Businesses With A Purpose And Latin America's Evolution

Marcelo Fernandes

Over the past few months, we have developed a number of initiatives to share the concept of “Purpose-Driven Business” focused on procurement and supply chain. We’re focused on how to make procurement professionals the leaders of the transformation that companies must make in response to the demands of an increasingly conscious society.

Global statistics point to promising numbers showing that purpose-driven companies can achieve 20% more sales, up to 50% higher employee retention, and an average share value six percent higher than organizations without any such initiatives.

Not so long ago, no company really cared about having a purpose. “Purpose” in this context is not just about a specific area of a company helping needy communities or pushing a more sustainable business. It is a change in corporate leadership philosophy.

What made change so important?

The combination of a new generation of consumers (millennials) with new social values shared through digital media and new digital transformation business models has exposed executives to new challenges to engage a new wave of consumers, to handle financial results, and to build and maintain positive brand perception.

We have many examples of the broad implications of mismanagement of value chains.

For example, in Sao Paulo, Brazil, food waste reaches 40 tons per day, which could otherwise feed about 13 million people. In addition, unemployment is at critical levels in the region, and one of the only ways to deal with it is by generating opportunities for innovation and inserting small businesses into larger supply chains.

I believe we have an opportunity in this region to discuss changing our leadership philosophy to move from a cost-centered focus to a value-centered one, generated through collaborations with suppliers from our various value chains.

Co-innovation and collaboration with different sizes and types of suppliers can transform not only one company but its entire ecosystem across three pillars.

1. Economic growth

Currently, about 42% of business-to-business (B2B) expenses are made electronically through business networks. About 60% of purchase orders are digital, and this means suppliers must be willing to understand and do business through digital tools. Imagine the power of digital business networks for companies looking to grow their business by selling to more and more customers. Also imagine what could happen if smaller companies, even family-owned businesses such as farmers, had access to sell to larger companies.

This could push job creation and wage increases that contribute to economic growth. Collaboration within value chains opens more opportunities for innovation and creates competitive advantage for companies.

2. People development

Not only do service providers have to understand the new dynamics of digital commerce to increase their market share, but they must also understand the new dynamics of what is called “modern procurement.” This means that it is now vital for suppliers to adapt to their buyers’ corporate values to continue doing business with them. At the same time, leaders of large companies have to understand and leverage their suppliers’ cultural differences and gain a better understanding of the technology tools that can make the entire sourcing and payment process more efficient for better financial impact.

Another aspect is the pride of employees who work in companies with a clear purpose in their ability to create an impact on their surroundings and not focus solely on the bottom line.

3. Risk management

There are many risks in managing value chains. These can damage a company’s image to the point of impacting financial results, market value, and reputation, as we have seen with global giants in recent years. Risks related to cybersecurity, slave labor, supplier incidents, corruption, and small-supplier management underscore the need to use technology to reduce problems and keep supply chain relationships under control.

A new world of business purpose

We are on our way to a new world, with unpredictable scientific and technological advances that can generate scenarios oriented around specific purposes. Procurement and supply chain professionals can play a key role as leaders in this transformation by embracing technologies that will make them leaders in this purposeful new business-oriented era.

Running a business with purpose is more important now than ever before. Hear the opinions of experts from Latin America and the United States (in Spanish with English subtitles).

Marcelo Fernandes

About Marcelo Fernandes

Marcelo Fernandez is a marketing and technology professional who is focused on understanding the convergence of technology and the economy and the many way the future of businesses is taking shape. He has 20 years of experience in building integrated marketing plans that transform company exposure to impact revenue and market share.