3 Reasons Your Ethical Sourcing Program is Failing (And What to do About it)

Even with the best of intentions and individuals or teams to drive them, some ethical sourcing programs are doomed to fail. But if we know why they fail, we know how to fix them!

There’s no doubt that, when it comes to ethical sourcing, that we all have the right intentions. After all, as procurement professionals, we know the massive impact we can make at a time where we can probably consider that the future is for sale. Procurement certainly is calling the shots.  

But anyone who has tried to launch an ethical sourcing program and make it succeed, or even strike up a conversation with the right executive to help make it all happen, knows that intentions do not always translate into action. 

There are a lot of reasons that ethical sourcing programs fail, too many to cover in just a single article. However, we can offer a few ideas of what might be holding yours back and what to do about it. And, if you still haven’t got to the bottom of this, our expert panel at the Big Ideas Summit 2022, led by Oliver Hurrey, Chair at the Sustainable Procurement Pledge, will most certainly be able to help. 

1. Lack of Internal Resources 

When asked by the NYU Stern Centre for Sustainable Business why they thought that their ethical sourcing program was failing, 42% of procurement professionals highlighted a lack of internal resources as a key culprit.

This lack of resources is an all-too-common problem. Whether it’s as simple as ensuring that you, or your team, have sufficient capacity to research and launch a program, to acquiring a budget to boost initiatives or invest in new technology, establishing and maintaining a successful ethical sourcing program is an expensive exercise.

As we all know though, the investment is a worthwhile one, and it’s your job to ensure that senior executives and decision makers feel the same way.

In order to acquire the internal resources you need, you need to make your case to senior leaders by highlighting the business impact of your plans, as well as how they link with organisation-wide strategic objectives. Emphasize that ethical sourcing is not just a matter of compliance, but that it can be a proven strategy for increasing sales and revenue, as well as building a respected brand.

2. Resistance from Suppliers 

Once you have the internal buy-in, the next most common hurdle to overcome is getting external buy-in from your suppliers. After all, you can have the best processes in place for your organisation, but without your suppliers on board, you are never going to succeed. Often the intention is there, but the work required to meet objectives and KPIs can sometimes be missing in action.

However, there are a number of things that you and your procurement team can do to ensure greater effort and compliance when it comes to sustainability initiatives. Ethical sourcing initiatives should be managed no differently to any other program involving suppliers – as a partnership and according to best-practice supplier relationship principles. 

When working with suppliers on sustainability initiatives, ensure that you provide clear incentives for them being involved, for example, changes in contract terms, or collaboration on strategic change initiatives. If they need it, offer support and education on sustainable practices and how they can flow it down through their supply chain. Make sure you also set clear and achievable targets to remove any ambiguity on both sides.

Providing these incentives gives your suppliers the opportunity to add mutual value, as well as encouraging continuous improvement. However, they should also understand the measures if they are compliant, not least stopping doing business with them.

3. Incorrect or Insufficient Tools and Technology 

When it comes to ethical sourcing, no person is an island. Every procurement team needs the tools and technology to drive their program, monitor compliance, manage KPIs, and make it as effective and efficient as possible.

For example, supplier rating and engagement platforms make it much easier to benchmark, compare, measure, and monitor supplier progress on key sustainability criteria, as well as select new suppliers when they’re needed. Having clear and transparent goals that are measured by a platform – especially one when essential data can be shared – can help to motivate suppliers to take ownership of their performance and make the necessary changes when needed. 

Of course, tools and technology, optimal supplier management and greater internal resources can still sometimes only be the tip of the iceberg when it comes to creating and managing a successful ethical sourcing program. If you have a program you’re struggling to get traction with, then you may need to engage some expert advice. 

And that’s what our panel discussion at the Big Ideas Summit is all about. Join your fellow delegates in hearing what our world-leading experts have to say:

• John M. Gabriel – Project Executive, Global Supply Chain: Social Responsibility, Blockchain and Responsible Minerals at IBM Corporation
• Jim Leung – Former Ethical Sourcing Management Executive
• Paul Polizzotto – Founder & CEO at Givewith
• Isabel Ross – Organic and Ethical Sourcing Manager at Pukka Herbs

Don’t miss out on this, and the rest of the amazing program, coming your way on March 16th. Register here now.