In the old days, procurement was focused on two things: minimizing costs and risk. Today, it’s all about sustainability and corporate social responsibility.
According to an MIT Sloan study, 70 percent of companies around the world have made sustainability a top priority. And procurement is leading the way in driving it through new models of operating that protect the environment, support local communities, uphold the human rights of workers, and provide visibility into the supply chain.
Gaining a Conscience
What’s driving the change? Research from Nielsen shows that about two-thirds of consumers are willing to pay more for products and services from companies who are committed to positive social and environmental impact. Another study by Cone Communications found that nine in 10 consumers expect companies to not only make a profit, but also operate responsibly to address social and environmental issues.
To align with their customers’ agendas, companies across the Asia Pacific region are embracing modern solutions that enable them to do well for their companies while also doing good.
Stamping out Slavery
Eight Australian businesses—Woolworths, Coles, Big W, Masters, Simplot Australia, Goodman Fielder, Inghams Enterprises and Officeworks—for instance, have pledged to work together to reduce, and ultimately eliminate, forced labor, human trafficking and slavery from their manufacturing process and supply chains.
Slavery? Yes, you read that right. It was abolished centuries ago. Yet there are still more than 30 million forced laborers around the world today. And many of them are lurking in modern supply chains.
In today’s connected world, this doesn’t need to be the case. Social networks have completely transformed our personal lives. Chances are good you’re reading this article on a mobile device. You may even be riding in a cab that you hailed using Lyft after picking up your mobile order from Starbucks that you paid for using Square. And the same technologies underlying these services are now being used to tackle some of the most pressing challenges that global businesses face. Like slavery.
Leveraging the power of business networks and the intelligent, cloud-based applications underlying it, companies can gain a whole new level of transparency into the capabilities, performance, and social and environmentally responsible practices of their suppliers—and their suppliers’ suppliers. They can map the bill of materials for products and services right down to their raw materials and cross-reference this information with hotspots where there is a high propensity for the use of forced and child labor to determine their risk. And more importantly, they can receive timely alerts they can use to drive actions and report on them in meaningful ways.
Social causes aren’t just limited to consumer companies, however. One of the largest iron ore producers in the world and biggest companies in Australia is committed to delivering positive social change by ending disadvantage among Aboriginal people. And it is using the Ariba® Network and the cloud-based procurement applications delivered on it to discover, connect and collaborate with Aboriginal suppliers and create opportunities for growth that benefit the larger community. The company, for instance, has created a catalog from which employees can purchase goods and services from Aboriginal suppliers.
And suppliers like Muru Office Supplies, a Supply Nation certified Indigenous business that sells over 20,000 office supply and stationery products from nine warehouses throughout Australia, are benefitting from the move.
“We were invited to participate in a tender process that the company was conducting through the Ariba Network,” recalls Muru CEO Mitchell Ross. “Like any small business, our first question was ‘what is this process going to cost and will it be worth it?’ But we knew it was a requirement if we wanted to win the business. And we were also familiar with the SAP Ariba brand and knew it was a reputable platform, so we jumped right in.”
And it paid off. Muru won 100 percent of the company’s office supply business. But more important, Ross says, it has enabled the company to forge ties with like-minded companies who are also using the network and want to do good.
“I attended an SAP Ariba Live event in Sydney where I met two procurement managers who work for one of the biggest banks in Australia and a large construction company. They are very much into supporting the local community and now that they know we are on the network, they want to have conversations. So it’s creating opportunities for us to open new revenue streams.
Paying it Forward
And Ross is using these opportunities to pay it forward. “Being an Aboriginal man, it’s in my DNA,” he says. “Muru means pathway. And I want to create a pathway for the next generation of Aboriginal people.” To do so, the company sponsors an early education program designed to arm young children in Queensland with knowledge that will be vital to their success in the future. Ross has also co-founded an Indigenous-owned and operated business incubator in partnership with local corporations to give young entrepreneurs the resources and support they need to develop a strategy, line up financial support, and create their own future.
“SAP Ariba plays a critical role in our ability to do this, creating more opportunities to sell to our customers, which produces more revenue and profits that we can give back to the community,” Ross said.
More than 2.8 million companies—including over half a million in Asia—are connected to the Ariba® Network. And they use it to conduct nearly $1 trillion in commerce. Collectively, these companies have the buying power to ensure that suppliers provide transparency and fair labor practices across their sub-tier supply chains. And an increasing number of companies are choosing to do so and make difference—not just for their companies, but for all of society.
Ben Redwine is general manager, Asia Pacific Japan for SAP Ariba, where he leads his team to drive growth, innovation, go-to-market strategy, sales, operations and customer success. Redwine brings tremendous passion and a proven track record of building and leading high-performance global organizations. Since joining the company in 2003, he has held various leadership roles, most recently as global vice president of Network Value Organization (NVO).