l5 15 sustainable procurement

8/14/2019 L5 15 Sustainable Procurement

1/107

Sustainable procurement

Level 5


2/107

Session 1

Defining sustainable procurement andanalysing current and emerging global

trends


3/107

Learning objectives

At the end of this session candidateswill be able to:describe the relationship between sustainabledevelopment and sustainable procurementanalyse and compare different definitions of

sustainable procurementexplain why sustainable procurement should begood for businessanalyse global social, economic andenvironmental trends affecting sustainableprocurementevaluate the relationship between innovationand sustainable procurement.


4/107

Sustainable development

Meeting current

Balancing the TripleBottom Line (TBL) ofeconomic, social and

environmentalconsiderations

Sustainabledevelopment

compromising theability of futuregenerations to meet

their own needs

sustainableconsumption andproduction


5/107

Sustainable procurement inthe context of sustainabledevelopment

Meeting the needs of the present: Internal and external customer requirements Meeting budget targets and performance criteria Product and process capability

Supplier requirements Resource allocation

Ensuring that the needs of future generations can be met: Implementing sustainable procurement strategy and policy

Use of sustainable purchase specifications Sustainable sourcing of products and services Sustainable contract management Sustainable supply chain management and development


6/107

Sustainable procurement -definitionsThere is no single definition of sustainable

procurement but, in its simplest terms, it is theability to purchase products and equipment,usually on a large scale, without compromisingresources for future generations.

(www.governmenttechnology.co.uk)

Sustainable procurement a managementprocess used to secure the acquisition of goods

and services (products) in a way that ensuresthat there is the least impact on society and theenvironment throughout the full life cycle of theproduct.

(www.cannybuyer.com/guidebook)


7/107

Sustainable procurement -definitionsSustainable procurement means giving dueconsideration to the impact of the procurement on theenvironment, on the community, and on the socialconditions of those delivering or receiving the productor service. Its about looking at what your products aremade of, where they come from, and who has madethem. Its even about looking at whether you need tomake the urchase at all. If ou consider all these

factors you can make better choices and achieve thebest overall value for money on a whole-life and long-term basis.(Welsh Procurement Initiative Sustainable Public SectorProcurement Guidance 2004)

Sustainable procurement true sustainableprocurement should take into consideration economic,environmental and social factors in analysing theimpact of sustainable procurement and the supplychain environment.(Sustainable Development Strategy, European Union)


8/107

Sustainable procurement -definitions

A process whereby organisations meet their needsfor goods, services, works and utilities in a way that

achieves value for money on a whole-life basis interms of generating benefits not only to theorganisation, but also to society and the economy,whilst minimisin dama e to the environment.

(Sustainable Procurement Task Force)

Footnote: Sustainable procurement should consider theenvironmental, social and economic consequences of:

design, use of non-renewable material, manufacture andproduction methods, logistics, service delivery, usage,operation, maintenance, reuse, recycling options,disposal, and suppliers' capabilities to address these

consequences throughout the supply chain.


9/107

Why sustainable procurementshould be good for businessF H BC,

, , .

(H BC H , 2007) F ,

.(B 2007/8)

I ,

.

.( C 2008)

,

, , . (B 2007)


10/107

Why sustainableprocurement should be goodfor business

Enhancedreputation

Positivecustomerperception

Risk mitigation

Improvedavailability ofresources

Reduced costs

Removal ofwaste

Energy savings

supplierrelationships Increased Brand

value Ability to attract

additionalfunding

suppliers Identification ofalternativesupply chainsolutions

Safer, greenertechnologies andmaterials

suppliermanagement Reduced need

for problemrectification


11/107

Global trends

C

I/

C

A ,

?


12/107

Global trendsWorldwide demographic trends:

population growth and consumption patternsmigrationdiversity of workforce

Global skills base: ex e wor orce

education and trainingGlobalisation:

manufacturing

farming and food productionadvantages and disadvantagesEnergy:

rising energy costs

fossil fuels and renewable energy.


13/107

Global trendsAvailability, use and depletion of naturalresources:

waternatural materials and foodssoil qualitypollution

Corporate Social Responsibility (CSR): corporate susta na ty

human rightslabour and community relationsenvironmental impactethical trading

corporate governanceInnovationexploitation and commercialisation of sustainableideasmarket research and supplier identification anddevelopment.


