Category: Information

Information about Procurement & Co.

Ethical Procurement

 

Ethical Buying

Introduction

Consumers are increasingly aware of the provenance of the good and services they consume and want to know if these have come at an unacceptable cost to others.  The transparency and availability of information via the internet and particularly social media means companies must have confidence in their supply chains and the statements they make about their products.  Word of mouth spreads incredibly quickly among consumers, and it is extremely difficult to counter an online firestorm.  This is a major risk that any company, whether they are a supplier or a producer of end products, should be continually addressing and monitoring.

What is ethical buying?

Essentially, it is about ensuring that the products and services a company purchases do not cause undue harm or risk for people, animals, or the environment.  It overlaps with sustainability, since buying products which cause harm to the environment, via production methods, excessive freight, and haulage, or use of non-recyclable materials could be unethical.  It also includes people – no forced or child labour in the supply chain, fair wages and a safe hygienic operating environment for workers; animals – such as farming and testing practices; and even politics – avoiding purchase from certain regimes such as Myanmar and Zimbabwe.

There are generally three types of ethical buying practices, which procurement professionals can use in combination:

  1. Positive buying: actively selecting products that are ethically produced, to avoid harm to the environment, such as locally grown foods, energy-saving lightbulbs, or electric cars
  2. Avoiding negative buying: avoiding, as a policy, the purchase of items which do not meet ethical criteria, such as cosmetics tested on animals, or from factories which fail to provide adequate working conditions.
  3. Company selection: avoiding or favouring suppliers based on their ethical standpoint and standards.  This could include not purchasing fuels from companies which have caused environmental damage in sensitive regions such as rainforests and the Arctic

Ethics and cost control are not mutually exclusive!  Ethically produced products and services can avoid the need for expensive redress and can also produce higher quality which reduces wastage and improves efficiency.  Suppliers will increasingly need to meet and guarantee standards to win contracts with consumer-facing organisations, and it is more efficient to apply these company-wide, rather than have different terms for different customers.

The FAIRTRADE Industry is having a direct impact on the living conditions of approximately seven million people in rural areas in the developing world.

Why

Social Procurement creating a benefit beyond the purchase of goods and services which enables buyers to support local economies have a positive impact on the environment, create more jobs and increase employee wellbeing

  • Making a positive social impact.
  • Resource Positive-Give more than you take.

Ethical buying is that ethically produced and sourced products are valued by consumers.  According to the 2019 PWC Irish Retail Consumer Report, 41% of Irish consumers are prepared to pay a premium for sustainable products, and 68% are prepared to pay a premium for locally produced food:

“Organisations who are able to consistently and transparently demonstrate their alignment with their customers’ values and beliefs have an additional advantage when it comes to where spend is directed, and how trust and loyalty are earned.”

Consumers increasingly correlate ethical production with higher quality, particularly younger people who are particularly conscious of their lifestyle choices and enjoy sharing these online.  Unethical practices within the supply chain present a big risk for any business.  Just look at recent examples of modern slavery conditions in Leicester’s clothing factories, that were widely reported as being Boohoo’s own workers, whilst they actually worked for a supplier.  However, it wasn’t enough for Boohoo to claim innocence just because they didn’t own the factories.

We live in a fickle world, and globalisation has intensified competition.  Ethical buying presents an opportunity for companies to differentiate themselves and meet customers’ needs.  This isn’t important only for end-user companies though – for an end product to be sustainable and ethical, all its’ input processes and components have to meet the same standards.  This is where the supply chain becomes so important.  Can customers really be expected to pay a premium for “locally produced” food products if thousands of air miles have gone into the ingredients?!  Therefore, as mentioned above, companies within a supply chain may find that ethical sourcing practices help to win more business and more customers.

How?

Ethical buying might seem like a minefield, and yet another thing to consider when making purchasing decisions.  But it’s nothing compared to the extra work, costs and headaches that result if a company is found to breach acceptable standards, or to have been misleading (or even untruthful) about its’ products.  It could also be argued that this is the minimum that any responsible organisation should be doing.

