Sustainability through procurement – Spotlight on Fair Operating Practice
Here we shine a spotlight on one of the core subjects of the Standard to see how it could relate to your organisation.
What is fair operating practice?
ISO 20400 describes it as applying and promoting ethical conduct in your organisation’s dealings with other organisations, including suppliers, contractors, partners, customers, competitors, governments and business associations. It covers:
- responsible political involvement
- fair competition
- promoting social responsibility in the supply chain
- respect for property rights
Having an impact…
The impact of something going wrong in any of the above areas can be significant and affect your customers, shareholders, staff, suppliers and whole communities. For example:
Some claim that the UK Government’s procurement team should have looked more closely into the low bids, high number of contracts and poor payment practices by Carillion, a British multinational facilities management and construction services company, which collapsed recently, taking hundreds of supply chain contracts with it. A Federal Liaison Committee meeting in February 2018, heard that the equivalent of around $AUD270m has been set aside to keep services run by Carillion going while alternative arrangements are put in place.
Sustainable procurement emphasises the importance of competition and fair practices throughout the supply chain. Low pricing, extended terms and late payments are among the warning signs that something may be amiss.
Just as the negative effects can be far-reaching, your influence to make positive changes through sustainable procurement can be just as impactful.
What to think about
Things to ask yourself:
- do you have a positive impact on your suppliers and local economy?
- what affect are your practices having on your reputation?
- can you promote social responsibility in the supply chain?
Where to start
Why not try one of these as a starting point?
- check if your own processes, like delivery, price and payment expectations, are creating sustainably adverse impacts
- analyse what percentage of the goods and services you procure are supporting your local economy by being supplied by (for example) small and medium enterprises or Indigenous businesses
- understand what your organisation’s obligations are in relation to the Intellectual Property of your suppliers and ensure staff handling IP have the relevant training