smes in the supply chain procuring from responsible businesses · supporting sme suppliers 7 in 10...
TRANSCRIPT
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SMEs in the Supply Chain
– Procuring from
Responsible Businesses
Jennifer Casey
Feb 2017
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Objective
• Discuss the benefits and challenges businesses
face when procuring from smaller businesses
• Discuss what businesses are looking for in a
responsible supplier
• Outline what good practice is in relation to
procuring from SMEs and what other companies
are doing to support SMEs in their supply chain
• Discuss supplier diversity
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Agenda
• Introductions
• Benefits and challenges of procuring from SMEs
• What are businesses looking for in a responsible supplier?
• SMEs in their supply chain – good practice
• Supplier diversity
• Wrap-up
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Introductions
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Introductions
• Name
• Company
• Why you are here today
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Procuring from SMEs
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Benefits
• What do you believe are the benefits of procuring from SMEs?
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Benefits
Competitiveness Bottom Line Social Impact
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Benefits
Competitiveness Bottom Line Social Impact
SMEs suppliers increases the diversity of your supply chain – higher return on procurement costs
SMEs knowledge of local markets can be valuable for large companies trying to enter those markets
Competitiveness Bottom Line Social Impact
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Benefits
Competitiveness Bottom Line Social Impact
SMEs are quicker to deliver services locally, saving costs
SMEs can supply niche, innovative products or services that larger companies can’t or at a lower cost
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Benefits
Competitiveness Bottom Line Social Impact
Procuring locally from SMEs helps enhance an organisation’s reputation in the local community while making a positive social impact – e.g. construction industry
Research suggests that 7 in 10 SMEs increase in revenues and size within 2 years of becoming part of a corporate supplier base
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Challenges
• What do you believe are the challenges of procuring from SMEs?
• In general
• From a sustainability perspective
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Challenges
• Lack of awareness of social and environmental credentials of SMEs
• No capacity to conduct audits of smaller SME suppliers therefore no verification / validation if no public commitments by SME to responsible business
• Increased expectations around human rights along supply chain
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What are businesses looking for in
a responsible supplier?
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Responsible suppliers
According to Sedex, the top five areas of non-compliance by suppliers (large and small) are:
Fire safety
Health and safety management
Level of overtime hours worked
Management systems
Environment
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Responsible suppliers
• What does your business look for in a responsible supplier?
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Responsible suppliers
• Compliance with regulation
• Adherence to company’s code of conduct
• Responsible business practices: • Environment
• Social
• Governance
• Tier 1 versus lower tiers in supply chain
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ESG Criteria
• What ESG criteria do companies include in their supplier assessments?
• Some organisations leverage Sedex or Ecovadis
• Large focus on environment as tangible
• Achievement of standards – e.g. ISO’s
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SMEs in the Supply Chain – good
practice
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Supporting SMEs
Research by BITCI in 2015 into how large companies support SMEs found that:
Supply chain initiatives are the most
common type of support:
15% of SMEs in UK received some
mentoring from a larger business
Capacity building with suppliers
Supplier diversity programmes
Supporting local procurement
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Supporting SME Suppliers
7 in 10 SMEs increase in revenues and size within 2 years of becoming part of corporate supplier base
Small business owners believe increasing skills of workforce is an effective way to grow their enterprise
Supply chain initiatives have the ability to
deliver significant impact: Getting into the supply chain of large businesses is a key challenge for SMEs
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Good practices
• Procurement process is transparent
• Simplified application and selection process
• Programme to build supplier capacity
• Commitment to Prompt Payment
• Two way communication with suppliers
• Disclosure of supply chain information
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Examples of initiatives
Commitment to purchase >$1bn products and services from 5,000 SMEs in 40 companies by 2017 worldwide. Supply Chain Inclusion Programme in the UK and Ireland involved 17 SMEs who were mentored and involved in workshops, 12 of which are now listed with Sodexo providing over 35 products to Sodexo.
In partnership with Bord Bia, Tesco runs a supplier development programme called Taste Bud for Irish food and drink producers. Seven month programme including mentoring and workshops with Tesco buyers and technical experts.
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Examples of initiatives
Holds Meet the Buyer events for new wind farms encouraging local businesses (mostly small rural companies) to come and find out what opportunities there are for their business and how they can tender to SSE Airtricity or its subcontractors.
Provides funding for ICE (Inner City Enterprise) which in turns supports start-ups in Dublin city centre. Irish Distillers also supports new distilleries by mentoring them on how to make Irish whiskey.
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Examples of initiatives
Runs the thinkbusiness.ie website aimed at SMEs
which provides templates, guides, checklists and
case studies to businesses starting up, running or
growing their enterprise.
GNI’s parent company Ervia employs one person full
time to run the Small Business Advice Programme. A
panel of people with significant business experience,
volunteer their time to give practical advice to small
businesses.
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Supplier diversity
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Supplier diversity
56% of multi-national companies have global supplier diversity programmes aimed at supporting small businesses
56%
1 10 IN
One in ten companies in the sample have implemented the global supplier diversity programme in Ireland
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33% of procurement spending to reach SMEs by 2020 2020
25% 25% of contracts from large companies awarded to SMEs
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Wrap up
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Relevant Reading
• Stimulating Businesses and the Economy: • How large companies in Ireland are supporting SMEs • Business case and how to set up initiatives to support
SMEs • Examples of companies’ initiatives to support SMEs • Supplier diversity programmes
• Integrating Sustainability into the Company Supply Chain 2016
• Responsible Business and Modern Slavery – the impact on your business
• The Gender Pay Gap – EU & Ireland 30
Members only area on www.bitc.ie
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Thank You