The ‘starfish story’ is a well known anecdote. In most versions, an adult and child are walking on a beach before the tide goes out, and they see thousands of starfish stranded on the sand.
The boy starts throwing in starfish one by one back into the ocean, and the man asks why on earth he’s making the effort when there’s no way he can possibly make a difference for all of the starfish on the beach. As the story goes, the boy throws in one more starfish, looks at the man, and says, “But I made a difference for that one.”
It’s a powerful reminder that even one good deed can have an impact, regardless of how big the problem might seem.
How to Build a Successful Social Procurement Program
This philosophy describes Zurich Insurance’s approach to social procurement, according to Jaime Henriques Paiva, Head of Procurement and Vendor Management, in a recent episode of The Sourcing Hero podcast. Staring down a mountain of ESG challenges in the supply chain can’t discourage them from building a strong culture of social procurement and making a meaningful impact whenever possible.
In fact, under Jaime’s leadership, Zurich’s procurement team has built a publicly recognized social procurement program over the last 7 years that has become a part of the company’s DNA.
Clearly define what "social procurement" means to you
At the same time, Jaime readily admits that even pinning down a concrete definition of “social procurement” can be difficult – it means different things to different organizations. But, he says, it is still possible to create a social procurement program and maintain consistent standards while also adapting to different suppliers and enterprises that have their own definitions and missions.
Zurich solves this ambiguity problem by working with what he called “local intermediaries," which are network organizations that have a directory of certified social enterprises. In general he says, the two key requirements for defining a social enterprise are that 1) it needs to generate profit and 2) also have a solid social or environmental mission that designates at least 50 percent of that profit to your mission.
“For us, social procurement is a differentiator, internally and externally,” said Jaime. “Ideally, you would commit a large percentage of your spend to social procurement, but you don’t need to. You can start very small.”
Showcase the value social procurement can bring to the table
Building a strong social procurement program isn’t without its challenges, though. As Jaime says, highly risk averse organizations (like insurance) can often be reluctant to accept supplier transitions, and, on top of that, there’s also a persistent myth that social procurement is about “charity,” not bottom line business results.
“One of the main points about social enterprises is that they need to be profit-led,” said Jaime.
To get to that point, procurement has to educate the rest of the business about the real value of social procurement and make them aware of how it can solve their problems and support their goals.
“You have to go through that education and awareness process internally to make people understand what social procurement is, and when you achieve that moment, things tend to go much faster and much smoother,” he said. “But you have to understand what your peers’ or business partner’s pain points are. You can’t just simply try to convince them. You have to listen. You have to understand them, and then you can show them how a social enterprise could eventually solve their problem.”
Monitor the program's success
Measuring the success of the program through tracking and reporting can also present some challenges for procurement, which tends to focus on tracking metrics like spend or the number of social enterprises under contract. This may not capture what truly matters – the actual impact.
“Ideally, you would find a way to measure how many lives you impacted through social procurement,” said Jaime. This would require a fairly labor intensive approach, which most companies are still figuring out how to do. But, he says, that shouldn’t stop you from picking up another starfish, so to speak, and making the case for social enterprises in your supply chain.
Communicate its impact
While quantifying social procurement remains a work in progress for the business, communicating that impact can have powerful implications. Over the last several years, he says, Zurich along with other partner companies have collectively spent over 350 million pounds with thousands of social enterprises, resulting in millions of pounds being reinvested and the creation of over 3,000 jobs.
“When your employees and colleagues start seeing an impact like this that they can help achieve in their daily business, it creates a wonderful purpose driven sense of your job that is super fulfilling.”
When asked about being a sourcing hero himself for leading social procurement, Jaime is quick to give credit to his suppliers. “The real heroes for me are the social enterprises, the people running those organizations. What we are doing is the easiest part – identifying the opportunities to redirect part of our spend.”
For practitioners and procurement leaders who want to make an impact and lead the business to social procurement, Jaime says, don’t be overwhelmed by all the starfish on the beach. Just start where you are now, and pick them up one at a time. “When you do something with purpose behind you, if you need to ask for something, ask for forgiveness and not permission. Because if what you’re doing is purpose driven, you will almost always be doing the right thing.”
For more on this discussion, listen to Jaime's full episode of The Sourcing Hero here:
