SRSCC CEO Susan Rashid recently met with Mandy Johnston, Head of Category (Catering and Sustainable Procurement) at the University of Liverpool, to discuss social value, sustainability, and the evolving impact of the Procurement Reform Act on procurement practices.
How do you define social value within the context of purchasing decisions, and why is it important to consider in your buying process?
Since putting a direct focus on sustainability at The University of Liverpool, the procurement department has thrived at embedding it into their practices and processes. Having appointed myself, Mandy Johnston, Head of Category for Catering and Sustainable Procurement Manager, in April 2023 as part of their ambitious targets set out in the current Climate Action Plan and Strategy 2031, work soon began identifying what needed to be achieved. Attention quickly focused on embedding sustainability across 5 key principles; People, Policy & Strategy, Procurement Process, Engaging Suppliers and Measure and Reporting. Social value sits central to these areas, making a positive impact on our staff, students and community around us when procuring goods and services.
Suppliers awarded via a tender process must show they are working towards positive social value. We’ve engaged NETpositive Futures and use their Supplier Engagement System, which encourages suppliers to consider 5 key areas of sustainability:
- Modern Slavery Statement
- Ethical Business Practice
- Climate Emergency (including carbon reduction and net zero)
- Equality, Diversity & Inclusion
- Social/Community Contribution
Many collaborative suppliers already meet our social value objectives set out in their individual action plans, created in the Supplier Engagement System.
Can you provide an example of a recent procurement where social value played a significant role in your decision-making process? What specific factors influenced your choice? Where is the demand for this coming from?
Within the procurement department, we carry out a high-value tender process. Whilst conducting this process or utilising Public Sector framework agreements, social value must play a fundamental part in the procurement process.
It should be considered as early as possible, ideally in the pre-procurement/development phase. These decisions will be vital for overall performance throughout the contract period. The category manager will liaise with key internal and external stakeholders, as well as research the marketplace, to help decide what social value might look like for each category.
Factors that influence this choice depend on the category. For instance, with a recent catering project for fruit and vegetables, during the procurement process, we looked at regenerative farming practices to ensure that the suppliers we procure from have access to farmers who are making innovative decisions to create a better planet.
We’ve also recently renewed the vending contract with a supplier who interacts with the local community by engaging with student ambassadors to help promote their service.
I would like to say the demand for this is just sector-wide; however, it goes beyond this. Yes, stakeholder pressure is at the forefront of our decisions, but as climate change is occurring on a more rapid scale than predicted, we must introduce futuristic innovations to make significant differences sooner rather than later.
The University’s Strategy 2031, the recently released Social Value Manifesto for Liverpool City Region, and the new Procurement Strategy due at the end of 2024 will also promote social value in the local community. The new procurement strategy will help embed social value into the procurement process to ensure internal and external stakeholder buy-in. Students want to see the University of Liverpool make conscious decisions when procuring goods and services to protect their future.
When evaluating products or services, what indicators or criteria do you use to assess their social impact or contribution to societal well-being?
Although we now weight/score most Social Value questions within the tender process, it should always be evaluated from a quality point. This is to ensure SMEs get the same opportunity as large, global companies who have the capacity and money to create apprenticeship placements, for instance, whereas SMEs may only be able to offer training to upskill current staff. Both situations contribute to the growth of new skills, but in different ways that suit their capacity and resource, and when evaluating proposals, scores are based on how well each supplier contributes and on innovation.
As we’ve already established, social value can be summed up as the positive effects derived from a procurement project that go beyond just direct economic benefits. Other considerations are:
–Local economy – money that stays within the local community and local supply chains, local job creation, and opportunities to upskill local workforces.
–Environmental – carbon emission reductions (not offsetting; this shouldn’t be considered a benefit unless it has been thoroughly investigated), and biodiversity.
–Wellbeing & Social – providing, as a minimum, the real living wage, supporting staff around mental health and wellbeing, and providing community spaces.
How do you balance social value with other factors such as price, quality, or convenience when making purchasing decisions?
With the new Procurement Reform 2023 Act focusing on Most Advantageous Tender (MAT) rather than Most Economically Advantageous Tender (MEAT), there is a shift from price being the main focus when procuring goods.
The demands on both demonstrating and improving social value continue to grow. This means suppliers are having to look closely at how to allocate their resources most efficiently to maximise social value. As this shift grows, the weighted score within the tender process will continue to focus more heavily on social value to ensure the emphasis remains.