Ethical buying practices shouldn’t be difficult or cause extra hassle.  Here are a few hints and tips:

  1. Use standards – other people have already done the hard work for you, and lots of standards are available, which can only be used if the producer or supplier meets certain objective standards. These include: Rainforest Alliance, Fairtrade, Organic, the Ethical Trading Initiative, Red Tractor, Soil Association – there is a long list, so the key is to find the right one for the circumstances.  These are easier for buyers than developing specific standards, and it is far simpler for suppliers to have one common standard for all customers. It’s worth mentioning that different laws and standards apply in different countries, so a supplier simply operating within the law might not be enough.
  2. Get to know your suppliers and ask the awkward questions! If something seems too good (or too cheap) to be true, then it probably is.  You can take this a step further and establish formalised supplier evaluation procedures such as scorecards.  These are helpful for organisations with large procurement teams, to make clear to buyers what’s important as well as price, e.g. factory standards, transportation distance, codes of conduct and standards.
  3. Internal practices – of course, it is also important that your own procedures do not contribute to or even encourage adoption of unethical practices.  For example, late ordering can put pressure on workers’ hours, and overly aggressive price negotiation (especially by dominant customers) can push down wages.  Too often, buyers turn a blind eye due to pressure to meet cost and margin targets.  Set standards within your organisation, make them public and stick to them.

It is no longer enough not to know what is happening within your supply chains.  Arvo’s procurement specialists can assist you to review your supply chain to find potential risks, and opportunities to embrace ethical buying, and the advantages it can bring

Author: Kate Sherry

Strategic Relationship Management Advice

By Pat Ryan – Arvo

Your suppliers are your external manufacturing department. They do what you don’t want to do; because it’s technologically impractical, they are better than you, you are concentrating on other things, or it could tie-up your resources.

FACT: You are trusting them with your future

Developing good connections with suppliers—sometimes called Supplier Relationship Management—is critical to business success.

Businesses are increasingly relying on suppliers to help reduce costs, innovate, improve quality and reduce lead time. Good relationships with suppliers can provide a competitive advantage.

First-rate supplier relations require continuous, long-term effort. Not all suppliers should be treated as special suppliers. Some of the suppliers may not be suitable for developing relationships.

  1. Evaluate all suppliers—Make sure they are the best ones for your business and that their products meet your needs. You want suppliers who are aligned with your strategy.
  2. Integrate key suppliers into your business—Learn how they operate, and make sure your systems work seamlessly with theirs in areas such as invoicing and order fulfilment.
  3. Collaborate on quality improvement, problem-solving and product development—Work together to improve capabilities and adopt best practices on both sides.
  4. Measure performance continually—Have structured ongoing discussions with your key suppliers about how to improve.

Ultimately, the idea is to work together as partners so both sides prosper.

BE BRAVE – NOT ALL COMPANIES CAN DEVELOP AND MAINTAIN A SUPPLIER RELATIONSHIP PROGRAMME.

Sometimes companies focus just on the short term and only demand cost reductions from suppliers, rather than thinking strategically. That doesn’t help in the long run.

Do’s and don’ts of supplier relationships

  1. DO—Take a long-term approach to supplier relationships. Commit to shared prosperity and mutual development. Help suppliers boost their technical and problem-solving capabilities.
  2. DO—Understand in detail how your key suppliers work. See how they operate, and learn their culture to ensure mutual trust and strong partnerships.
  3. DO—Periodically evaluate the performance of key suppliers with scorecards, and periodically scan the market for better and/or more cost-effective alternatives. While you want to nurture strong relationships with suppliers, you don’t want to become captive to them.
  4. DON’T—Focus only on short-term goals, such as cost-cutting. Don’t insist on unreasonable payment terms or pressure suppliers to assume the cost and risk of holding the bulk of your inventory.
  5. DON’T—Focus your efforts on all your suppliers. Save your special collaboration for only a handful of key strategic partners. Anything more is unsustainable.

GDPR Post Brexit

A lot has been said and written on GDPR. At a time when we are just beginning to grasp the fact that ICT cannot be without GDPR, mainly due to the ‘consent’ email bombardment, comes Brexit and the uncertainty of it in relation to GDPR as it is an EU regulation. People and businesses are asking ‘’what will GDPR be like post Brexit?’’ Fortunately, a lot of articles have been written and discussions are going on from different perspectives, GDPR post Brexit won’t be a scenario of ‘’ how to manage your expectations during the first few days, weeks, months of dating’’ rather it is a subject of forward looking, information gathering, be in the know of suggested options especially for companies dealing in B2C or even B2B in case data management dealings don’t go according to plan.

