Social procurement is a strategic lever for public sector organizations to achieve social, cultural, environmental, and workforce development goals through their procurement activities. Every procurement has the potential to deliver benefits beyond financial numbers. Social procurement is an approach to realize this value. This was discussed in detail at a recently organized webinar hosted by the Canadian Public Procurement Council and sponsored by Infosys Public Services.
Social procurement is becoming a priority for government organizations because of the benefits in terms of supplier diversity and fairness it can deliver. For example, each year the City of Toronto awards an average of $1.8 billion of goods and services, professional services, and construction services. Two percent of this procurement represents a potential $30 million investment in Toronto’s economically-disadvantaged residents and communities.
To practice social procurement and deliver the benefits to their communities, organizations need to:
- Engage a wider base of suppliers including small, local players for procurement of goods and services
- Break down the social value of procurement into metrics that can be tracked to measure social, cultural and environmental impact of a particular procurement
- Simplify and automate the operational aspects to level the playing field, making it easier for small vendors to participate and compete
- Track supplier performance and take corrective actions as required
Policies and processes enforced and enabled through technology allow organizations to practice social procurement.
Carving out relevant portions from certain procurements or encouraging participation from small, local enterprises are the most common policy levers used by organizations to advance their social procurement goals. This approach allows organizations to divert existing budgets or resources to their social procurement initiatives and avoid the complexity of identifying or lobbying for new funds.
Traditional procurement approaches and compliance requirements can be complex, restrictive, and costly for small, local enterprises. They need to be simplified. They should incorporate the social value and outcomes from the procurement as part of evaluation criteria to select the right vendors.
A modern, electronic procurement system can enable these levers by:
- Offering a configurable rules engine for organizations to define policies that support their social procurement goals
- Providing a platform for organizations to define the processes they need to make it easier for diverse enterprises to engage
- Tracking the metrics that measure the social value realized from procurement and track performance of suppliers against those metrics
Recognizing the impact that social procurement creates, one of our clients, a federal purchasing department, drafted a comprehensive social procurement policy which articulates how the department will use procurement as a vehicle to reduce barriers, increase supplier diversity, and enhance economic and social opportunities for underrepresented groups.
By transforming its legacy procurement systems and processes into a cloud-based, electronic procurement platform, the department is executing on its social procurement directives and responding to ongoing policy changes more effectively.
The new solution has simplified procurement practices, reduced administrative overhead, and ensured more effective comptrollership. Overall, the procurement transformation program is enabling the department to:
- Deliver better value to citizens through improved procurement outcomes
- Improve client services beyond a specific procurement by providing easy, web‐based access to procurement information and services to other departments and agencies
- Provide ready access to information and services that reduce the burden on suppliers participating in the procurement process
- Achieve a comprehensive integrated approach to the management of government spend
- Empower procurement professionals with new tools, technologies, and processes to deliver client services more effectively
With this new solution the department can track results across multiple parameters, including supplier participation, supplier performance, and funds utilization. These are key social procurement metrics that enable professionals to track the social development goals through each and all procurement transactions.
At Infosys, we have developed a full suite of social procurement offerings aimed at helping our clients improve diversity in their supplier network through policy development, business process design, supplier/vendor analytics and benchmarking, and the implementation of industry-leading solutions.
Community and social benefits practices have continued to grow in sophistication and scope. In many places, they are becoming a new normal for doing business with government. Social procurement benefits all of us – the communities we serve, the organizations we work for, and the economies of the cities and provinces we live in. Through the right technology solutions and process re-designs, governments can meet their social procurement goals quickly and effectively.
*Co-authored with Anjana Raman, Program Manager – E-Procurement, Infosys Public Services