14/107

Session 2

External and internal factors influencingsustainable procurement


15/107

Learning objectives

At the end of this session candidateswill be able to:explain the interrelation of TBL factors forsustainable procurementa l the PESTLE model to different

organisations and sectors in the context offactors affecting sustainable procurementevaluate how internal strategies, policies,procedures, and attitudes influence sustainable

procurementexplain the importance of risk management andinternal availability of sustainable resourcesevaluate the relationship between sustainable

procurement, brand reputation, andperformance improvement.


16/107

ValuesMarkets

Triple Bottom Line (TBL) drivers

Corporate

Environmental

Time

Partnerships

Lifecycletechnology

Transparency


17/107

TBL for the purchasing function

A D

E

A F

/ E

E

D

C


18/107

External factors


19/107

External factorsPolitical - Government policies, targets,

and incentivesagenda 21/local agenda 21workforce diversityeducation olic

natural resource conservation and protectionwaste management.

Economicprinciples of supply and demandcost of external resourcesexchange ratesemployment marketavailability of materials, energy and fuels.


20/107

External factors

Social/ethicalavailability of skillsworking conditions and practicescorruption

corporate c t zens psocietal valuesfair trade.

Technologicalcommunicationinnovationnew sustainable materials and processes.


21/107


22/107

External factorsEnvironmental

Energy efficiency and conservation, use ofrenewable, carbon footprint calculation andreductionWaste reduction and management use of

, - ,specification and useGlobal climate change use andconservation of water, agricultural land,pollution and GHG emissions.

External stakeholdersStandards ISO 14001, SA8000, ISO14023/5.


23/107

Internal factors

Organisational strategies, policies,and procedures

CSRcorporate governance

people development.

Internal stakeholder attitudes

managementemployeessuppliers.


24/107

Internal factors

Risk managementeconomic, social/ethical andenvironmental considerations.

Availability of internal resourcescapacity and capability of processesskills and competencies

product and service designs.

Reputation and brand value


25/107

Internal factors performance improvementacross sectors

Public sector

Diversity Re-use

Private sector

Energyefficiency

Third sector

Increasesociallyres onsible

Wastemanagement

pollution Security ofsupply

Reduction ofrisk

Enhancedreputation

investment(SRI) Encourage

morevolunteers


26/107

Session 3

Sustainable procurement aligned toorganisational strategy


27/107

Learning objectives

At the end of this session candidates

will be able to:

explain why sustainable procurement operationshould be linked to or anisational strate

describe how the operation of sustainableprocurement impacts on the procurementfunctionevaluate the impact that the implementation of

sustainable procurement has on other functionswithin an organisation.


28/107

Alignment to organisationalstrategy ?

/ /

?

H ?

B C

( )

H ?

/ ?A H

D .

(B 2007).

C

B


29/107

Kaplan and Nortons balancedscorecardFinancial perspective how do we lookto shareholders?Customer perspective how do we lookto customers?

Internal business perspective whatmust we excel at?Innovation and learning perspective can we continue to improve and createvalue?


30/107


31/107

Sustainable procurement potential impact on thepurchasing function The need for a more strategic approach to

procurement Incorporation of a sustainable procurement

approach into individual tasks and targetsincludin :

competitive leverage activity price and cost management sourcing strategy development supplier selection and contracting post contract supplier management development of strategic plans training and development corporate social responsibility management and leadership.


32/107

Sustainable procurement potential impact on otherfunctions

Consideration of new/different suppliers and

technologiesAcceptance that some current suppliers andspecifications may no longer meet requirements

The finance implications of a whole life costingapproachConsideration of social and environmentalcriteria as well as economic

The requirement to accept tradeoffsThe need to acquire new/different skills andbehaviours.


33/107

Session 4

Sustainable procurement policy, policydeployment guidelines, and

implementation


34/107

Learning objectives

At the end of this session candidates

will be able to:propose effective ways to communicate and gaincommitment to sustainable procurement policythroughout an organisation

explain how to set targets, objectives andresponsibilities for successful sustainableprocurementevaluate the tools for policy deployment, ongoingmanagement and review

identify the key stages in the development of asustainable procurement implementation planexplain the flexible framework approachevaluate the role of procurement professionals askey players in the successful introduction andongoing development of sustainable procurement.


