Responsible purchasing: moving from compliance to value creation in supplier relationships

Nowadays, supply chain relationships represent an important risk factor to companies due to a cost-driven purchasing orientation. By relentlessly driving down cost in supply chain relationships, supplier relationships may suffer. In addition, through outsourcing and global sourcing, companies have not only created highly complex supply chains, but also supply chains that are not transparent. When irregularities arise, such as child labor and environmental problems in supplier relationships, the company’s reputation may suffer and supply can no longer be secured. We argue that responsible rather than sustainable purchasing is needed to support the company’s overall business strategy. In doing so, companies need to change their shareholder orientation into a stakeholder orientation. Which is why stakeholder theory is discussed. We furthermore argue that driving responsible purchasing fosters product and process innovation and builds stronger relationships. However, doing so effectively will take time and effort as companies and supplier relationships will move through different stages of maturity. These stages of maturity are discussed, as well as what it takes to move from one stage to another. Our discussions are illustrated by numerous examples taken from best practices of international companies