Social value refers to the broader impact of business activities including social, economic and environmental welfare. In the context of supply chains, this means going beyond traditional metrics like price, speed and quality to also consider factors such as job creation, carbon footprint reduction, diversity and inclusion in procurement processes. The concept is gaining traction with governments and corporations worldwide recognising the need to procure goods and services in ways that deliver wider benefits to society.
The process by which government departments or agencies purchase goods, services and works from the private sector plays a pivotal role in promoting social value. Governments are among the largest purchasers in any economy, and how they spend money can significantly influence market practices and drive social change. Public sector organisations can lead by example by embedding social value criteria into procurement policies, encouraging businesses to adopt sustainable and responsible practices.
What are the benefits of integrating social value?
- Enhanced reputation: Businesses that prioritise social value in their supply chains are often seen as responsible and ethical, enhancing their brand reputation and customer loyalty
- Increased innovation: The pursuit of social value can foster innovation, as businesses look for new ways to reduce environmental impact, improve community wellbeing and support economic development
- Regulatory compliance: An increasing number of countries are implementing regulations that require businesses to report on their environmental and social impact. Integrating social value into supply chains can help ensure compliance
- Competitive advantage: In public procurement, businesses demonstrating a commitment to social value can differentiate themselves and gain a competitive edge in tender processes
While the benefits are clear, incorporating social value into supply chain management is challenging. These include the complexity of measuring social impact, potential increased costs and the need for cultural change within businesses. To overcome these challenges, businesses can:
- Develop clear policies: Establishing clear guidelines and objectives for integrating social value
- Engage stakeholders: Collaborating with suppliers, customers and communities to identify priorities and opportunities for creating social value
- Invest in training: Educating procurement and supply chain teams on the importance of social value and how to evaluate it in decision making processes
- Leverage technology: Using data and technology to measure, monitor and report on social value outcomes
As we move towards a more interconnected and conscientious global economy, the importance of social value in supply chains cannot be overstated. By rethinking procurement practices and embracing the potential to make a positive impact, businesses can play a vital role in addressing some of the world’s most pressing challenges. The journey towards integrating social value into supply chains is an ongoing process, but it promises substantial rewards for businesses and society alike.
The future for supply chain is not just about moving goods and services efficiently, it is about doing so in a way that contributes to the wellbeing of people and the planet. Now is the time for businesses and public sector organisations to make social value a cornerstone of their supply chain strategies.