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How Procurement Will Save the World

In August, Microsoft made headlines by requiring its suppliers to implement paid parental leave policies. Any company that wants to sell goods and services to Microsoft must offer its employees a minimum of 12 weeks paid leave by this time next year.

This is one example of large companies that are pushing suppliers on more than just price point — going beyond financial costs to consider social and environmental costs as well. At the recent Social Enterprise World Forum (SEWF), an annual event designed to encourage the growth of social enterprises, participants discussed how more sustainable procurement requirements adopted by large companies could positively impact profits, people and the planet.

Johnson & Johnson, one of the largest healthcare companies globally, attended the event. Julian Hooks is the chief procurement officer for the Corporate Tier at Johnson & Johnson. He said, “We try to make the world a healthier place one person at a time and we’re doing that in part through our procurement strategy.”

To deliver on that promise, Johnson & Johnson prioritizes buying from suppliers that are women- or minority-owned businesses.

According to Hooks, in 2017 the company spent 1.45 billion dollars with businesses owned by women or people of color. He believes that “to change the face of healthcare, you need to change the face of the supply chain. That’s what does good in society and makes an impact.”

Since Johnson and Johnson operates in 165 companies and works with 70,000 suppliers around the world, it has the potential to significantly boost diversity among business leaders globally.

Technology Makes Social Procurement Easier

Technology can also help promote goods and services offered by social enterprises to commercial businesses. That’s where SAP has stepped in. Marcell Vollmer, chief digital officer of SAP Ariba, spoke at SEWF about how the Ariba Network — from SAP’s 2012 acquisition of e-procurement cloud vendor Ariba — connects more than 3.5 million companies around the world to socially responsible businesses.

“When we talk to procurement professionals, we see people trying to tackle supply chain issues such as slavery, poverty, and diversity. But they are struggling because they lack visibility and data on their suppliers,” explains Vollmer.

SAP Ariba provides that visibility and can track more than 200 different criteria such as environmental performance, fair labor and business practices. or diversity in management. This information allows companies to conduct risk assessments and rankings of potential vendors, which result in more ethical and sustainable supply chains.

Given that SAP Ariba connects more than 3.5 million companies to exchange approximately $2.1 trillion in commerce, it presents both a huge opportunity for social enterprises to connect with a bigger market and an easier way for companies to enact more sustainable business strategies by buying from socially responsible providers.

SAP is also developing an ecosystem of partners that helps companies find businesses with social purpose. For example, SAP Ariba has made headway eliminating the use of slavery through its partnership with Made in a Free World by providing transparency into suppliers’ labor practices. It also works with organizations like ConnXus to promote supplier diversity by helping companies identify small, minority and women-owned sellers.

To learn more about how social enterprises can enhance corporate supply chains, register for a new massive open online course (MOOC) on openSAP created by SAP and SEWF. The course begins January 22, 2019.

Source: SAP ERP News

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