Making The World A Better Place Through Procurement

Rick Price

Some companies approach supplier risk as a negative – playing defense against a contractor’s inappropriate, illegal, or corrupt practices that could wreck their reputation and bottom line. You could argue though, that the best organizations see it as an affirmative act: seeking out suppliers that align with their highest values. One of these organizations is Nielsen Holdings.

What the data says

With operations in 100 countries covering more than 90% of the world’s population, Nielsen has the data on what customers want, for media and retail customers. Nielsen’s own numbers show that today, customers increasingly look for social responsibility, and two-thirds will pay more for brands they perceive as socially responsible.

Deeper meaning

James Edward Johnson, Nielsen’s director of supply chain risk management and analysis, told a session at SAP Ariba Live in Sydney that those numbers come right home to the company that uncovered them. “If there are consumers in the world […] who are buying more stuff, and it does help our business, that’s great! But the thing that drives me, drives a lot of the people who work with me, isn’t just that it helps the bottom line; it’s that we can make an impact on people’s lives.”

A signal in the marketplace

As Nielsen puts it on its website, “Being a responsible corporate citizen is woven into Nielsen’s DNA.” They look at factors across the supply chain, the “environmental, social, governance, and ethical impacts of their purchasing.“

“We know that our institutional spend of over $2 billion can be a demand signal in the marketplace. We intentionally leverage our spend to drive our business performance and help improve the integrity and transparency of supply chains globally; create fairer and more humane working conditions in factories overseas; support diverse-owned and local businesses in our communities; and lighten the load on our planet’s resources.”

Johnson says, “Because we’re so active in the supply chain, we actually touch millions of lives. How do you make sure that’s a force for good, that when you negotiate deals, your push for price isn’t merely favoring companies that will cut corners, abuse their workers, enslave people, or rip up the environment by dumping chemicals into lakes?”

It works because of the way Nielsen does procurement

Nielsen says, “We manage our supply chain and purchasing decisions to increase our positive environmental, social […] and ethical impacts while decreasing our negative impacts.” The company requires suppliers to provide company-level information related to sustainability, soliciting the information during supplier registration and the RFP process. For more than two years now, its standard contract terms have required suppliers to abide by the company’s Supplier Code of Conduct. The code specifies behavior in the areas of labor (specifically human rights), health and safety, environmental management, ethics, and management systems. Nielsen is specific not just about behavior, but about the way their suppliers document it.

A data partner for a data expert

Nielsen has the data to work with because of the systems it uses to manage the entire supply process. The SAP Ariba network helps Nielsen conduct due diligence at scale quickly and cost-efficiently. SAP Ariba partners with OutsideIQ to bring data into the system and add a layer of context that helps Nielsen identify and prioritize supply chain risks.

Making the world better

At another Ariba Live event in Las Vegas, James Edward Johnson told the crowd that SAP Ariba will do more than help reduce supplier risk and secure Nielsen’s bottom line. “With the right tools in place and looking at the breadth of risks that we can with this, I can make the world a better place[…] I can start to bring improvements into the lives of workers in impoverished communities, I can preserve the earth for future generations, I can stop the practices that breed corruption and just oppress a lot of people in many areas of the world where we’re usually just blind to what’s happening in our supply chain.”

Want to see more about how Nielsen’s procurement process is making the world a better place? Click here to watch the video.

Follow SAP Finance online: @SAPFinance (Twitter)  | LinkedIn | FacebookYouTube

Rick Price

About Rick Price

Rick Price is an Emmy Award-winning journalist who now works at SAP, where he tells stories of customers' digital transformation.