In the previous chapter (pillar 1 "Protecting people and the planet": read the article), it became clear that the first stage of a CSR Purchasing approach had to integrate health protection and the reduction of environmental impacts. To achieve this, the commitment to the value chain must be global, and can only be envisaged in collaboration with all stakeholders on a vast array of data.
As a reminder, theResponsible Purchasing approach is based on 4 pillars:
- Protecting mankind and the planet: the obvious choice
- Collaboration with suppliers: a guarantee of security and future-proofing
- Digitization: the key to an efficient Responsible Purchasing strategy
- Social and societal criteria: the ultimate in Responsible Purchasing
In this article, we deal with pillars 2 and 3.
PILLAR 2 - Working with suppliers
Interdependence game
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To assume this product responsibility, Purchasing departments extended the supplier relationship from price negotiation alone to a product/quality/standard contract, which led to an initial relationship of interdependence. Relying on reliable suppliers who were themselves responsible for their commitments to the consumer enabled Purchasing to ensure the brand's peace of mind when it came to distribution. |
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We worked more closely together, both in terms of verifying the application of our standards (auditing, sampling, testing, etc.) and in terms of marketing strategies for innovative products.
Purchasers have therefore set up supplier performance grids for all the items making up the relationship, which are also used for supplier risk management, in order to secure supplies for their banners.
However, the buyer still had to meet his primary objective: financial performance. The application of standards generally does not make suppliers more competitive, so they remain on the same competitive footing.
Paradoxically, legislation has become an integral part of the commercial relationship between buyers and suppliers: a succession of laws (the Sarkozy reform in 2004, the Dutreil law in 2005, the Chatel law in 2006) have sought to restore consumers' purchasing power.
In 2008, against the backdrop of the global financial crisis, the Loi de Modernisation de l'Economie (French law on the modernization of the economy) allowed retailers to liberalize their pricing policies, encouraging buyers to make ever greater demands on suppliers, in order to create brand preference through price. To maintain performance, buyers have widened their geographical sourcing horizons, while suppliers have used financial rather than manufacturing levers, such as payment terms, substantial promotional discounts and, in the worst cases, personalized "advantages".
Balanced supplier relationships
The balance of power was sometimes upset, and the legislator once again intervened, this time to decouple distributors' commercial policies from buyers' negotiating actions. Two laws were passed:
- The Macron Law of 2015 had the effect of framing commercial relations more strictly by imposing a time limit on annual negotiations, enforcing compliance with payment deadlines and introducing the notion of responsibility in priced products. These initial elements were reinforced in the EGALIM law on the balance of commercial relations in the agricultural sector for healthy and sustainable food, with the major notion of re-distribution of the margin upstream.
- At the same time, one of the aims of the 2016 Sapin law was to introduce transparency and anti-corruption measures into the relationship, building on the 2010 Volot report, which had already highlighted the hidden realities of inter-company relations.
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Today's CSR commitment goes much further in the relationship with suppliers, based on trust and mutual respect. This may involve shared management of supplies, and therefore production planning, or a multi-year commitment to security, investment and innovation. In all cases, compliance with payment deadlines and contracts is the cornerstone of a responsible purchasing policy, which can always be improved upon with more partnership: guaranteed minimum price, appropriate dispute resolution, etc. |
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All these actions illustrate the importance of balance in commercial relations and mutual respect between organizations, as well as the difficulty of instilling macro-economic responsibility in the face of specific competitive challenges.
PILLAR 3 - Digitalization
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As with all other corporate functions, dematerialization, and therefore paper reduction, is an obvious building block of a CSR approach (even if intensive use of the Internet has a considerable impact on the climate!) |
In the same way, digitalization enables organizations to work remotely, which helps reduce the impact of transport (and, incidentally, ensures business continuity in the midst of a health crisis!)
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But, and this is the fundamental point, digitalization enables retailers to manage a huge volume of data correctly and securely. Collecting, scheduling and using Data wisely are the keys to a successful CSR purchasing strategy. How can you compare products in a tender without all the technical data, labels and associated costs? How can you meet supplier payment deadlines without systematizing information or dematerializing invoices to reduce internal processing times? How can you position yourself on a TCO without being able to integrate all the indicators? |
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When we think of the digitization of purchasing, we often think of the transactional part, with the use of a ERP to ensure Procure to Pay. But CSR also requires more advanced scheduling, provided by other IT solutions (MDM, Master Data Management, for managing reference data within a single master file - PLM, Product Lifecycle Management, for product design, manufacture and maintenance).
Legislative news in the context of the 2020 Finance Act is contributing to this digitization with the obligation to dematerialize invoices between January 1, 2023 and January 1, 2025, depending on their size.
Finally, if the responsible buyer wishes to go even further in building up his TCO, and needs to take into account all the costs of environmental and social externalities in his Total Life Cycle Cost of a product, the organization must provide him with costing tools and efficient dashboards. The entire purchasing organization will then be able to refocus on high value-added optimization and selection tasks, securing supplies, agility in decision-making, and CSR in particular.
>> Read the last part of our dossier with the presentation of Pillar 4 "Social and societal criteria": read the article
By Catherine Fedrigo