Social Value in Procurement – What You Need to Know

Social value is becoming increasingly important for businesses to consider. However, a surprising number of firms fail to consider the role of social value in procurement activities.

Indeed, it’s easy for firms to focus exclusively on social value in their actions; still, by failing to consider social value in your product procurement processes, you may find that your social outreach is far less significant overall.

With this thought in mind, today, we are looking at why social value is important for businesses and why social value in procurement is something you cannot afford to overlook.

What is Social Value?

Before we begin looking at social value in procurement specifically, it’s important to first clarify what social value is.

Social value is a somewhat complex topic since the definition can sometimes be a little unclear. However, generally, social value refers to a quantifiable measure of a business’s social impacts. Social value primarily focuses on positive social impacts and assesses how the firm brings value to its communities.

There are three main ways that social value is measured.

Firstly, social value commonly considers the social benefits to the local community on offer. Moreover, it may also consider wider societal influences (for larger-scale businesses operating nationally) and economic changes the business can provide.

Notably, social value is a metric that can directly influence the overall reputation of a business. With this in mind, it’s critical to consider how your firm could bolster its activities for the betterment of its social value.

How Does Social Value in Procurement Work?

It’s easy to understand a business’s social value by considering its direct actions. However, did you know that your business also has a social value in indirect activities?

One highly influential example of this is social value in product procurement – in other words, how your business creates social value for local communities through its product sourcing choices.

Every business will have to purchase products at some point, be it materials for manufacturing, ingredients for cooking, or new stock to sell. However, did you know where and how you purchase these materials can directly influence your business’ overall social value?

As per the Social Value Act 2012, it is a necessity for public entities to consider how their actions relate to local social, environmental, and economic sustainability.

This fact is also true in procurement; as such, when purchasing new products or materials, it is important to look for ways to bolster your local community.

You can heighten your business’s social value in product procurement in several ways.

Buying locally sourced products from your community is one such example; furthermore, you should also ensure you’re paying a fair price to local businesses for their ingredients or products, as this can help strengthen the local economy around your firm. In doing so, you’ll also have a direct positive social impact on other businesses locally, strengthening your local economy. However, try to ensure you apply these principles across all product procurements, not just one or two, to have the most significant impact.

Final Thoughts

Undoubtedly, businesses are spending a greater amount of time and energy on enhancing their social value – and for a good reason. Indeed, social value is a massively critical factor of business management, directly relating to how the business operates and its reputation among communities. However, social value isn’t solely related to the business’s direct activities.

Businesses can indirectly generate social value with careful product procurement strategies. With this thought in mind, the next time you purchase a new shipment of products, materials, ingredients, and the like for your firm, it’s massively important to consider how this could impact the communities around you accordingly.