[Interview]
There are undeniable advantages to a long-term responsible purchasing policy. But it's also a long-term process. What are the most common obstacles? And how can they be overcome? Yann Le Coz, a specialist in responsible purchasing, answers ORSYS' questions.
A sustainable commitment to responsible purchasing: what's in it for the company?
Today, banks pay particular attention to the sustainability of their corporate clients. They require proof of their CSR strategy (corporate social responsibility). These include the EcoVadis rating, the LUCIE or B-Corp label for CSR, and the RFAR (responsible supplier relations and purchasing) label for a sustainable approach to responsible purchasing.
Holding the RFAR label is proof of a real commitment to responsible purchasing and CSR. It really sets the company apart, especially when it comes to responding to calls for tender.
It can also be part of a wider strategy. In fact, obtaining the RFAR label also enables us to anticipate the raising of requirements thresholds in the EcoVadis rating. In other words, it can enable companies to retain their bronze, silver, gold or platinum rating. EcoVadis evaluates more than 100,000 companies worldwide. It has also become a standard in calls for tender.
Where to start?
It all starts with the signing of the "Supplier Relations and Responsible Purchasing" Charter. This is the first binding step in the implementation of a responsible purchasing approach.
Today, around 2,400 companies have signed the charter. However, only some 90 companies have been awarded the famous RFAR label. These include large groups, SMEs and public bodies.
By signing the RFAR charter, the company takes on 10 commitments but also appoints an internal mediator and an SME correspondent, defines an action plan to make progress on responsible purchasing, maps purchasing risks, respects legal supplier payment deadlines, etc.
This falls under the 1er commitment set out in the charter: "To ensure a responsible financial relationship with suppliers". And rightly so! According to the French Business Ombudsman (Médiateur des Entreprises), the main cause of insolvency for SMEs in France is a lack of cash flow due to late payment by their customers. It is therefore incumbent on responsible buyers to pay particular attention to their suppliers' payment terms.
How do companies see themselves in a responsible financial relationship with their suppliers?
In practical terms, the company needs to measure average payment times for different categories of purchase. For example, 30 days net for transport or temporary staff and 60 days net for supplies. If payment times are exceeded, an analysis of the causes will enable an action plan to be put in place to ensure that payment times are respected over time.
Let's quote it case of two large companies. One in the banking and insurance sector. The other in the energy sector.
The two purchasing directors leave from same observation. "I need all my suppliers, especially the smaller ones. But these suppliers are in a fragile situation (post-Covid). In particular, very small businesses are at greater risk of defaulting in the event of bad debts.
They go on to say. "As a responsible buyer, I have a duty to support this economic fabric by paying my suppliers on time. Or, in these times of crisis, even paying in advance.
On the one hand, there is the concept of the "supplier's preferred customer". In times of shortage, the principal seeks to ensure that he is better served by his grateful suppliers than his less well-paid competitors.
On the other hand, it's also pragmatic. When there's a network to maintain (rail, electricity, water, etc.), a company must ensure that there will always be local economic players to provide services in each area. There must also be enough players to enable competitive tendering (cf. Public Procurement Code).
What are the main difficulties in adopting a responsible purchasing approach?
Firstly, companies need to realise that embarking on this responsible purchasing approach requires a real commitment on the part of their suppliers. governance. And above all a long-term commitment.
They often don't know where to start. And they ask themselves: "What are we going to put in this purchasing policy? The challenge will be to adapt it to the company's vision and governance (CSR strategy).
Companies can also encounter obstacles. In particular, they will still need to ensure that the strategic vision is translated down to the field. Which means good communication. Whatever the size of the company.
"Winning the label is an ambitious undertaking. Support from a specialist company helps to identify obstacles and provide solutions. It begins with a diagnosis of the company's current purchasing practices in relation to the label's requirements. The first step is to identify the gaps, then define an action plan for progress and, finally, achieve maturity. In other words, to comply with the label's standards.
