After decades of price-driven procurement, and supply chains where risks and responsibilities were passed on to suppliers, the world is changing.

Businesses are increasingly being scrutinised and held to account for their impact, their sustainability (or lack of it), and the transparency and ethical practices in their operations.

Governments – including those in Australia – are imposing stricter regulations around due diligence and supply chain reporting, encouraging businesses to identify and mitigate environmental and human rights risks. This means businesses must be proactive about addressing their own role in human rights violations, modern slavery, and environmental impacts. Australia’s Modern Slavery Act 2018, and the NSW Modern Slavery Act 2018, are part of a growing push towards greater due diligence, transparency, and collaboration.

Procurement decisions are no longer being driven by price alone, with an increasing number of businesses now prioritising transparency, ethics and collaboration. Across all ESG areas, from Scope 3 emissions, biodiversity, human rights, and circular economy, one thing is becoming clear; engagement with suppliers is the best way to shift the focus and achieve real change.

Beyond legal requirements, taking responsibility for your supply chain demonstrates commitment to ethical and sustainable practices as well as continuous improvement, while fostering consumer trust, ultimately strengthening your brand and creating a competitive advantage. How do we build more sustainable and resilient supply chains? It’s easiest to break your approach down to nine different areas of supplier engagement, as every supplier relationship and supply chain is unique:

1. Exclusivity: Reward engagement and transparency. Explore offering some degree of exclusivity to suppliers who are more aware, more engaged, more transparent about their supply chains and have higher levels of due diligence. This is about offering them something in return if they’re prepared to evolve with you.
2. Timing: Your timing is not necessarily your suppliers’ timing. Let’s keep in mind that we’re asking busy people to do more. To ensure we maintain a great relationship, and get more engagement from suppliers, it’s critical to take the timing of our requests into account. Your ideal timing is unlikely to align with theirs, and they will have other obligations and commitments, so take time to discover the best timing strategies for supplier communications to maximize engagement.
3. Streamlined Processes: Help your suppliers to help you. We’ve all felt the difference between a great process and a bad one. It can be the difference between using an app or not even opening it, or starting and finishing a task. Even a small amount of friction can dramatically affect outcomes. Given that we need our suppliers to engage with us and our digital tools – working to improve their experience and streamline their process will make a big impact on success. Talk with industry peers about the tips and tricks for simplifying supplier assessment processes and reducing fatigue.
4. Education and Training: Bring suppliers on the journey with you (not at arm’s length). Put a note above your monitor so you don’t forget – what we’re leading here is a big change in the way we communicate, engage and procure. In any situation, asking people to do something new and not especially easy without providing the context, is not going to yield good results. This is no different: sending a detailed assessment questionnaire to suppliers and asking for it to be completed, without explaining why it’s important and what the next steps are, is going to lead to frustration all around. So equip suppliers with the tools they need to meet your standards while improving over time.
5. Repetition: Consistent, frequent, well-crafted messages will shift the needle over time. Let’s face it, life is busy, and we’re all being bombarded with more and more messages, emails, texts, and information every day. As much as it would be nice to be able to say something once and that be enough, it’s not. Good communication needs to be refined and repeated, repeatedly! If you have something important to say once, then you have something important to say again and again. Learn how to leverage consistent and repeated communication to shift supplier behavior over time.
6. Contact Data: Good data, higher impact. In any stakeholder communications pursuit, maintaining your database is critical. You don’t want to end up in a situation where all your efforts to improve supplier communications and engagement aren’t reaching the people it needs to. Which do you think is more likely to get a response: ‘Dear (Nameless) Valued Supplier’ or ‘Dear Alex’? We know which we’d delete and which we’d action. The importance of maintaining accurate and up-to-date supplier contact information for better engagement cannot be underestimated.
7. Financial Incentives: Make it worth their while. With most supplier platforms, the most frequently heard refusal is: “I’m not being paid to do this and there are other things that are more worth my time”. Which is why you might want to consider compensating suppliers for their time. Financial incentives – even small ones – can make a huge difference in supplier engagement, and can begin the process of behaviour change, especially with time-poor small businesses (SMEs). Explore how small financial rewards can lead to higher engagement, especially with those smaller suppliers.
8. Non-Financial Incentives: Incentives that may be worth more than dollars and cents. We’re seeking to move beyond money as the sole driving force in procurement, so it’s only fair that we also embrace non-financial incentives to improve supplier engagement. Exploring non-financial incentives encourages us to lean into good business principles to motivate better outcomes, while maintaining a strong focus on why we’re pursuing this. It’s time we understand the value of non-monetary rewards like faster payment terms, longer contracts, or preferred supplier status.
9. Requirement: In order for suppliers to do X, they must first do Y. A lot of what we’ve mentioned here has been about persuasion and influencing. But let’s not forget that as a buyer, you have significant leverage to wield. Requiring suppliers to fulfill certain obligations, such as completing assessments, is a perfectly legitimate option you can explore, especially around higher-value or higher risk procurement. This is particularly relevant when it comes to tenders, new suppliers, or during the onboarding process, as obligations can be more easily enforced at this point. It’s time to learn how to incorporate supplier assessments and ethical practices into contracts and tenders.

These nine areas are why the experts at technology provider Informed 365 and sustainability advisory Better Sydney, with the help of PigFace Marketing, have launched a free comprehensive guide to help businesses build sustainable, resilient and diverse supply chains.

The Supplier Engagement Handbook, provides a roadmap for building a stronger, more transparent supply chain. The guide breaks down the puzzle of supplier engagement into those nine crucial areas designed to foster collaboration and trust with your suppliers while helping your organisation meet modern standards for environmental and social responsibility and:

• Build stronger, more collaborative relationships with suppliers
• Meet regulatory requirements, including those related to the Modern Slavery Act 2018
• Implement incentives that encourage better supplier engagement
• Improve your brand reputation and foster consumer trust.

Download the guide here

Robin Mellon is the CEO of Better Sydney

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