The power of procurement: an Australian perspective

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JeniChristensen_100.jpgBy Jeni Christensen (MCIPS), Procurement Manager in Melbourne, Australia, for Villa Maria Catholic Homes, a not-for-profit organisation linked to the Catholic Church.

2019 has been a productive year for procurement with the Commonwealth Modern Slavery Act of 2018 (the Act) being passed by the Australian Parliament on 29 November 2018 and entered into force on 01 January 2019. The Act established a national modern slavery reporting requirement for large businesses (> AU$100-million in revenue) and other entities doing business in the Australian market over the same threshold.

There is some great work being done but there is still a huge amount to do to eradicate modern slavery within Australia and, indeed, globally. The key is to educate ourselves, our suppliers, staff and business contacts on what this means, why this is important, how they can help and what we are looking for.

Furthermore, we need to collaborate globally to raise awareness on this issue. Let us learn from the United States (US) and United Kingdom (UK) as it is still maturing in Australia...let's start sharing our successes.

I issued our first campaign on modern slavery to our top 50 key suppliers using the Slavery and Trafficking Risk Template (STRT), through our compliance partners, and we received 40/48 responses (2 bounce backs being re-issued in the second campaign). Responses are varied in terms of risk profile. Some companies have done lots either for US or UK markets, while some have done absolutely nothing but have been transparent in admitting their lack of understanding or noting that they are looking into the topic. Only two refused to respond.

There are helpful resources available from Australia's Department of Home Affairs and I have personally joined the Social Responsibility Alliance who publish the STRT and, through their development committee, are amending this to include the Australian Modern Slavery Act.

However, Australia is lagging behind with regard to procurement recognition. We need to step-up and understand procurement as a true profession and encourage companies to appoint more chief procurement officers (CPOs). We need to influence our leaders and articulate the procurement value proposition and benefits realised through robust agreements, drive compliance through ethical supply chains, eradicate modern slavery through strengthening supplier relationship management and relaunch the procurement brand.

Australia needs to professionalise procurement and raise awareness of the value of ethical and sustainable procurement.

So, how do we do this?
Remove the stigma that procurement is merely about savings and the cheapest price. Promote the value of professional procurement and demonstrate procurement excellence through continuous improvement methodologies.

Professional procurement differs in the following ways:
- Value-for-money and longevity (not the cheapest price)
- Openness, transparency, fairness, integrity and professional conduct
- Risk management (including reputational risk, compliance and accountability)
- Celebrate success
- Due diligence and conflict of interest (particularly when on-boarding suppliers, promoting longevity, etc.)
- Contract and supplier relationship management (benchmarking and benefits realisation of the resultant contract)
- Detect and report procurement fraud (do not wait for the Ombudsman or the Independent Broad-based Anti-corruption Commission (IBAC))

Steps to getting to professional procurement:
- Employ qualified chartered procurement professionals and ensure ongoing continuous professional development (CPD) as well as other training programmes for all procurement and non-procurement staff involved in projects
- Implement robust procurement policies and procedures (embedding ethical and sustainable procurement) for goods and/or services (including capital and build projects, environmentally-sustainable design, etc.)
- Promote a professional Code of Conduct; procurement ethics extend beyond mere compliance with guidelines, policies, laws and regulations. Ethical behaviour embraces openness, transparency, integrity and professional conduct, all of which are essential to continued fair and competitive processes
- Implement procurement systems (including e-procurement, Procure-2-Pay, process controls, etc.)
- Embed probity and procurement fraud training for non-procurement staff involved in projects and declare conflicts (perceived, potential and actual)

Let's raise the bar in terms of professional procurement and take a deeper dive at the benefits of ethical sourcing and sustainable procurement, including, but not limited to:

Social/people
- Modern slavery and human rights
- Labour standards (International Labour Organisation)
- Health and safety

Environmental/planet
- Environmental sustainability
- Reuse/reduce/recycle

Economic/profit
- Business ethics
- Value-for-money (not the lowest cost)

The goal: a CPO at every boardroom table, moving procurement from the back room to the boardroom. Let us promote professional procurement!

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