Turning Social Enterprises Into Competitive Advantage through Procurement

Corporate procurement is fast becoming ground zero for companies committed to having a positive impact in the world through social change.

Consider Potluck Café Society, a Vancouver-based social enterprise that provides catering services to SAP’s local offices. In addition to bringing approximately 30,000 nutritious meals each year to low-income people, Executive Director and General Manager Naved Noorani estimates that the organization has contributed approximately $4 million to Vancouver’s Downtown Eastside to date through its employee payroll.

“People struggle living from one paycheck to the next in a world that doesn’t go viral on social media or make headlines anywhere,” Noorani said. “We are their family, and we also have to be competitive so we can continue expanding our impact. It’s because SAP gets catering from us that we can provide our social programs to the community.”

Business Gets Competitive Edge with Community Benefits

Make no mistake, corporate social responsibility (CSR) is a business imperative. Forrester researchers predicted that over 55 percent of consumers will consider company values when making a buying decision. IDC analysts said that 35 percent of knowledge and frontline workers will consider social, environmental, and humanitarian actions key criteria for where they decide to work by 2021.

Gerry Higgins, managing director at Social Enterprise World Forum, said that bringing social enterprises into procurement catalogs adds another powerful dimension of value beyond longtime business purchasing criteria like pricing and quality.

“If a city with youth unemployment challenges evaluates construction bids based, in part, on the potential for greater community benefits, we’ve seen commercial companies commit to training qualified apprentices instead of using cheap labor from somewhere else,” Higgins said.

Global Commitment Requires Buy-In from Local Buyers

While social procurement at SAP is a top-down commitment from senior leaders, having buy-in from employees in the procurement department is equally important.

“Our employees are very supportive of this,” said Ron Singh, procurement specialist at SAP in Vancouver, “Buyers have to personally believe in the vision so they are committed carrying out the mission every day. Thinking social means shopping local.”

The impact of employee involvement in SAP’s commitment to social procurement is palpable at Hope, Action, Values, Ethics (HAVE) Culinary Training Society, another Vancouver-based organization doing business with the company; in this case, delivering fruit to the local SAP office daily. HAVE’s community programs include housing assistance and job skills training.

“The delivery job alone, which generates many hours of employment for one driver, means more to this person than he can ever describe,” said Adriane King, Operations and Development director at HAVE. “He looks forward to going to work every day because of the relationships he’s made with the people at SAP. It gives him a sense of purpose, something that’s amazing for his mental and physical health.”

Higgins saw supply chain spend with social enterprises as a fundamental shift in relationship-building between private sector businesses and society at large.

“Social procurement is mutually beneficial, making it a more balanced transaction,” he explained. “This becomes a more sustainable relationship between social enterprises and the private and public sectors going forward.”

Social Change is Bigger than Procurement

Buying from social enterprises is part of SAP’s commitment to have a larger role in society, improving people’s lives. Alexandra van der Ploeg, head of SAP CSR, said that the company is initially building social procurement programs in Australia, Canada, and the UK because those regions tend to have the largest amounts of mature social enterprises that are capable of meeting corporate supply chain needs for goods and services.

“There are increasing demands across SAP, as well as with our customers worldwide, to include more social enterprises in procurement,” van der Ploeg said. “That’s why we’re investing in partnerships with entrepreneurs and incubators in the communities where SAP and our customers operate. We want to empower more social enterprises so they can do business with companies like ours.”

Social Enterprises: Pipeline to Job Opportunities

Tribu Meraki is among the many social enterprises working with SAP to expand the impact of global CSR programs through procurement. Founded to help jumpstart career opportunities for unemployed youth, the Argentina-based startup was a participant in a social enterprise accelerator supported by the SAP Social Sabbatical  program. Today, Tribu Meraki provides multimedia production services to SAP in Argentina and other regions. The organization also collaborates with social foundations that support campaigns such as economic growth.

“The work we’re doing for SAP means that we can bring in more young people as apprentices who gain confidence in their skills and desire to grow professionally,” said Ivan Villasmil, co-founder and art illustrator at Tribu Meraki. “Being an SAP vendor has given us tremendous visibility worldwide, helping us open more doors for young workers to realize their career dreams.”


Follow me: @smgaler

This story originally appeared on SAP BrandVoice Forbes.