Supply chain play a big part of social value management. Suppliers have various types of impact on the success and desirability of a company. Policies and standards related to social and environmental value, as well as governance practices create new demands for supplier management. We at whatimpact operate in a diverse world of partnerships: both enhancing collaboration between the third and private sector through our matchmaking platform as well as ourselves operating as a social impact startup as a supplier to various organisations.
Currently, most enterprises and larger companies have initiatives to increase the number of SMEs and VCSEs in their supply chain. They do this to increase innovation in their own organisations, learn skills and capabilities outside of their normal scope, and deliver social value at a local level by buying locally and from those organisations whose impact goes beyond the core product or service.
When talking about sustainable supply chain principles, practices and policies, working with SMEs and VCSEs are a key part of the equation. We wish to list some practical tips to apply when looking to widen and diversify a company’s supply chain. It might be surprising, how small (yet big) things can prohibit commercial partnerships from happening or have a negative impact on the smaller supplier’s business. In the end, we all wish to make mutually beneficial business and successful partnerships.
- Equal partnership
The size of the buyer in comparison to the supplier or the size of the contract in comparison to the entire business can have a negative impact to the supplier if the buyer doesn’t braise equal rules and practices. It is not uncommon, that the larger buyer wishes to change the contract, timelines and how things are run in the middle of the contract period referring to their buying power. It is natural, that there might be changes, but the implications to the supplier should be considered and extra costs occurring from the changes compensated.
- Reasonable and relevant due diligence and security protocols
Various standards and accreditations used and acquired by larger organisations create complex protocols and practices to mitigate e.g. cyber security and commercial risks. If these protocols do not consider the limitations of SME/VCSEs to be able to meet some of the requirements, doing business becomes impossible. We have seen practices where the highest level of cyber security is demanded for a products or service, where there is no data to be protected and the risk could have been mitigated through a collaborative attitude instead. We have seen startups and VCSEs not being chosen as partners as the organisations could not pass due diligence due to their operational age being less than 3 years or their registration status was not the right kind. Forward looking companies acknowledge the diversity of suppliers in their governance standards .
- Fair payment terms
One-sided, long payment times and complex payment terms is a global and national challenge in supply chains. Smaller organisations regardless of their type cannot wait 60 or 90 days to get paid. This is, however, what is many times offered. Even if payment terms have been agreed to be less, late payments are very common. If a smaller organisation leaves an invoice unpaid or stalls payment, consequences can be critical, with partnerships seizing to exist or the business being black listed. Today, all organisations use advanced accountancy and invoicing technology, which allow swift and timely payments. Each company, especially larger ones, should think of their financial diligence and practices as a reflection of their service quality and ethics in general. If you have the power, you also have the responsibility.
- Fair trading practices
Startups and VCSEs have many times exciting knowledge, innovative products and services, which makes them experts of some particular field. Having larger, reputable clients is something these organisations seek for and are willing to put the effort into acquiring them. Sales negotiations with large organisations are sometimes lengthy, up to 6-12months, and the process can entail the expert companies giving advice and presentations, granting access to valuable materials, attending events and granting free trials. If the real intention to buy is not there, this kind of a process is just not feasible nor fair for smaller organisations.
- Social value is a shared responsibility
Delivery of social value is mandatory for all government tenders. Main contractors gain benefit from suppliers’ social value programmes, therefore supplier’s social value activities have become important criteria to form partnerships. Smaller, local organisations and social impact companies inherently deliver social value, but cannot be responsible for all social value projects. It is still the main contractor’s responsibility to deliver their share of environmental, social and economic add-on value, through their company activities paid from their budget, delivered by their employees.
whatimpact.com is the only platform in the UK which is built to help you plan, deliver and report on social value, aligned with government social value requirements – to speak to our team about how we can help you with your social value management, contact us here.