Procurement professionals today face a delicate balancing act: meeting essential KPIs like cost, quality, and delivery while also driving ESG objectives. Both are crucial for an organization’s long-term success and sustainability. However, they often seem to be at odds with each other.
The KPI Conundrum
Traditional KPIs are integral to procurement’s role within an organization. Regardless of the organization’s nature or progressive thinking, metrics like cost, quality, and delivery remain central. These KPIs are the organization’s lifeblood, without which it cannot function. However, they can also lead to confusion, often measuring irrelevant aspects and failing to provide actionable data to enhance performance.
Promoting Social Value through KPIs
Interestingly, while traditional measures may seem to contradict sustainability and social value objectives, these ESG goals are also promoted and measured using KPIs. For instance, major construction procurement frameworks in the UK, such as SCAPE and PAGABO, require contractors to commit to these KPIs and detail the benefits they will provide.
The Challenge of Contradictory KPIs
Despite the positive impact of KPIs on ESG goals, contradictions persist. For example, organizations may be measured on their spend with local suppliers and social enterprises simultaneously. This can create a dilemma if the local region lacks sufficient social enterprises.
Supporting Social Enterprises for Mutual Benefit
Social enterprises, businesses that trade for social or environmental purposes, offer significant potential for positive social impact. However, many lack the resources or experience to navigate complex corporate or public sector procurement processes. Procurement can support these organizations through supplier development programs, creating strategic partnerships, building capabilities, and implementing processes that enable social enterprises to access opportunities while still providing positive social impact.
Balancing traditional procurement requirements and KPIs with ESG goals may seem like a daunting task. However, with strategic planning and investment, procurement can support social enterprises, promote social value, and still meet traditional KPIs. It’s a balancing act that requires careful navigation, but one that can lead to a more sustainable and socially responsible future for organizations.
