Social Enterprise Business Centre

SE Promotion

Tips on Responsible Procurement

The idea of social procurement has not been popularized in Hong Kong yet. Usually, only large enterprises have such relevant procurement policies. In order to improve the public’s understanding of social procurement, we have published “Responsible Procurement News” quarterly to provide tips and primary direction on social procurement. The news can help enterprises to put social procurement into practice.

  1. How does social procurement help with fulfilling social responsibility?
  2. What kind of goods or services can enterprises obtain from social enterprises?
  3. What are the types of responsible procurement?
  4. Does it count as social procurement if only social impact is included in the scoring criteria of procurement?
  5. Can social enterprise handle large number of orders?
  6. How to ensure that the SE products or services meet the requirement of corporates?

How does social procurement help with fulfilling social responsibility?

A social enterprise, generally speaking, is a business that targets at a specific social mission. It attempts to solve social problems by commercial means. Maximising profit for the shareholders is not its primary target, while its profit will be principally re-invested in the business to create wider social impact.  Therefore, social procurement can support a sustainable operation of the social enterprises. Thereby achieving diverse social goals and missions.

What kind of goods or services can enterprises obtain from social enterprises?

According to a survey conducted by our center, over 50% of the interviewees (company/ organization) think social enterprises cannot provide goods or services they need. Therefore, they will not consider social enterprises when it comes to procurement.

In fact, other than gifts services, social enterprise can also provide services like office & building cleaning, moving & relocation, designing & production, packaging, performing, accounting& auditing, and also vocational training and team building.  These kinds of services are suitable for different companies.

Companies can use the online search engine of SE Directory to know more about the content and the variety of goods and services, thus consider procuring from social enterprises. Through filtering categories of “Business Nature” , “Social Missions” or typing keywords, available enterprises and their information will immediately list.

What are the types of responsible procurement?

Responsible procurement can generally be divided into two categories: environmental and social.

With the increasing awareness of environmental protection in the society, many companies have formulated a series of environmental protection procurement guidelines that require all departments to take environmental factors into consideration when purchasing, so as to reduce the impact on the environment. Thanks to the support from different sectors, the rapid development of environmental procurement has become one of the development policies of various enterprises.

In addition to environmental factors, corporates usually take price, quality, or reputation of suppliers into consideration during procurement. However, social impact is rarely included. The concept of social procurement thus focuses on social factors by considering the social value created by the suppliers’ goods or services, such as employment for the disabled, empowerment of disadvantaged groups and encouragement of Fair Trade practices etc., so that each consumption can exert its social impact and enhance the social value of the company.

Does it count as social procurement if only social impact is included in the scoring criteria of procurement?

The practice of social procurement is extensive. Companies may start by changing the procurement guidelines and gradually reform related policies and systems, so as to act in accordance to social procurement and fulfill their social responsibilities.

Changing the procurement scoring criteria is the basis of social procurement. Corporates may improve their chances of winning the bid by adding "Social Impact" to their procurement scoring criteria, or by increasing the weighting of the score.

Having the corresponding corporate policies is an integral part of fully implementing social procurement. Corporates may formulate a set of company policies that adheres to social procurement, such as including the entire bidding process and follow-up work in procurement policies, ensuring coordination and communication among various departments, and even providing employees with education on related concepts.

If your company has no experience in implementing social procurement, we suggest that your company first update the procurement scoring standards to include social impact in procurement considerations, so as to implement social procurement and shoulder social responsibility.

Can social enterprise handle large number of orders?

The scale of SEs is generally smaller than large-scale suppliers. Their manpower and resources may not fully meet the requirements of corporates, thus corporates usually lack the confidence to appoint SEs as the vendor of large number of orders.

However, allowing joint-tendering may help lessen corporates’ concerns. By taking advantage of the flexible nature of SEs, several SEs can combine their resources and share the production processes to reduce their respective burdens. For example, if a company needs souvenirs for its event, the order can be jointly contracted by multiple SEs, ranging from idea design, test production, post-processing and packaging, delivery and distribution, etc. Such an arrangement allows SEs to play to their strengths and provide the company with high-quality products and services.

On the other hand, corporate may consider splitting orders during procurement. It not only reduces the burden on individual SEs, but also makes it easier for SEs easier to fulfil corporates' needs. Taking catering services for large-scale events as an example, companies can split orders into different food categories, such as snacks, Chinese and Western food, patties or fruits. SEs are then invited to tender, which gives the small and medium-sized SEs valuable bidding experience.

To promote the products and services of SEs and encourage the business sector to implement responsible procurement, there are some platforms that provide one-stop services to support corporates in purchasing from a variety of SEs, simplifying administrative procedures. You are also welcomed to search for the SEs targeting corporate customers by entering the keyword "Corporate Procurement" into the SE Directory search engine on SEBC website. The SEs will be listed instantly.

How to ensure that the SE products or services meet the requirement of corporates?

According to a survey conducted by SEBC last year, more than 90% of the companies or organizations surveyed believe that the quality of products and services is one of the most important purchasing considerations. So how can enterprises ensure SE products or services meet their requirements?

SEs are usually small in scale and most of them have little experience in bidding. In addition to requiring SEs to submit documents of proof, such as past customer records or portfolios, we suggest companies to conduct on-site or virtual visit for tender evaluation, so as to gain a deeper understanding towards the tenderer.

Reliance on the review of tender application form alone is insufficient if one wishes to conduct a thorough tender evaluation. Through site visit (both online and offline), corporates can fully grasp the production process and sanitary conditions of SEs. The corporates may also take the opportunity to communicate with employees or customers face-to-face and be acquainted with the social impact of SEs through such dialogues. On top of ensuring that the hardware of SE meets tender requirements, site visits allows corporates to have a good grasp of SE's social mission, and help them choose suppliers with similar values.

Although SEs' services may be constrained by their limited scale, it is precisely because of their small size that allows them to be more flexible than large-scale vendor. SEs may supply tailor-made products and services according to corporates’ unique requirements, such as souvenirs, holiday gift boxes, corporate training activities, etc. As most SEs are willing to provide customized services, the process of negotiation and decision-making is relatively simple and straightforward, which gives both parties more time to prepare for other matters related to products or services.