How to Manage your Supply Chains as a Social Enterprise
Applying your values beyond your company’s borders
Your goal is to have impact running through the veins of your organisation, and clearly demonstrate company culture in every choice you make. You’ve got your staff satisfaction levels to an all-time high, thanks to your approach to working hours and culture, and your product keeps putting smiles on customers’ faces. However one part you haven’t quite reassessed is your supply chain.
Depending on what you do as a social enterprise, managing your supply chains can be quite challenging. You have to balance three areas whilst taking into consideration your own impact goals, and then decide whether your suppliers should also commit to this.
Let’s take a look at each part in more detail.
Triple bottom line
A social enterprise is committed to ensuring sustainability in three main areas:
People — the social side of things, from your staff to your customers, to society as a whole and your stakeholders
Planet — the environmental element, making sure you are having a positive effect and reducing (and when possible removing) any negative effects
Profit — the financial element, thinking through decisions to ensure the enterprise prospers and increases its impact efficiently and effectively
When sourcing your suppliers you have to think about these three areas, and get the balance right. Right for who? Well ultimately for you, your team and your customers.
For example, say you’re a jewellery shop in London, selling handmade items made by otherwise unemployed women over 50 in Chile. Your social goal is clear, and it is quite obvious that you have a niche customer segment in mind, but what about the financial and environmental elements?
Are you able to source such items and sell them on in a way that isn’t exploitative and still makes a suitable profit for your location? How do you import them and what environmental affect does that have?
These sorts of questions are not easy to answer, and can have plenty of layers you have to peel back to finally decide whether you are doing something completely positive or positive with caveats.
Matching up visions
There may be an easier way to find suppliers that ensures the impact is multiplied, and that’s by working with other social enterprises that have the same social or environmental goals as you.
As the social enterprise sector has grown, the offer has shifted from embedded models with a limited range, to a diverse selection of products that aren’t necessary connected to their social goal.
An example of how the selection has diversified is Who gives a crap. They produce toilet paper — so perhaps one of the first moves all social enterprises in their sales locations should do, is switch their loo roll supplier!
A starting point would be to just work with social enterprises, but when you delve a bit further you will find even closer connections. Perhaps you are both working with young people from low socioeconomic backgrounds, or you both want to support women of colour in becoming entrepreneurs.
Whatever your vision is, see if there are potential suppliers who offer what you need and at the same time align themselves pretty closely to you.
Perhaps you’re now asking why just source goods from social enterprises rather than traditional companies? Well this brings us to another decision to make.
Demand, suggest or move elsewhere
Imagine you found the perfect supplier, they use environmentally-friendly raw materials, they aren’t on the other side of the world and despite not being a social enterprise on paper, they seem to take their responsibilities fairly seriously.
Then on a site visit, you see the conditions their workers face, and learn that the salary difference between the CEO and the lowest paid is a ratio of 10:1. And that 1 isn’t even a living wage. They need your business, especially post pandemic, and you’re now in a quandary.
Do you tell them you will work with them if they ensure certain changes be made? Or perhaps you say you’ll work with them in the hope you can change things? Or maybe it’s just better to ditch that supplier and look elsewhere?
This isn’t fiction, large companies are actually demanding more from their suppliers these days in order to keep their contracts. They are ramping up the pressure to encourage more socially and environmentally practise.
At the same time this is something that many wouldn’t feel comfortable doing, nor would some feel that their order size would warrant such a change. It’s another tough decision to make.
Improving your impact
All in all, managing your vast supply chains takes time to amend for the better. There aren’t always social enterprises available in the right place or at the right price to provide you with your needs. There’s sometimes not the possibility to carry out checks to make sure the supplier is who they are, and act in a way they say they do.
However, having a plan in place to gradually review and refresh your suppliers is vital. It may happen once a quarter or once a year, but it’s something that can truly affect your triple bottom line, increasing your impact as well as making savings.
It’s good practise both personally and professionally, so sit down, look at your suppliers and see if there is a better alternative out there. Who knows — it could lead to wonderful new partners or business ideas. One client of mine set up another business because he couldn’t find a good enough supplier!
Check out what we do at Impact House, and feel free to reach out on LinkedIn, I’m always happy to connect with fellow social entrepreneurs.
