‘Our organisation has spent four or five years trying to define and develop what we mean by sustainable development in the supply chain, and we’ve broken the task into three areas – society, the environment, and economics,’ says Mark Barnett, chief operating officer, The Consortium for Purchasing & Distribution.
Looking at societal impacts, Barnett says that on the purchasing side the pressure has been on getting buyers, both his own and those in the councils and authorities he serves, to focus on ethical sourcing rather than on best cost or price.
‘This is quite difficult for us,’ he says. ‘We are high up in the tiers as distributors of branded products and while we do a lot of auditing we can only reach one tier up or down. Drilling down directly to the ultimate sources is hard for a company of our size [€60m turnover] so we have to look at aims and cultures as a guide.’
But even smallish concerns can take a global view. Barnett says that the consortium some five years ago joined the UN Global Compact set up by Kofi Annan to engage business in societal and ethical issues.
‘Politicians can say anything but even in the public sector it is business organisations that have to deliver,’ says Barnett. ‘The compact has 3,000 members in 100 countries. Developed countries like the UK can offer leadership but we also have to change hearts and minds in the developing (supplier) countries. I have joined the UK steering committee and am bringing back messages on human rights, labour standards and corruption that might not otherwise be heard.’
Corruption in particular he sees as a huge problem, complicated by cultural issues. ‘In the West giving a contract to a relative is seen as wrong, but at the same time we seek to award to people we know and can trust. In other cultures, that may have to mean members of the same family or group. The search for a perfect solution is always likely to go wrong, but it has been a challenge to get buyers to ask about cultural fit.’
By contrast, environmental sustainability issues are, Barnett suggests, getting a lot easier to handle.
‘They are almost normal,’ he says. ‘There is so much legislation around it is easier to ask hard questions of suppliers. With rules like WEEE and the waste packaging directive we can demand information from suppliers about things that they have to do anyway.
‘We sell around 30,000 SKUs from pencils to fire engines. Ideally, I would like to be able to explain to every customer the environmental impact of every purchase, but that will be a long road.’
Economic sustainability is arguably where the supply chain started, but Barnett says it is a continual battle to get buyers, internal or external, to understand the concept of total cost of acquisition. ‘We have to go back to basics every two or three years. This year we’ve introduced total acquisition cost as a model of the real costs of dealing with suppliers, including environmental, social and cultural costs alongside the cash.
‘This has been quite exciting for us and has delivered good results but in all honesty our customers aren’t there yet. So we aren’t doing this for them (although as spenders of the public’s money they ought to be engaged) as much as for ourselves.
‘We are doing these things for our own sustainability. We believe we may be a different business in five or 10 years’ time. I can’t predict where the difference will be but I can try to create our section of the supply chain so that we can change faster than our competitors.’
Change will include markets. Although the consortium was, as its name suggests, originally a pooling of resources by a number of public authorities, primarily in the south and west of England, the company is now free-standing and does about 30 per cent of its trade with private sector buyers.
And given the direction of public policy, Barnett expects that the consortium will be marketing much more in the future to the private sector and in competition with other consortia (for example, the Yorkshire Purchasing Organisation or the Eastern Shires Purchasing Organisation) that have similar roots, as well as purely private sector rivals. Partly because of this, Barnett says that, except where mandated, the consortium does relatively little tendering to EU procurement rules. ‘I want my buyers to understand the marketplace and the sustainability issues. I want my professional people to achieve through relationship-building, not administration.’
Sustainability issues aren’t as yet necessarily customerdriven, even in the public sector. ‘We are developing
sustainable supply chain solutions to enable us to adapt to the future, to different markets and customers. We know our customers will demand these solutions in time, but we will be there first, says Barnett.
Mark Barnett is chief operating officer at The Consortium for Purchasing and Distribution Ltd.
Five Years at Remploy
His earlier career included project management for Martin Emprex International, five years as divisional purchasing manager at Remploy and several procurement roles in large UK organisations.
The UN Global Compact
As chair of the UN Global Compact UK steering group he has been able to bring an SME perspective to a forum that is often driven by a multi-national focus, and the consortium’s work on sustainable supply chains has been recognised by a listing in the ‘top 25 European Supply Chain Innovators of 2006’.
London Business School
Mark is a Member of the Chartered Institute of Purchasing & Supply and a graduate of the London Business School senior executive programme.