Social enterprises and the private sector supply chain

Social enterprises and the private sector supply chain
Helen Barrett, Guardian Professional

Big business is supplied by big business, and breaking into the plc supply chain is beyond most small companies. Or so is the received wisdom. But recently, a number of heavyweight corporate names, including 02 and accountancy firm PricewaterhouseCoopers (PwC), have expressed an interest in using social enterprises as suppliers.

The latest to do so is building giant Wates, which last week published a paper outlining its ambition to make social enterprises "an integral part" of its supply chain, and urging other corporates to do the same.

The company is committed to involving at least one social enterprise on every construction project as "strategic partners, or preferred or approved suppliers".

"They work very closely with a few social enterprises, rather than ‘splurging’," says Cliff Prior, chief executive of UnLtd. "It allows them to build a realistic business relationship over time.

One example is the Ocean Estate project in east London, for which Green Dreams, a social enterprise run by the Bromley By Bow Centre, supplies landscape gardening. The centre is also helping Wates to develop its social enterprise strategy.

"What Wates has done is very practical," says chief executive Rob Trimble. "It’s a virtuous circle: the enterprise delivers social profit in meeting employment needs of locals, and by involving them. But there’s a double social bottom line, because profits are fed back into wider regeneration work to reduce poverty."

Wates’s interest in social enterprise began when two of its executives mooted the idea just over a year ago. As chairman and chief executive Paul Dreschler admits, many on the senior team didn’t know what a social enterprise was.

"But we developed their plan anyway, because it resonated with our values," he says. "We had to work hard to understand the market, so we thought about which contracts would be easiest for social enterprises to engage with."

Wates appointed social enterprise "champions" in every regional office. "We needed people on the ground with enthusiasm – this is not a top-down thing."

Dreschler says there is no limit to the number of social enterprises it could partner with. "We’re still learning," he says. "There are no targets because we don’t know the market well enough yet. Ultimately we want to create bigger and bigger opportunities."

Like Wates, 02’s commitment began with an internal advocate. Simon Devonshire, the company’s general manager for small businesses, is also founder of social enterprise One Water.

"There’s nothing contrived or ‘bandwagon-y’ about 02s enthusiasm," he says. "It’s a convergence of factors. The economic turbulence is a catalyst for small start-ups, and founders at that point nearly always want to include some element of social good – so there’s a lot of them about.

"But you can’t do business without an internal champion who cares," he says. "Big business has knocks and blows, and not everyone understands how fragile social enterprises are."

02 has supplier relationships with several social enterprises, including leadership organisation On Purpose which provides associates to work on projects that develop the company’s social enterprise agenda.

Founder Tom Rippin says companies are driven partly by the fact that social enterprise is popular politically, which in turn leads to good PR "in a good way".

"Plcs want to get in on that, because it’s more meaningful than philanthropy or CSR, and they can use their skills and expertise to help in a practical way," he says.

Cynics might fear that by entering the supply chain, social enterprises risk being ditched the minute their partners’ bottom line takes a hit.

"It’s certainly more costly [to partner with social enterprise] because plcs need to do more due diligence," says UnLtd’s Prior. "Social enterprises need to think about those places where their extra expertise is of value. There are sectors where that premium is really worth something – Fairtrade is sustainable despite its premium price, for example – and articulate that."

Lora Cartwright, PwC’s procurement head of strategy and operations, suggests social enterprises consider looking further down the supply chain for an entry point. "Our contracts tend to be substantial, which means there’s a risk attached to putting too much business with one small organisation. We want to work with our suppliers to find opportunities for them further down the chain," she says.

Once a social enterprise is working with a plc, what can it expect in terms of cultural differences? "Plcs talk in huge numbers and huge money," says Julie Harrington, communications manager at Create, a Yorkshire-based social enterprise that trains marginalised people for employment. The organisation supplies staff to a Leeds branch of Morrisons.

"But the upside is the quality of what we can offer our trainees – that’s the biggest advantage. Morrisons is interested in being a good employer."

On Purpose’s Rippin adds: "You’re unlikely to be talking to the ultimate decision makers in a large plc. And the legal department might check contracts in much more detail than a smaller organisation might."

The will to work with social enterprise is growing, as 02’s Devonshire confirms. "Anecdotally, social enterprises are pushing at an open door," he says. "If they can articulate their benefit in a way that is bankable, there are opportunities."