Procurement Reform

Procurement professionals need to be at the heart of public sector savings, while senior management should take procurement more seriously, according to a senior figure at the Confederation of British Industry (CBI).

Following the formation of the UK coalition government, the CBI called for re-engineering of public services to help reduce the £163 billion public sector deficit, including reform of procurement.

Speaking to SM, Susan Anderson, director of public service at the CBI, said procurement professionals should “be centre stage” during this transformation.

She claimed that senior managers, in earlier efforts to save on public procurement, had failed to take full responsibility for driving through business change necessary to capture the benefits of initiatives such as shared services and joint buying.

“It’s about culture: a senior manager does not get Brownie points for seeing through procurement, and that goes to the ministerial level. They get recognition for new initiatives. The responsibility [for change in procurement] has to lie with the senior management team. Procurement professionals sometimes say ‘we do not get a look in’, although they sometimes get
the blame. We have got to take them seriously.”

Some shared service initiatives had failed because once they achieved critical mass, and had a full team in place, additional public bodies were put off joining because they realised they would not be able to transfer staff. “They get cold feet because they do not want to make 
staff redundant, but [avoiding redundancies] 
is a luxury we cannot afford,” Anderson said.

However, she said to be effective in reducing public spending, professional procurement skills should be retained where possible. “Although no areas of public spending should be sacrosanct, procurement people should be centre stage.”

The CBI also re-enforced the claim it made in October’s pre-budget submission that improving public sector purchasing and reducing duplication in the process could save the public purse £13.5 billion by 2015-16.

Spelling out its priorities for the government in the document Time for Action: Reforming Public Services and Balancing the Budget, the CBI said savings could be achieved by re-shaping public service provision, including using the private and third-sector to deliver efficiencies.

Nestle draws up responsible sourcing

Nestlé is introducing procurement guidelines to ensure its palm tree oil supply comes from sustainable sources.

The Swiss confectioner, which came under fire from environmental action group Greenpeace after a report claimed some of the oil it purchased was from unsustainable sources, has now teamed up with the Forest Trust to produce a set of responsible sourcing guidelines.

These guidelines, which were announced this week and will be enforced immediately, look at Nestlé’s procurement process and provide technical support to suppliers that do not meet the requirements. Guidelines include protecting high conservation value forest areas and peatlands, and ensuring farms and plantations used for sourcing palm oil comply with local laws and regulations.

In a statement Nestlé said: “By setting critical requirements for its procurement process and checking compliance with its supplier code, Nestlé wants to ensure that its products have no deforestation footprint.”

Nestlé recently dropped Indonesian firm Sinar Mas as a palm oil supplier after claims by Greenpeace that identified Sinar Mas as guilty of deforestation in its production of palm oil.

In a statement in March, Nestlé UK said it does not buy palm oil from the Sinar Mas Group for any of its products, including Kit Kat, but does purchase it from a company called Cargill and had sought assurances from them about their supply chain.

Nestlé aims to have 18 per cent of its palm oil purchases in 2010 coming from sustainable sources, working to reach 50 per cent by the end of 2011. The company has already committed to purchasing all of its palm oil from ethical sources by 2015.

Pat Venditti, head of Greenpeace’s forest campaign, said: “Nestlé’s move sends a clear message to Sinar Mas and to the rest of the palm oil and paper industries that rainforest destruction is not acceptable in the global marketplace. They need to clean up their act and move to implement a moratorium on rainforest destruction and full peatland protection.”

In a policy statement released by Sinar Mas earlier this year and at its AGM the company said it was committed to the principles of the Roundtable on Sustainable Palm Oil and to a halt to clearing in forests and peatlands.

Supply chain and carbon management......

Leading businesses will increasingly refuse to purchase from suppliers who fail to manage their carbon emissions, according to a survey.

The annual Carbon Disclosure Project (CDP) Supply Chain Report, produced by management consultants AT Kearney, found that only 6 per cent of major organisations currently deselect suppliers for failing to manage carbon emissions. However, 56 per cent have committed to do so in the future.

The survey of CPD supply chain members, which include Dell, BAE Systems, Cadbury, Sony, IBM, Unilever and PepsiCo, found that 89 per cent had an established strategy to engage with suppliers on carbon-related issues.

Meanwhile, 90 per cent of these companies have an emissions or energy reduction plan in place.

But while a significant proportion of carbon emissions are typically found in the supply chain, only 20 per cent of these companies report figures for their own supply chain emissions.

Of the 710 suppliers who disclose carbon emissions to their customers through the CDP programme, 60 per cent have appointed a board member responsible for climate change. Fifty-six per cent have a carbon reduction plan in place and 38 per cent have committed to a clear target, according to the report.