Social Procurement in the Hospital Sector
Caroline Gordon, Landell
Paul Rogers, eSourcing Group
© 2013 This material is co...
PART A. BACKGROUND
•  What is social procurement?
•  What are the benefits?
•  What are the obstacles to social procuremen...
What will this Presentation Cover?
PART B. RESEARCH SNAPSHOT
What is the extent of social procurement in the Victorian hos...
What will this Presentation Cover?
PART C. SPECIALIST ADVICE
What support are Victorian hospitals seeking to help them imp...
What is Social Procurement?
The purpose of Social Procurement is
to achieve social outcomes through purchasing
Examples of Social Procurement
PURCHASE OF GOODS
Fair trade aims to assist producers in developing countries to:
•  improve their trading conditions;
•  improve the condit...
The benefits of local sourcing include:
•  supply chains are generally shorter, leading to greater
certainty and predictab...
Examples of Social Procurement
STRATEGIC INITIATIVES
•  A social enterprise is a business that operates for a social and/or
environmental purpose.
•  Many social enterprises e...
Improvements in the supply chain can have very positive social outcomes for
specific groups and communities (e.g. improvin...
Social procurement requirements can be included in tenders/quotes which
prescribe social outcomes as part of the service d...
Why Bother?
1. The Paradigm Shift has Started
•  Governments and markets are increasingly embracing social procurement
as a mechanism ...
2. Purchasing Power
•  The hospital sector has significant purchasing power. Victoria’s public
hospitals bought more than ...
3. Cost Neutrality
•  Social benefit objectives do not necessarily have to add costs to the
procurement.
•  Minimal cost i...
4. Benefits Provided by Social Procurement
•  Securing a hospital’s reputation and leadership; the creation of training an...
There is a growing body of evidence about the value of social procurement and case studies
that have been undertaken, many...
And the Hospital Sector…?
Research Snapshot
There is not a great deal of evidence about social procurement in the hospital
sector, especially in Aus...
So we decided to do our own research…
Research (Part 1): Online Survey
Landell and eSourcing Group developed an online survey to collect baseline
information targeting Procurement Managers and ...
Of the 45 hospital representatives which received the survey, 18 completed it,
representing a 40% response rate, which is ...
Yes
64.7%
No
23.5%
I don’t know
11.8%
Hospitals that
undertake Social
Procurement
When asked whether their
hospital(s) inc...
Public
81.8%
Private: 9.1%
A mixture of public
and private: 9.1%
Of the respondents whose hospitals undertake social procu...
Specific
Procurement
Categories
A number of specific
procurement categories were
identified by respondents
(respondents co...
Of the respondents whose hospitals undertake social procurement, only 9.1%
indicated that they provided practical guidance...
Of the respondents whose hospitals undertake social procurement, three good
examples of social procurement were provided:
...
Some Good Examples Found
“Our priority is to ensure that the service is safe to the patients (but) with
equal conditions, ...
Some Good Examples Found
•  “(We) have affiliations with health service of health care
organisations, councils, special he...
Of the respondents whose hospitals undertake social procurement, only 9.1%
indicated that they provided practical guidance...
Obstacles to Social
Procurement
Of the respondents whose hospitals
currently undertake social
procurement, the majority (4...
Page 34.##
Obstacles to Social
Procurement
Of those respondents who indicated
that their hospitals did not undertake
social procureme...
Of the respondents whose hospitals don’t currently undertake social
procurement, 33.3% plan to do so in the future.
Plans ...
•  Most sectors are at a very early stage of adopting social procurement
•  HOWEVER, it appears that the majority of hospi...
•  However, the primary focus of these social procurement projects appear to be in the
form “direct” social procurement, w...
Lesson Learned
There does not appear to be a great deal of social procurement being
undertaken upstream in the supply chain
Research Part 2: Interviews with Senior Managers
“Our focus is primarily upon
business as usual and lack of time
is a key issue for us”
“We changed the scope of the contract
so that the preparation of conference
rooms could be handled by a provider
who engag...
Where can you start?
Tips to becoming Social Procurement ready
•  Appoint a “champion” who is knowledgeable and enthusiastic about
social procurement to be your organisation’s social pr...
•  Develop a social procurement business case in which:
•  your hospital’s policies, processes and purchases are audited a...
•  Consider “hot spotting” your spend portfolio using one or more of these mechanisms:
•  supply chain analysis;
•  risk a...
•  Develop "supply-side" readiness by educating your suppliers about your hospital’s move
towards social outcomes through ...
•  Develop a database of social enterprises in your local area municipality
(e.g. by utilising and promoting Social Trader...
Information on Social Procurement
When asked whether they would like to receive information on
social procurement, a whopp...
When asked what type of information they would like to receive, the majority of
respondents indicated a link to:
•  a Soci...
Landell and eSourcing have jointly developed a free Social Procurement
Guide for the Hospital Sector, which provides high-...
Landell will shortly be releasing a Social
Procurement Toolkit in August
The Toolkit focuses on procurement for the Victor...
Thanks Caroline Gordon, Landell
P: 0412 149 424
E: caroline.gordon@landell.com.au
Paul Rogers, eSourcing Group
P: 0438 550...
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Social Procurement for the Victorian Hospital Sector

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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

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Social Procurement for the Victorian Hospital Sector

  1. 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. 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. 3. What will this Presentation Cover? PART B. RESEARCH SNAPSHOT What is the extent of social procurement in the Victorian hospital sector?
  4. 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. 5. What is Social Procurement? The purpose of Social Procurement is to achieve social outcomes through purchasing
  6. 6. Examples of Social Procurement PURCHASE OF GOODS
  7. 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. 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. 9. Examples of Social Procurement STRATEGIC INITIATIVES
  10. 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. 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. 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. 13. Why Bother?
  14. 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. 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. 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. 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. 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. 19. And the Hospital Sector…?
  20. 20. Research Snapshot There is not a great deal of evidence about social procurement in the hospital sector, especially in Australia
  21. 21. So we decided to do our own research…
  22. 22. Research (Part 1): Online Survey
  23. 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. 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. 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. 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. 27. Specific Procurement Categories A number of specific procurement categories were identified by respondents (respondents could select more than one option)
  28. 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. 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. 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. 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. 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. 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. 34. Page 34.##
  35. 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. 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. 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. 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. 39. Lesson Learned There does not appear to be a great deal of social procurement being undertaken upstream in the supply chain
  40. 40. Research Part 2: Interviews with Senior Managers
  41. 41. “Our focus is primarily upon business as usual and lack of time is a key issue for us”
  42. 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. 43. Where can you start? Tips to becoming Social Procurement ready
  44. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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

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