Examining Purchasing Social
Responsibility
by Jimmy Alyea
The concept of purchasing social responsibility (PSR) is defined by Carter and Jennings as “the involvement of purchasing managers in
the socially responsible management of the supply chain” (2002) and as “purchasing activities that meet the
discretionary responsibilities expected by society” (2004). Discretionary activities are those based upon
an organization’s judgment rather than upon legal requirements or ethical
issues. Carter and Jennings consider five
discretionary undertakings of supply management--diversity, the environment,
human rights, philanthropy, and safety--to be interrelated parts of a broader
concept of purchasing social responsibility (PSR) rather than stand-alone areas
of management and of research.
Purchasing managers should be concerned with PSR because of
their unique position to leverage strategic roles to set company standards for
socially responsible practices. Purchasing’s
organizational importance has changed from that of providing the lowest-cost supply solution to that of
coordinating and integrating procurement
processes, both internally and externally, to one of adding value to the supply
chain. Through interaction with other
key functional areas of an organization, as well as externally with suppliers
and customers, purchasing managers can positively impact social responsibility
performance in the supply chain both upstream and downstream. For example, contract language and conditions can
require that suppliers (and second- and third-tier suppliers) observe environmentally
sound practices, provide safe and humane working conditions, and permit
periodic audits of their compliance in these areas. On the other hand, irresponsible actions by
supply managers and their suppliers in areas such as human rights and the
environment can significantly damage a firm’s performance and reputation, which
can lead to backlash from customers, stakeholders, regulatory agencies, activist
groups, and the media.
Another PSR area of significance to purchasing organizations
is the understanding by supply management of the interrelatedness of individual
discretionary undertakings of social responsibility, such as diversity and
philanthropy, within a broader framework of purchasing social responsibility. With this understanding, Carter and Jennings (2004) point out that
supply managers can leverage the knowledge gained in implementing one area of
PSR when determining how to implement and manage other PSR activities. Specifically, the similarity of the drivers,
barriers, and effective tactics used to overcome these barriers to implementation
of an initiative such as minority business enterprise (MBE) sourcing may, in
many cases, be applied to implementing and managing programs in other areas of
PSR such as human rights issues in suppliers’ plants.
To help supply managers fully understand the
interrelationships among key social-responsibility elements, the ISM’s
(Institute for Supply Management) Commission on Social Responsibility
identified seven core principles and practices of PSR in 2002. ISM (2008) believes that utilizing these guidelines
will enable purchasing professionals to strengthen an organization’s culture,
improve trust in internal and external relationships, anticipate challenges
more readily, and reduce business risks, while adding significant long-term value
to their organizations and to society.
The best corporate social responsibility initiatives often
come from within a company whose employees readily embrace new ideas and truly
care about making changes for the better. As reported by Carter and Jennings (2004), top
management leadership by example, combined with shaping an organizational culture
that embraces fairness and good corporate citizenship, has a direct and
significant effect on purchasing social responsibility (PSR). Supply management professionals are a key to
helping organizations identify methods and opportunities to support future
social responsibility initiatives. They
are uniquely positioned to take a leadership role within the organization and
with suppliers. With their wide range of
contacts and sphere of influence throughout the supply chain, they can be
pivotal in the success of “raising the bar” and removing barriers to developing
and implementing new PSR programs. By
working across boundaries, purchasing managers can take the lead in highlighting
what needs to be done in terms of social responsibility, now and in the future.
Innovative employee initiatives of front-line purchasing
personnel who are aware of customer demands and trends—such as concerns for product
safety, environmental impact, and product origin--are also important to shaping
forward-looking PSR programs. Carter and
Jennings (2004) found that although individual values of supply management
employees do not directly impact PSR programs, their values can play a key
mediating role in initiatives instituted by employees. The implication for purchasing managers is
that employees selected to develop new PSR programs should be ones whose
personal values and beliefs support PSR and align with the activity under
consideration. Additionally, successful employee
initiatives concerning the enhancement of PSR activities are more likely to
occur in a people-oriented environment that allows for missteps and risk-taking
in order to capture opportunities and encourage innovation.
The Institute for Supply Management’s (ISM) seven core Principles
of Social Responsibility (2008) provide
a framework for purchasing organizations to lead the way in developing
proactive programs as new PSR issues arise or are foreseen. These guidelines are organized by the following
dimensions of social responsibility involving the purchasing function: community, diversity, environment, ethics,
financial responsibility, human rights, and safety. They can be used by supply management to define
and put into place, both internally and externally, ambitious and demanding
goals for the future. ISM recommendations
for interacting with suppliers on social responsibility issues can be used to
encourage collaboration, partnerships, and open communication lines for the
sharing of product innovation, new technology, and the use of best practices in
order to better position the supply chain to meet future PSR challenges. For example, early supplier involvement in
such areas as product design for reuse and disassembly, waste reduction,
reduction of packaging material, and product life-cycle analysis can increase commitment
and opportunities for firms to be environmentally responsible and to stay ahead
of rising public expectations and demands for environmental friendliness.
Other ways in which purchasing can influence an
organization’s future social responsibility agenda is by having clear policies firmly
in place concerning issues such as safety and human rights and by following
through on their utilization. To address
diversity, purchasing can encourage or require the use of minority business
enterprise procurement programs in certain areas of its own and its suppliers’ organizations. It can refuse to do business with firms that
are irresponsible in dealing with human rights issues such as paying workers a
living wage and providing humane working conditions in factories. Other important PSR considerations can be
included in the supplier selection process and in procurement contracts. Social responsibility audits can be conducted
periodically to insure compliance although guidelines and standards need to be
developed for consistency in evaluating findings. Similarly, purchasing needs to develop
performance metrics for most of the PSR dimensions in order to build a
convincing business case for their implementation. A purchasing organization that does more than
“talk the talk” on socially responsible practices will be in a stronger
position to influence its firm’s social responsibility agenda as it evolves in a
complex and dynamic environment.
Social responsibility has to be a companywide,
cross-functional effort that is embedded in an organization’s culture and that
extends outside the organization as well.
Although no one function or person can do it all, supply management is well
suited to be the facilitator for developing, coordinating, and implementing a
firm’s socially responsible initiatives and for guiding its future progress.
Copyright 2012. James L. Alyea.
All Rights Reserved.
For more information, please contact Jimmy Alyea:
Works Cited
Carter, C. R. (2006).
Purchasing social responsibility—what is
it, and where should we be headed? In
J. L. Cavinatto, A. E. Flynn, & R.
G. Kauffman (Eds.) The Supply Management
Handbook, Seventh Edition (pp. 393-407).
New York: McGraw-Hill.
Carter, C. R., & Jennings, M. M. (2000). Purchasing’s contribution to the socially responsible
management of the supply chain. Focus
Study: Center for Advanced
Purchasing Studies. Retrieved from http://www.ism.ws/files/sr/capsarticle_purchasingscontribution.pdf
Carter, C. R., & Jennings, M. M. (2004). The role of purchasing in corporate social
responsibility: a
structural equation analysis. Journal of Business Logistics,
25.1.
Retrieved from http://web.ebscohost.com.ezproxy.uhd.edu/ehost/pdfviewer/pdfviewer?vid=3&hid=14&sid=62c64b61-3153-4887-9dc1-b54b2cd26ff9%40sessionmgr13
ISM principles of sustainability and social responsibility.
(2008). Institute for Supply Management. Retrieved from http://www.ism.ws/files/SR/SSRwGuideBook08.pdf