Some companies will encounter more specific difficulties. For example, some for an SMEIn many cases, this will involve improving the structure of the purchasing function. This was the case for one of the SMEs I worked with.
In concrete terms, what are the obstacles encountered by this SME? What are the possible solutions?
The aim of this SME is to obtain the RFAR label, because responsible purchasing is at the heart of its DNA. But is this vision of the company, or more precisely of its director, well aligned with that of the various business lines? That's the first point to check.
Furthermore, the CSR approach is the responsibility of the quality department, as there is no dedicated department. Similarly, the company does not have a specifically identified purchasing department. The purchasing function is based on the business lines: project managers, production, etc. It is therefore necessary to structuring the company's purchasing function. The decision? To recruit a purchasing manager to drive the approach and guarantee its performance over time.
Once this has been done, and communication on CSR and responsible purchasing actions has filtered down to the field (production, the factory, etc.), other obstacles start to surface. For example, we hear: "I don't have anyone to do it" or "I don't have the skills". In this case, the solution lies in responsible purchasing training.
What are the main benefits of responsible purchasing training?
Participants discover that the responsible purchasing approach it is first and foremost a question of corporate governance. In fact, this is the first point covered in training.
The trainer invites the buyers to ask themselves questions. Do they have the necessary and sufficient information on the their company's CSR policy ? If the answer is no, the training helps them to become a force of proposal and take ownership of the CSR challenges facing organisations. In other words, to become aware of their company's commitments and to work on their own role in implementing this policy. This includes passing on their questions, needs and constraints to the CSR department.
The ideal is toinvolve all stakeholders during training courses on responsible purchasing. It's easy to imagine the CSR manager taking part alongside the buyers. This makes it possible to express the challenges and objectives to be met (responding more effectively to customer invitations to tender by involving the purchasing function), while at the same time looking together at possible courses of action/solutions.
In addition, during a inter-company trainingIn this way, buyers can discuss the issues they face with each other. They can benefit from peer-to-peer feedback.
How much time and resources do you need to devote to this process in order to succeed?
For an SME with 250 to 300 employees, you can count on approximately one year between signing the charter and obtaining the label. The internal project manager, often the purchasing manager, will devote one day a week to this.
What happens after I've been awarded the RFAR label?
The label is valid for 3 years.
Each year, the company receives a visit from an auditor who examines the progress made in relation to the previous year. There is therefore an initial audit, a follow-up audit and a renewal audit. In particular, we will be looking at the KPIs that the company has defined to measure the achievement of its objectives.
It is important to remember that this is a progress strategy. The company needs 2 to 3 years to reach maturity.
Does this have an impact on training needs?
Exactly. Over time, the company is able to identify its areas for improvement more precisely and to identify the most appropriate solutions. more precise training needs. For example, a purchasing manager may want his buyers to become more robust in terms ofeco-design. Another will want its teams to make progress on the TCO (overall cost of a product or service). Still others will need to develop their skills in managing purchasing risks, and more specifically the managing subcontracting, where many risks are concentrated.
What about large groups? How do they manage any difficulties in implementing their responsible purchasing policy?
In large organisations, practices at central (head office) and decentralised (regional) levels are often disparate. Some purchases are negotiated at national level for the whole group. But for other purchases, this makes no sense. For example waste management is a local issue.
Nevertheless, head office buyers must be able to "talk" with local buyers. This means that the company's purchasing policy must be clearly understood and applied at local level (plant, etc.). It is up to the purchasing director to provide the impetus. For example, organising seminars that bring together the company's entire purchasing function. Alternatively, we can use "success stories" - sites that have successfully put the company's purchasing policy into practice - as a basis for communication.
We also find this problem and this type of solution in companies that grow through successive takeovers. Furthermore, companies employing more than 500 people must publish their extra-financial performance declaration (DPEF) as a supplement to their balance sheet. Often, the company does not involve the purchasing function enough in this DPEF. One way forward would be to involve the purchasing departments in drawing up this performance declaration. Buyers could then be trained to build a dashboard with performance indicators for responsible purchasing.