In your opinion, what role should businesses play in addressing social issues or promoting positive social change? And how should they do it?
Although some businesses struggle to put importance on sustainability, social value has the influence to address challenges such as recruiting and retaining talented staff, building brand reputation, and reducing greenhouse gas emissions, whilst still hopefully allowing them to make a profit.
In many cases, it will help businesses gain a competitive advantage, improve business operations, increase confidence among stakeholders, and reduce the risks of negative outcomes.
They can do this by placing social value at the core of their business and procurement and by being transparent about the social impacts their organisation is going to have on their local community. They should look to record their results.
How do you stay informed about the social impact of the products or services you buy? Do you rely on specific sources or platforms for information?
Category Management – all category managers have access to sustainability portals within their specific industries via Higher Education consortia. Staff are encouraged to attend these either face-to-face conferences or via webinars to enhance their industry knowledge.
NETpositive Futures Supplier Engagement Tool
The University of Liverpool engaged with NETpositive Futures to help embed sustainability in the procurement department. The NETpositive Futures Supplier Engagement Tool is used widely within the HE sector and is seen as a holistic approach to embedding sustainability within the supplier portfolio. The tool is very suited to SMEs as it is free to suppliers and provides advice on how to embed social value into their organisation.
Once registered, suppliers focus on five key areas:
• Modern Slavery Statement
• Ethical Business Practice
• Climate Emergency (including carbon reduction and net zero)
• Equality, Diversity & Inclusion
• Social/Community Contribution
Supplier action plans generated from the system are monitored and managed throughout a contract period. We recognised the top 100 suppliers by spend, and 58 of the 100 suppliers have a plan on the SE Tool, equalling 58% uptake. Moving forward, category managers will be looking at supplier plans within their category more frequently and will be reviewing, at least on an annual basis, high-risk/spend suppliers that aren’t captured on a Public Sector framework agreement.
NETpositive Futures Net Zero Carbon
The UK is committed by law to meet Net Zero by 2050, and the University of Liverpool by 2035. These ambitious climate actions are vital to ensure that we limit the average global temperature rise to well below 2°C, thereby preventing the most dangerous impacts of climate change.
The Net Zero Carbon Tool has been developed for the Higher Education sector to calculate supply chain emissions and to understand how suppliers are responding to the shared challenge of climate change.
We’ve invited high spend/impact suppliers to calculate and share more detailed carbon data by asking them to:
- Join the enhanced Net Zero Carbon Project.
Participate in the 12-month project by registering and sharing details on your carbon emissions. - Prioritise reducing supply chain (scope 3) emissions with our support.
- Annually submit scope 1+2 emissions data, using the free Net Zero Carbon Supplier Tool for a bespoke carbon reduction plan.
IBIS Reports – In terms of market research, we are currently investigating IBIS World, a market intelligence tool for many categories. This will allow category managers to build up a picture of their area. For instance, they can see if a marketplace is at the infant or mature stage, who the big players are, what barriers exist within the industry, and how ESG affects that particular category. All the information from various sources is captured in one location. We can advise our internal stakeholders of the current trends within each market. Also, if we are purchasing something irregular, e.g., a tractor, these reports provide research into the opportunities and threats within each supply chain.
What do you believe are the biggest challenges or obstacles in integrating social value considerations into mainstream consumer behaviour, and how do you think they can be overcome?
Social value is not understood the same way across different sectors, organisations, or departments, which leads to a lack of knowledge and understanding of its impact on an organisation. This is possibly due to the lack of knowledge on how to develop strategies to embed social value across new procurement projects.
There is a lack of knowledge and understanding when it comes to measuring social value outcomes. There are a number of measurement tools being widely used across the public sector for measuring social value; however, we at the University of Liverpool use the NETpositive Supplier Engagement system, which is also used by others within the HE sector.
One of the biggest barriers is cost; however, improving social value in organisations and new projects doesn’t always require additional capital. Many opportunities can include it without additional cost and can, in some cases, create financial value. The University of Liverpool procurement department hopes to engage with apprentices in the near future. Utilising members from the local area to grow their knowledge on what to look for when procuring goods and services that consider social value as a forefront would be beneficial socially and economically.
Although I’ve mentioned solutions for overcoming barriers to driving social value in procurement, there is much more work to be done by organisations, sectors, and worldwide to meet these challenges.
A huge “Thank You” to Mandy Johnston for talking to us about her efforts in driving positive change through sustainable procurement practices.