Before going further, here is a brief recap on GDPR for those who need it. In the beginning, the European Union adopted the DGPR (2016) as an EU law on Data protection to provide privacy for all individuals in the EU and the EEA. The regulation which became enforceable beginning of May 2018 has two main priorities, to; give individuals control over their personal data and, to; simplify the regulatory environment for international businesses by unifying the regulation within the EU. GDPR also addresses export of personal data outside the EU and EEA. With Brexit in sight, this is where GDPR post Brexit questions arises, with UK about to become a third country, will the Britain abide by GDPR? What guarantees are there in terms of data privacy? – Whether in terms of B2C or B2B. Individually, people and businesses alike are researching the topic and informing those who are anxious.

Looking for Answers

Questions and answers have been suggested, with the amount of publications on the topic, we are becoming bombarded again. My opinion is to answer GDPR questions whatever perspective, we must go to the heart of GDPR – the principles (the core conditions that governs the regulation GDPR (2016/679) especially the 7th “Accountability”.

ICO wrote about GDPR principles, to be;

  1. Lawfulness, fairness and transparency,
  2. Purpose limitation,
  3. Data minimisation,
  4. Accuracy,
  5. Storage limitation,
  6. Integrity and confidentiality (security),
  7. Accountability.

Monique Magalhaes of Techgenix, in January 2018 wrote and highlighted that – ‘’organisations need to follow these principles when collecting, processing and managing European citizens personal information regardless of whether the business is in EU or elsewhere in the world.’’ I believe this explanation applies to Britain once it becomes third country.

According to another website tripwire.com; there might be a common misapprehension which might be a wishful thinking for some British businesses who don’t want the hassle of achieving GDPR compliance, thinking that UK businesses might not need to comply with GDPR post Brexit as it is an EU regulation. The fact is, currently the UK adopted all the rules of the GDPR into the Data Protection Act 2018 – which means that UK businesses will have to continue complying with the GDPR after Brexit and those that deal with EU citizens have to comply with GDPR directly.

Important for UK businesses to remember; compliance with the key principles is a paramount building block for good data protection practice for those involved. Failure to comply with the principles may lead to substantial fines. Article 83(5) (a) states that infringements of the basic principles for processing personal data are subject to the highest tier of administrative fines. This means a fine of up to €20 million, or 4% of your total worldwide annual turnover, whichever is higher.

Brian Honan of independent.ie writes; GDPR and Brexit will potentially bring many challenges to organisations over the coming years, but proper planning and keeping abreast of how talks regarding data protection post-Brexit will help keep on top of those challenges. This suggests that businesses and the concerned alike need to keep eyes open for the future is unclear.

For more information visit the pages referred;

https://www.dataprotection.ie/

https://www.independent.ie/business/data-sec/gdpr-will-the-uk-still-be-a-safe-place-for-your-data-postbrexit-36741468.html


Contact Us with related queries or to get support for your Strategic Sourcing Brexit risk

Brexit Helpful Tools and Supports

With two years negotiation period since the 2016 Referendum and two further years expected with the transition period, there have been many helpful tools and supports developed to aid businesses navigate the Brexit quagmire. Many of these helpful tools and supports are available free-of-charge, more are highly subsidised or grant-aided while some paid solutions exist also.

As a starting point, Arvo have a range of Brexit specific tools, templates, reports and insights available online here. If you have any queries on these Arvo Tools, feel free to email [email protected] for a prompt response.

While Arvo are aware of many third-party tools and solutions also to support your Brexit risk management, with a selection outlined as follows

Brexit
Helpful
Tool
Description Website
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Brexit SM Scorecard (Enterprise Ireland) A Starting Point to help businesses to begin preparing a strategy and ready their teams in terms of planning and shinning a spotlight on some of the key operational areas that may be exposed.https://prepareforbrexit.virtual-adviser.com/

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Online
Assessment
Tool
Invest Northern Ireland’s assessment tool covers Business strategy, Operations, Innovation, Sales and Marketing, Finance, People and Management, Legal and regulatory. https://www.investni.com/get-ready-for-brexit/brexit-assessment-tool.html

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Tariff
Checker
Intertradeireland provide a quick guide to the potential WTO Tariffs that may be applied post-Brexit.https://intertradeireland.com/brexit/tariff-checker
  HMRC Trade Tariff: look up commodity codes, duty and VAT rates https://www.gov.uk/trade-tariff

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Brexit
Online
Toolkit / “Brexit: a guide for your business”
IBEC offers an Online Toolkit to help business preparation online. A Guide for your Business. https://www.accenture.com/ie-en/insight-brexit-guide-your-business

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No Deal Brexit Plans /
Brexlist Brexit Checklist /
Brexsure Brexit /
Supply Chain Audit /
Brexit Directory
The Ready for Brexit platform is independent and objective. It aims to help businesses and organisations manage the challenges and opportunities that Brexit brings. https://readyforbrexit.co.uk
PS: Use ARVO190213 as a Discount Code

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In addition to the above tools/systems, there is a plethora of information available online with downloadable Templates, Documents and Files from many organisations such as those listed below. Many of these organisations also provide Brexit financial supports, experts, grants and initiatives available to assist most businesses through this unprecedented economic event e.g.

