At the 3rd National Health Procurement Conference, Landell gave a presentation on Social Procurement in the Victorian Hospital Sector and released a guide to Social Procurement for the Hospital Sector. To obtain your copy of the Guide, click on the link below. http://landell.com.au/social-procurement-csr/social-procurement-guide-for-the-hospital-sector

1. Social Procurement in the Hospital Sector
Caroline Gordon, Landell
Paul Rogers, eSourcing Group
© 2013 This material is copyrighted and cannot be used without the express permission of Landell and eSourcing Group

2. PART A. BACKGROUND
• What is social procurement?
• What are the benefits?
• What are the obstacles to social procurement?
• How do you overcome these obstacles?
What will this Presentation Cover?

3. What will this Presentation Cover?
PART B. RESEARCH SNAPSHOT
What is the extent of social procurement in the Victorian hospital sector?

4. What will this Presentation Cover?
PART C. SPECIALIST ADVICE
What support are Victorian hospitals seeking to help them implement social procurement?
What is important when implementing socially responsible purchasing?

5. What is Social Procurement?
The purpose of Social Procurement is
to achieve social outcomes through purchasing

6. Examples of Social Procurement
PURCHASE OF GOODS

7. Fair trade aims to assist producers in developing countries to:
• improve their trading conditions;
• improve the conditions of their workforce; and
• promote sustainability
Purchase of “Fair Trade” Goods

8. The benefits of local sourcing include:
• supply chains are generally shorter, leading to greater
certainty and predictability of delivery times and lower
delivery costs; and
• local suppliers and local communities are supported
Local Sourcing of Goods

9. Examples of Social Procurement
STRATEGIC INITIATIVES

10. • A social enterprise is a business that operates for a social and/or
environmental purpose.
• Many social enterprises employ staff and/or trainees from groups which
historically have difficulty securing employment (e.g. long-term unemployed,
people with a disability)
Contract with Social Enterprises/Not For
Profits (do good)

11. Improvements in the supply chain can have very positive social outcomes for
specific groups and communities (e.g. improving labour conditions for workers
in developing countries)
Supply Chain Improvements (avoid doing
harm)

12. Social procurement requirements can be included in tenders/quotes which
prescribe social outcomes as part of the service delivery (e.g. the employment
of long-term unemployed as apprentices)
Selection Criteria/Contract Provisions (do
good)

13. Why Bother?

14. 1. The Paradigm Shift has Started
• Governments and markets are increasingly embracing social procurement
as a mechanism for generating social benefit.
• In 2012, the UK Government enacted the Public Services (Social Value) Act
2012
Four Good Reasons

15. 2. Purchasing Power
• The hospital sector has significant purchasing power. Victoria’s public
hospitals bought more than $1.6 billion of goods and services in 2010/11.
• Hospitals are thus ideally placed to use their considerable market power to
stimulate and influence markets to develop strategies and processes which
support social outcomes
Four Good Reasons

16. 3. Cost Neutrality
• Social benefit objectives do not necessarily have to add costs to the
procurement.
• Minimal cost impacts can be secured by ensuring that social benefit
objectives are appropriate to the size of the procurement and within the
expertise of the providers.
Four Good Reasons

17. 4. Benefits Provided by Social Procurement
• Securing a hospital’s reputation and leadership; the creation of training and
employment opportunities;
• Encouragement of local economic development and growth;
• Engagement of small-to-medium enterprises, social enterprises and minority
businesses to provide them with the same opportunities as other businesses,
including the ability to engage in procurement processes;
• Promotion of fair and ethical trade, thereby ensuring that supply chains do not harm
people or environments; and
• Improvements in social inclusion
Four Good Reasons

18. There is a growing body of evidence about the value of social procurement and case studies
that have been undertaken, many of these case studies have been undertaken by:
• local councils, which have been at the forefront of social procurement initiatives; and
• State Government departments in the areas of:
• construction;
• hospitality;
• catering; and
• purchasing from social enterprises
Social Procurement and the Hospital Sector

19. And the Hospital Sector…?

20. Research Snapshot
There is not a great deal of evidence about social procurement in the hospital
sector, especially in Australia

21. So we decided to do our own research…

22. Research (Part 1): Online Survey

23. Landell and eSourcing Group developed an online survey to collect baseline
information targeting Procurement Managers and Sustainability Officers
The survey was sent:
• to the hospital procurement managers of 25 hospitals / hospital networks via
email; and
• by Health Purchasing Victoria (HPV) to a network of 20 hospital
sustainability officers
Research Method

24. Of the 45 hospital representatives which received the survey, 18 completed it,
representing a 40% response rate, which is excellent for a “cold” survey of this
kind, given that it received:
• no government funding (although HPV provided strong support); and
• no government promotion
Response

25. Yes
64.7%
No
23.5%
I don’t know
11.8%
Hospitals that
undertake Social
Procurement
When asked whether their
hospital(s) incorporated social
outcomes in any procurements,
the majority of respondents said
YES!

26. Public
81.8%
Private: 9.1%
A mixture of public
and private: 9.1%
Of the respondents whose hospitals undertake social procurement, the considerable
majority were public
Of the respondents whose hospitals undertake social procurement, 45.5% indicated that
social outcomes were required for specific procurement categories
Specific Procurement Categories

27. Specific
Procurement
Categories
A number of specific
procurement categories were
identified by respondents
(respondents could select
more than one option)

28. Of the respondents whose hospitals undertake social procurement, only 9.1%
indicated that they provided practical guidance to staff about social
procurement.
Guidance

29. Of the respondents whose hospitals undertake social procurement, three good
examples of social procurement were provided:
Some Good Examples Found
“Employment of socially disadvantaged and (intellect)ally challenged
individuals work in (the hospital’s) gardens and grounds and
(perform) minor maintenance

30. Some Good Examples Found
“Our priority is to ensure that the service is safe to the patients (but) with
equal conditions, we prefer non-profit organisations.”

