What is sustainable procurement?
11th March 2020
Back in 2017 in its procurement of towels and overalls, the Ministry of Defence of the Kingdom of the Netherlands (MODNL) followed a circular policy and explored requirements around recycled fibres. The winning bids creating estimated savings of 233 million litres of water, 69,000 kg CO2 and 23 megajoules of energy. This was the Procura+ Award winning tender in 2017 for Innovation Procurement of the Year.
This is just one example of many when it comes to industries, in both public and private sectors, embracing the need for sustainable practices throughout the supply chain.
Sustainable procurement is about taking a long-term view when it comes to working with partners in your supply chain and considering the affects on People, Planet and Profit. At 4C we like to think of this combination as achieving overall Prosperity from sustainable practice. A sustainable procurement process is one whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment (CIPS 2019).
Most large organisations have a recent understanding in the economic sense to sustainable procurement practices with many having best practice guides in place to ensure this is carried out throughout the business, and partnering firms. This is borne out by aspects of the Business in the Community’s (BITC) corporate responsibility index, a leading benchmark of responsible business’ in the UK.
Of most relevance to the sustainable procurement are the conclusions of the 2006/2007 BITC report which state that: “Supply chain management remains a challenge for companies, although there has been a significant increase in the number of companies working with suppliers to help them improve their social and environmental management and performance”. BITC and CIPS both agree that climate change and the use of resources have become key issues for businesses, providing both risks and opportunities. The BITC report comments that 73% of companies involved stakeholders to identify key issues affecting businesses, and that 87% of companies publicly reported performance on climate change.
Benefits of sustainable procurement
According to Principles and Practices of Public Procurement view in 2012, sustainability has some essential benefits to business:
- Minimises business risk, discussed in greater detail in a latter section.
- Provides cost savings, through focusing organisations on following a whole life costing methodology when sourcing goods and services. This would include reducing use, reusing and recycling, and ultimately reducing the amount of waste going to landfill.
- Enhance the corporate image in the marketplace, by demonstrating purchasing and supply management’s value to the organisation.
- Creates markets for new products and services, by using technology to develop and market sustainable products that will initially attract consumers who are early adopters and command a premium price in the marketplace.
- Secures the supply of goods and services in the light of increasingly environmental legislation.
- Reduces waste and improves resource efficiency
‘a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment.’
With the implementation of circular procurement in the MODNL highlighted above, this requirement demanded suppliers to find alternative inputs and new ways of working. In order to assist this innovation, the market engagement conducted by the MODNL found that functional rather than technical specifications provided the suppliers with more space to innovate and find new solutions to meeting the MODNL’s material needs.
When asking the market to work with new materials or in new ways, it is also necessary to give more lead-in and response time in order to adequately consider and prepare non-traditional offers. The result is that companies are able to research and develop new products which meet higher sustainability specifications. The key takeaway from this case to any business when implementing a sustainable procurement process is that it is a long-term view; where organisations should be seen as partners to work with, not to make demands from.
4C work with clients on a range of projects when it comes to innovative approaches to sustainable procurement across the whole range of industries from financial services, manufacturing, retail, oil and gas, media and so on. We have worked with world leading companies to drastically improve the whole procurement process with focus on the 3P’s of people, planet and profit. Or in our words to achieve overall Prosperity.