35/107

Sustainable procurementimplementation processCommunicate strategic plansObtain commitmentFraming policies and procedures

Assigning responsibility and authorityChanging structuresAllocation of resources and budgets

TrainingMonitoring response and revision.


36/107

Communication of strategicplansNewslettersManagement reviewsCore team meetings

Web portalPress releasesAdvertising

Annual shareholder reports.


37/107

Stakeholders who are they?

Internal the purchasing function andother functions within the organisationExternal particularly suppliers, supplychains and, where applicable,

customersThird parties government, NGOs,trade associations, such as thoseorganisations where there is astakeholder interest, but no commercialor contractual relationship.


38/107

Obtaining commitment fromstakeholders to sustainableprocurementReconfirm the organisations vision and show how sustainableprocurement can contribute to its achievementOffer a clear definition of sustainable procurement within theconcept of organisational sustainability and link to businessobjectivesPresent the business case for sustainable procurement givingexamples of benefits and successes such as competitivea vantage n ot er organ sat ons

Explain the risks of not adopting sustainable procurement usingexamples of competitor or other organisation problemsPresent key sustainability trends, identifying challenges andopportunities, and showing how sustainable procurement cancontributeAccept that organisations can seem to be successful without

actively promoting sustainable practices but point out that theycan still be advantageous in gaining competitive advantagePresent details of best in class sustainable organisations andcompare to own organisationShare key stakeholder feedback with regard to sustainableprocurement either from own organisation or competitor

sustainability reports.


39/107

SMART objectives

Specific performance requirement e.g. all suppliers have CSR statementSpecific

Able to measure performance easily and objectively e.g. use of x% recyclable packagingMeasureable

Agreed between stakeholders e.g. between buyer and supplierAgreed upon

Challenging but achievable and motivating e.g. use of staged targets as in Kyoto ProtocolRealistic

Including a time-frame for achievement e.g. target date for achievement of ISO 14001 or

equivalent.Time-based


40/107


41/107

The role of the procurementprofessionalAnalysis of supply marketsIdentifying opportunities for innovationand supplier developmentUnderstandin the drivers for chan e

Managing and directing relationshipswith suppliersInterfacing with other functions

Planning for continuous improvement.


42/107

Session 5

Sustainable specification and sourcing ofproducts and services across different

organisations and sectors


43/107

Learning objectivesAt the end of this session candidates will be ableto:

evaluate the impact of customer requirements on thedevelopment of sustainable purchase specificationsidentify the requirements for development ofsustainable purchase specifications for materials,componen s, processes an serv ces across eren

organisations and sectorsanalyse the potential impact of end products orservices based on sustainability of specificationidentify the main considerations for sustainableprocurement at each stage of the sourcing processevaluate the status of sustainable sourcing acrossdifferent organisations and sectorsgive examples of environmental, social and economicstandards and legislation relating to sustainable

sourcing.


44/107

Sustainable procurementand customer requirementsIdentify the customer

External for example end user, retailer,distributor

Internal for example other functions,.

Understand the sustainability ofcustomer requirementsPurchasing as a customer.


45/107

Development of sustainablepurchase specificationsClassifying and prioritising products and

services for sustainable procurementPurpose and content of sustainablepurchase specifications

Sustainable purchase specifications foroutsourced servicesRequirements for different sectors andorganisationsImpact of end products and services.


46/107

Classifying and prioritising

H E

G E C

Classification of components and services for an automotivemanufacturer using the Kraljic matrix

I

I

F E

B

H


47/107

Sustainable purchase specificationPerformance Related SpecificationDoes it Apply a reduce, reuse, recycle mindset Use recycled and/or recyclable materials wherever

possible

Reduce or eliminate hazardous materials, substancesor processes

Demonstrate a responsible approach throughunderstanding the economic, social andenvironmental impact of selected materials andprocesses

Impact of End ProductDoes it

Minimise non-renewable energy use?Reduce pollution and emissions?Minimise the use of hazardous orenvironmentally damaging substances?Minimise waste to landfill?Use sustainably sourced or recycledconsumables which can easily be reused orrecycled at the end of their life?

equ re test ng w c s carr e out respons ywithout adverse effect on the environment oranimal/human welfare

Require products and processes that are as energyefficient as possible

Reduce or eliminate packaging destined for landfill Maximise the expected life of products and materials Promote design for disassembly through

standardisation and simplification Apply sustainable design and criteria to the supply

chain Allow for sustainable innovation Achieve environmental and social performance

equivalent to standards such as ISO 14001 and SA8000

Minimise disposal impact?

