This post is by Shaun McCarthy OBE, chair of the Supply Chain Sustainability School.
I was a student at Lanchester Polytechnic in Coventry when the Sex Pistols first and only album, ‘Never mind the bollocks’ went straight to number one in 1977. The BBC had banned it so there was nothing at number one in the BBC album chart. The New Musical Express was full of it, reporting that Woolworths in Coventry had posted their album chart with Never Mind the Knick Knacks at number one.
With no regard at all for missing my first lecture of the day, I went there immediately to witness this momentous event and sure enough, there it was. This was decades before the invention of camera phones so I have no proof but I can guarantee that I was there. Maybe this was the start of Woolworths downfall. Maybe missing that lecture was the start of mine too.
39 years on I thank Green Alliance for inviting me to write about sustainable procurement and for giving me permission to use the B word in a blog.
Benchmarks for sustainability are constantly shifting
We all buy things but few of us do it professionally. It is relatively simple at the highest level. It is about using a competitive supply chain to deliver the objectives of your organisation in a way that represents value for money. When we start to consider sustainability requirements this becomes a little more complicated. Sustainability objectives are hard to define and the agenda continues to change as we learn more about our environment and society. For instance, we worried about greenhouse gas emissions so we started to drive diesel cars, now diesels in cities are a bad idea due to health impacts. Society’s expectations that we address human rights and social value in supply chains are increasingly backed by legislation such as the Dodd Frank Act in USA and the Social Value Act and Modern Slavery Act in the UK.
In the past, in the face of requirements such as health and safety and quality management, procurement professionals used traditional methods to deal with them. We used balanced scorecards, selecting those who complied and rejecting those who couldn’t, auditing them and driving continuous improvement. But, the problem with sustainability is the complexity and fluid nature of the subject matter, which means the level of competence in the supply chains of many sectors is very low. By selecting only the small number of suppliers who can support sustainability objectives we end up with a smaller and less competitive supply chain. Basic economics demonstrates that if we have an increasing number of buyers with increasing demands and a decreasing number of competent suppliers, the price of goods and services will inevitably rise, perpetuating the myth that sustainability costs more. This, frankly, is ‘knick knacks’, as Woolworths would say. Sustainability shouldn’t cost more, but bad procurement does.
Supply chains need to be smarter
Supply chains often comprise a very small number of very large businesses at the top and a very large number of very small businesses in multiple tiers below. The relationships are not linear, with networks of small businesses working together in increasingly complex ways. As explained in my recent video, we, therefore, require a more nuanced approach to sustainable management, investing in developing the competence of our supply chains. The task to develop these supply chains is too big for all but the largest organisations so it is necessary for big buyers to collaborate in new ways with those who they may consider competitors.
I am proud to chair the Supply Chain School, which celebrated its fourth birthday in 2016, and which was partly driven by my experience as chair of the Commission for a Sustainable London 2012 from 2007-13. This is a collaboration of 47 businesses in the construction sector to deliver a virtual learning environment for more than 14,000 members and rising every day. The aim of the school is to create a centre of excellence for the sector, building a competitive supply chain competent to deliver sustainability challenges now and in the future. By using their professional skills, procurement people can put an end to the knick knacks that sustainability and value are opposites, and show that under a good procurement approach, they are mutually supportive.