WHAT 

Responsible purchasing is also referred to as sustainable or ethical sourcing or procurement. More important than the term used, is to understand the actual of potential implications of a buying companies policies and practices for its suppliers, being it workers or the environment. 

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Responsible purchasing strategies and practices address how suppliers are selected/deselected, the length of the supplier relationship, collaborative production planning, the fairness in payment terms and sustainable costing. 

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Purchasing strategies and practices can have significant adverse impact in the supply chains. Some examples are:

• Short lead times, frequent and/or last-minute order changes are found to be key root causes to excessive overtime and hence increased risk for accidents and injuries. 

• Rush orders can lead to illegal sub-contracting to factories with bad working conditions - included child labour.

• Delayed payment from buyers might delay payment of wages to workers. 

• Price pressure when sourcing and negotiating prices squeezes the suppliers profit margins and hence ability or willingness to pay decent wages and invest in more environment-friendly equipment. 

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WHY

With increased awareness, the (missing) link between procurement and supplier compliance is increasingly referred to in global frameworks such as UN Guiding Principles, OECD Guidelines for multinational companies and GRI. 

Research and companies' experience also show that poor procurement might cause negative impact on the buying company's own bottom-line. On the positive side, changing the company's procurement strategy and practices might be easier than you think!

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HOW
Through in-house capacity building across departments, RBA assists companies identify manageable and measurable actions on how to improve internal procurement policies and practices for enhanced supplier compliance. We provide neutral facilitation of supplier surveys for objective and constructive input on improvement areas. Practice shows that suppliers are more open about their clients' poor procurement practices when responding to neutral parties.   

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On compliance cost calculations, manufacturers are both part of the challenge and the solutions. Based on surveys and dialogue with about 1500 suppliers across sector and countries, we find that suppliers have insufficient knowledge in calculating a unit price which covers the cost of compliance. Complemented with building purchasers and merchandisers' knowledge on how to request cost of compliance in their price quotes, we build suppliers' capacity on how to calculate cost of compliance in their pricing. 

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