Minimise water use?Deliver best practice in health and safety forusers?Take into account whole life costs?Stand the test of time?


48/107

The sustainable sourcingprocessStep 1: Identification of requirement

Is this purchase really necessary?How will it affect society or the environment during itscreation or use?

Step 2: Sourcing planSourcing strategy aligned to organisation objectivesMake or buy?

Set sustainability evaluation criteria economic,social/ethical, environmental.


49/107

Sustainable sourcingEconomic

Whole life costcompetitiveness Financial stability Process capability Use of innovation

Social / Ethical

CSR policy Skills base Responsible

workforce practices Human rights

Environmental

Location of supplierand sub-suppliers

Environmentalimpact of materials,processes, end

Code of ethics pro uc s anpackaging

Wastemanagement

Reuse andrecycling

Use of renewables Design for

disassembly


50/107

The sustainable sourcingprocessStep 3: Market place analysis

Who the suppliers are size and type of supplierorganisationsHow many there are competitiveness of the marketWhere they are based developed or developing

Who their other customers are diversity of customerbase, individual customer share of businessHow the market is developing growing, shrinking, pricetrends, new technologies and processes, new suppliers.

Step 4: Pre-qualificationUse of pre-qualification questionnaire (PQQ)Pre-qualification criteria achievement of standards orequivalent.


51/107


52/107


53/107

Status of sustainable sourcing


54/107


across different organisationsand sectors

Public sectorSustainable procurement becoming morewidespread but still difficult to measureCost still a ma or issue

Main focus on environmental factorsJapan, Canada and Northern Europeleading, followed by USAExamples of good practice: ICLEI Procura+,International Green Purchasing Network(IGPN), Danish Environmental ProtectionAgency (DEPA) and UK SustainableProcurement Action Plan.



55/107


across different organisationsand sectors

Private sectorFocus on economic sustainabilitySome evidence of growing consideration ofenvironmental and social factors driven by

reputationSome organisations taking a positiveapproach in order to differentiate themselves(for example, Co-op Group , Marks andSpencer Plan A)Many larger organisations now providingCSR and sustainability reportsComparative indexes available for example,Dow Jones Sustainability Indexes (DJSI)



56/107


across different organisationsand sector

Third sectorFocus on lobbying, reporting, and influencingother large organisationsMay be missing the opportunity to contribute

Many smaller organisations suffer resourceissues.


57/107

Standards and legislation forsustainable sourcing

Kyoto Protocol

International Labour Organisation (ILO)EU Directives 2004/17/EC and 2004/18/EC onpublic procurement

ISO 15686 whole life costing standardsFinance and tax laws (for example, SarbanesOxley)Fair Trade standards

ISO 14023/25 Eco-labelling standardsSA 8000 social accountability.


58/107


59/107

Learning objectivesAt the end of this session candidates will be

able to:examine contract management activities in thecontext of sustainable procurement

procurement can be incorporated into contractsand relationshipsdescribe how sustainable contract managementover the whole life of the contract links toorganisational performance and successevaluate the benefits and risks for the supply chain


60/107

Contract managementactivities

Contract/relationship management

Asset managementReceipt of products and services

.

S i bl / l i hi


61/107

Sustainable contract/relationshipmanagement

Customer contract/relationship

requirements are sustainableContract management documentsinclude economic, social/ethical andenvironmental performance criteriaSMART supplier sustainabilityperformance and improvementobjectives are set and agreed

Effective measurement and monitoringin place against KPIs.


62/107

Sustainable asset managementEconomic, social and environmental

impact of acquired assets such asbuildings, capital equipment andsystemsLife-span/life-cycle considerationsAvailability and sustainability of spareparts and consumablesSoftware compatibility/sustainability

End of life/disposal considerations reuse, recycling.


