baranee. I agree with what David and Helen have said and not being an expert in this particular area (my buying history has been services related) I don't want to suggest any specific questions you could ask. However, what I would say from my experience is don't ask any questions simply as an intellectual or 'box ticking' exercise. Only ask questions that Procurement and the organisation will actually track, manage and that will become part of your institutional knowledge of your supply chain.
If you ask questions that you don't really care about or don't put the answers in a knowledge base then this will lead to at least two things; your RFP's will become unnecessarily cumbersome for you and your suppliers and, more dangerously, if anything ever goes wrong then your risk and culpability is so much higher because you asked questions on the subject and then failed to manage the situation.
I would agree with much of the above comment. including sustainability in a tender or is vital to the reputation risk and in doing the right thing as a business. Not tick boxes though - if it going to be included there should a means of demonstrating the supplier is working to the right ethical standards.
Ethics should always form part of the initial procurement strategy and also be include in the Invitation to Tender. I wouldn't touch anything in procurement that excludes ethical behaviours. CSR is another issue which procurement should consider as that takes in diverse elements of business which should be fundamental to ethical procurement and business operations.
There is a new global measure for social and ethical procurement: http://www.seratio.com/
This metric of Corporate Social Responsibility, Social Impact, Social Value, Personal Value, Social business, Environment, Procurement, Risk Management, Sustainability provides a consistant measure of social value. When going to market companies should be going further than a few questions in an RFP, ongoing transparant efforts if what is required to erase the problems in supply chains. Procurement needs to be taking strong leadership to educate our customers, suppliers and internal stakeholders.
I'm happy to assist and discuss with any interested members.
All, your responses have been great and I'd like to thank you for taking the time to respond. In short, the answer is yes Ethical Procurement is a matter for consideration, and in pursuing them we need to be asking questions that can actually be tracked based on evidence.