31. Some Good Examples Found
• “(We) have affiliations with health service of health care
organisations, councils, special health organisations and they
are involved in socially responsible activities.
• We also require that companies working for us share the same
value and commitment to the community”

32. Of the respondents whose hospitals undertake social procurement, only 9.1%
indicated that they provided practical guidance to staff about social
procurement.
Guidance

33. Obstacles to Social
Procurement
Of the respondents whose hospitals
currently undertake social
procurement, the majority (45.5%)
indicated that they experienced no
obstacles
Yes
36.4%
No
45.5%
I don’t know
18.2%

34. Page 34.##

35. Obstacles to Social
Procurement
Of those respondents who indicated
that their hospitals did not undertake
social procurement a higher
percentage (75%) indicated that
they foresaw obstacles in
undertaking social procurement than
those whose hospitals did implement
social procurement (36.4%)
Yes: 75%
No: 25%

36. Of the respondents whose hospitals don’t currently undertake social
procurement, 33.3% plan to do so in the future.
Plans to Implement Social Procurement

37. • Most sectors are at a very early stage of adopting social procurement
• HOWEVER, it appears that the majority of hospitals (particular public hospitals)
already undertake a range of social procurement initiatives
• This is a fantastic start and beyond the
expectation of the researchers before the
survey was undertaken
How do We Interpret these Results?

38. • However, the primary focus of these social procurement projects appear to be in the
form “direct” social procurement, which relies on first-tier supplier responsibility
• Examples provided by the survey respondents included:
• contracts with social enterprises and not-for-profits;
• employment of staff from disadvantaged groups;
• local sourcing of goods and services; and
• purchase of “Fair Trade” goods
Focus on Direct Social Procurement

39. Lesson Learned
There does not appear to be a great deal of social procurement being
undertaken upstream in the supply chain

40. Research Part 2: Interviews with Senior Managers

41. “Our focus is primarily upon
business as usual and lack of time
is a key issue for us”

42. “We changed the scope of the contract
so that the preparation of conference
rooms could be handled by a provider
who engaged our target stakeholders ”

43. Where can you start?
Tips to becoming Social Procurement ready

44. • Appoint a “champion” who is knowledgeable and enthusiastic about
social procurement to be your organisation’s social procurement “go-to”
person
• Ensure that there is senior managerial support for social procurement
within the organisation before implementing any programs, as this will have
a critical effect on the success of the project.
Tip: Get Support

45. • Develop a social procurement business case in which:
• your hospital’s policies, processes and purchases are audited and
reviewed to:
• determine how your hospital’s strategic objectives can achieve the
following through social procurement:
• Quantify the tangible and intangible social procurement benefits
Tip: Plan the Target Outcomes

46. • Consider “hot spotting” your spend portfolio using one or more of these mechanisms:
• supply chain analysis;
• risk analysis; and
• category analysis
• Is there a chance that you are buying products that may pose a reputational risk to your
hospital?
• bedding, linen, work wear, some simple bandages, etc.
• surgical instruments, trolleys, etc.
• Consider researching the scale and nature of those risks and mitigate them
Tip: Don’t Drive a Desk!

47. • Develop "supply-side" readiness by educating your suppliers about your hospital’s move
towards social outcomes through purchasing
• Incorporate social procurement outcomes into your organisation’s regular reporting
requirements (e.g. annual reports).
• Communicate the social procurement message internally and externally using the principles of
the “Social Procurement Communication Strategy”
• Develop a database of social enterprises in your local area municipality (e.g. by utilising and
promoting Social Trader’s online tool: www.socialenterprisefinder.com.au)
• For quotes and tenders, develop specifications, tender provisions and contractual clauses
including social procurement requirements (including appropriate weighting)
Tip: Engage your Suppliers

48. • Develop a database of social enterprises in your local area municipality
(e.g. by utilising and promoting Social Trader’s online tool:
www.socialenterprisefinder.com.au)
• For quotes and tenders, develop specifications, tender provisions and
contractual clauses including social procurement requirements (including
appropriate weighting)
Tip: Review Supply & Demand

49. Information on Social Procurement
When asked whether they would like to receive information on
social procurement, a whopping 94.1% indicated that they would.

50. When asked what type of information they would like to receive, the majority of
respondents indicated a link to:
• a Social Procurement Guide for Hospitals; (98.3%) and
• a Social Procurement Toolkit (81.3%)
Information on Social Procurement for
Hospitals

51. Landell and eSourcing have jointly developed a free Social Procurement
Guide for the Hospital Sector, which provides high-level guidance and
checklists for implementing social procurement projects which is available
online at:
• landell.com.au
• eSourcing.com
Social Procurement Guide

52. Landell will shortly be releasing a Social
Procurement Toolkit in August
The Toolkit focuses on procurement for the Victorian public sector
including hospitals.

53. Thanks Caroline Gordon, Landell
P: 0412 149 424
E: caroline.gordon@landell.com.au
Paul Rogers, eSourcing Group
P: 0438 550 221
E: progers@esourcinggroup.com