63/107


64/107

S li l ti hi d l t


65/107

Supplier relationship developmentfor sustainable procurement

High

r o c u r e m e n

t

Performance

Strategicalliances

Co-businessintegration

Sustainable procurement and supplier integration

Low

HighLow Degree of supplier integration

S u p p o r

t f o r s u s t a i n a b

l e

Competitiveleverage

Preferredsuppliers

partnerships

Source: Adapted from Johnson S Managing change through teamwork, ISCAN, Sheffield, 1997.


66/107

Whole Life Costing (WLC)

... a technique to establish the total costof ownership. It is a structuredapproach which addresses all theelements of this cost and can be used toproduce a spend profile of the productover its anticipated lifespan.

Office of Government Commerce (OGC)

Advantages of WLC for


67/107

Advantages of WLC forsustainable procurement

WLC gives an enhanced degree of

financial certainty over the acquisition ofproducts and services both at the time ofsourcing and into the futureIt provides an empirical means ofassessing value for money andselecting appropriate optionsIt should facilitate an evaluation of other

features of the acquisition of goods andservices, as well as cost, particularly ifthose other features can themselves becosted.

Public Private Partnerships


68/107

Public Private Partnerships(PPPs)

Private Finance Initiative (PFI) often

used for capital and infrastructureconstruction projects, using privatesector finance and with long-termcontracts, typ ca y up to or yearsStrategic service delivery partnershipsJoint venture companiesArrangements where private sector skills

are used to sell public sector servicesand assets into markets.


69/107

Session 7

Measurement, monitoring and developmentof sustainable procurement withinorganisations and supply chains


70/107

Learning objectivesAt the end of this session candidateswill be able to:apply effective supplier and supply chain audit,assessment and evaluation tools and techniques inthe context of sustainable procurement

identify sustainability measurement and monitoring

criteria for the procurement functioncompare the status of supplier sustainabilitymonitoring and reporting across differentorganisations, sectors and supply chainsexplain how to prioritise products for sustainableprocurement developmentdescribe how sustainability objectives, targets andrequirements can be set for suppliers throughout thesupply chain

apply appropriate supplier development tools andresources in the context of sustainable rocurement.

Measurement and monitoring


71/107

of sustainable procurementactivity

AuditsInspectionsQuestionnaires

us ness rev ewsEconomic, social and environmentalKey Performance Indicators (KPIs)Source planning

Stakeholder mapping/communicationSupply chain mappingTransparent sustainability reporting


72/107

Types of sustainability auditCompliance audits assess conformance to regulations(for example, Sarbanes-Oxley Act)Internal standards audits review how well anorganisation meets its own requirements (for example,sustainable sourcing process)External standards audits assess conformance to an

,

A management systems audit evaluates adherence toa specific process within a management standard (forexample, ISO 14001 or SA 8000)Risk/best practices assessments examine potentialliabilities and risks and seek to share good practice (for

example, financial stability of suppliers)Productivity assessments look for efficiencyimprovements such as energy conservation, wastereduction and process improvement using tools such assix sigma.

Criteria for sustainable


73/107

procurement business reviews

Financial stability

Current turnoverProfitability

Design andinnovation

Current designsUse of

Supply chainmanagement

Location andtype of sub-su liers

Impact on theenvironment

MaterialsProcesses

Legislation andstandards

EconomicSocial

analysis

Future

projections

RecyclingDesign for

disassemblyNew sustainableproduct/processdevelopments

Responsiblesupply chain

practices social, ethical,economic

management

Packaging

TransportInclude wholesupply chain

KPIs for sustainable


74/107

KPIs for sustainableprocurement

Environmental:

Year-on-year energy purchases Use of recycled materials (eg paper, print cartridges) Amount of waste to landfill Percentage of current spend with suppliers who arereporting on environmental impact Percentage of new spend with suppliers who arereporting on environmental impact Year-on-year reduction in supplier GHGs

Social:

Diversity of purchasing staff All purchasing staff have necessary skills or

access to training and development Adherence to human rights, labour rights andworkplace standards both within the purchasingfunction and the supply chain Supplier diversity (eg minority-owned suppliers,small su liers and start-u su liers upp er wa er an energy usage

Supplier recycling, pollution control and waste to

landfill

Supply chain adherence to animal welfarestandards (eg product testing)