Organisation Description Website

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Enterprise Ireland Enterprise Ireland has a wide range of supports, including free Online Courses and Webinars, and fully-funded and partly-funded Consultancy engagements, to enable Irish businesses to take critical action and address their exposure to Brexit https://prepareforbrexit.com

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Intertradeireland IntertradeIreland offers 2 Vouchers to provide financial support to help understanding Brexit, Online Courses to help SMEs to prepare for Brexit and beyond, also Tariff Checkers and Events that offer information and Topics about Brexit, advises and outcomes. https://intertradeireland.com/brexit/

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Invest Northern Ireland Invest Northern Ireland offers an Online assessment tool, Regional Workshops a financial assistance in form of a Preparation Grant and a one-stop resource of best practice guides, information advice and support to help in preparing for Brexit on their Brexit website. https://www.investni.com/features/invest-northern-ireland-launches-get-ready-for-brexit-campaign.html

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Bord Bia Bord Bia offer a Supply Chain Mentoring Program, to identify key challenges with clients supply chain and export markets. Regional Customs Training, which aims to provide practical training on the basic principle and requirements of customs, tariffs and non-EU trade. A Dublin Custom Training trains Clients in all aspects of customs and tariffs management. A Currency Risk Training prepares for buyer negotiations and new business arising from non-Eurozone market opportunities. Supply Chai Workshops are offered too.

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Revenue Revenue offers helpful links and Videos on how to deal with the upcoming trade with non-EU Countries, Planning Details and Seminars that prepare and help with Brexit related issues. https://www.revenue.ie/en/customs-traders-and-agents/brexit/index.aspx

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HMRC – Her Majesty’s Revenue and Customs HMRC offers 2 grants to help with business to complete customs declaration in preparing for the Brexit. Training Grant and IT improvements are covered in those grants. https://www.gov.uk/guidance/grants-for-businesses-that-complete-customs-declarations

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NSAI – National Standards Authority of Ireland NSAI offers several factsheets with useful information, downloads from previous Brexit Workshops. https://www.nsai.ie/brexit/

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HSA – Health and Safety Authority HSA offers useful information and downloads for informational Sheets and publications about Brexit. https://www.hsa.ie/eng/Topics/Brexit/

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SBCI – Strategic Banking Corporation of Ireland SBCI in partnership with the Department of Business Enterprise and Innovation (DBEI) offers a Brexit Loan Scheme. The Loan can be used for future working capital requirements, or to fund innovation, change or adaption of the business to mitigate the impact of Brexit. https://sbci.gov.ie/schemes/brexit-loan-scheme

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IBEC – Irish Business and Employers Confederation IBEC offers several very informative Guides on the topic of Brexit, Future of Ireland and the EU and the Technology of Ireland and the EU. Several Reports on Brexit and its Future. http://www.ibec.ie/brexit

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Local Enterprise Office Local Enterprise Office offers a Currency Risk Management Booklet, a Customs Insight Course, the InterTradeIreland Start to Plan Voucher Scheme, the Brexit SME Scorecard Online Tool, A Brexit Loan Scheme, a Brexit Mentor Programme, the Enterprise Europe Network, Trading Online Voucher Schemes, Training and Management Development Courses, Microfinance Loan, Micro Lean, Co-Innovate Programme, Technical Assistance for Micro-Exporters. https://www.localenterprise.ie/Discover-Business-Supports/Brexit-Information

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EU Commission
Information on Brexit
All Information regarding the Brexit on the Website of the European Union Commission.  
https://ec.europa.eu/info/brexit_en

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EU Commission 
Brexit Preparedness
The European Union Commission and its Brexit Preparedness Information Site. All Information regarding Brexit and regarding the EU Commission.  
https://ec.europa.eu/info/brexit/brexit-preparedness_en

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Contact Us ([email protected]) or the agencies above to get support for your Strategic Sourcing Brexit risk