Economic:

Year on year spend against budget Percentage of spend with key suppliers Percentage of spend in less stable economies Application of whole life costing Financial performance of suppliers


75/107

Source planningGathering key statistics does the product orservice category meet key sustainabilityrequirements? Are there any planned changes and, ifso, what is the likely impact? Who are the currentsuppliers and how much is spent with them?Price and cost analysis are current and futurepricing and cost strategies sustainable? Application of

life-cycle costing.Supply chain and market analysis for example,supply chain mappingRisk assessment and relationship management how secure and sustainable are current supplysources?Supplier capability and performance analysis

use of sustainable procurement KPIs covered earlier.

Supply Chain for Tea


76/107

/

/EC

B F F

B 70%0 D (30% r o d u c i n g c o u n

t r y - - - - - - - - -

I

B

F /

, ,

C

)

: E A F C

I - - - - - - - - - -

I - - C o n s u m

i n g c o u n

t r y - -

Monitoring and reporting on


77/107

g p gsupplier sustainability

Currently there is a lack of consistent

information available to buyersBuyers can encourage suppliers toreport in the following ways:

Start small use internal resources to produce a simple

report or newsletter (for example, Starbucks coffee shopbrochure)Use readily available data safety, waste/emissions andenergy usage data, and details of charitable donationsReduce frequency or narrow scope reporting once

every two years is acceptable or focusing on specificregions or topicsCost effective verification audit internally, combine withother audits or possibly use NGO volunteers.

Sources of sustainability


78/107

yinformation

The Global Reporting Initiative (GRI) voluntary sustainability reporting framework forall sectors worldwideThe Supplier Ethical Data Exchange (Sedex) -a web-based membershi or anisation forcompanies who want to monitor and improveethical performance in their supply chains. It is anot-for-profit organisation based in the UK andopen to members worldwideSustainability reports published by private

and third sector organisationsLocal government websitesSustainability indexes for example, DJSI.

Supply chain development


79/107

pp y pfor sustainable procurement

Prioritising suppliers and products

Clear objectives, targets, andrequirementsBenchmarkin and a anal sis

Supply chain communication and co-operationMonitoring and improving supplierperformance.

Prioritising suppliers and


80/107

g ppproducts for development

Product/material capacity, supply or

quality issuesFinancial stability or cost concernsConcerns over workforce orenvironmental practicesSignificant environmental impact(potential or actual)General communication or sub-supplier

management issuesRelationships with suppliers indeveloping countries.


81/107

Setting sustainability targets,objectives, and requirements


82/107

j , qfor suppliers - examples

Target to broaden customer base or develop newproducts/materials to reduce risk

Certification to ISO 14001 environmental managementsystem or equivalentAchievement of workplace standards set out in SA 8000

Provision of an annual report on economic, social andenvironmental sustainability performance (this could alsoinclude supply chain information)A reduction in energy usage (as an amount per person)An increase in use of recycled and renewable materials

(as a percentage of current)A reduction in waste sent to landfill (as an amount perperson employed)A reduction in emissions ( as an amount per personemployed)


83/107

Session 8

Drivers and barriers to achievingsustainable procurement across different

organisations and sectors

Learning objectives


84/107

At the end of this session candidates willbe able to:identify which external and internal factors willdrive organisations towards sustainableprocurementanalyse the characteristics of different sectors in

evaluate how different sectors industries andorganisations are responding to sustainableprocurement drivers and effectsidentify the external and internal barriers tosustainable procurement and recommend

approaches to manage/overcome themevaluate the impact of external and internalbarriers for different organisations and sectors.


85/107

Sustainable procurement driversPrivate Sector

Corporate citizenship

Sustainable innovationStakeholder pressure

CSR policy

Reputation & brandvalue

Socially responsibleinvestment

Public Sector

Third Sector

Government policies,

targets and incentives

Global employmentmarket

Availability of resource/energy

Improving workingconditions andpractices

Societal values

Fair Trade

Legislation

Performanceimprovement


86/107

External barriers to


87/107

sustainable procurementExternal cost issues more expensive rawmaterials, energy and related processes;external funding restrictionsExternal stakeholder attitudes customers,external shareholders, donors and the eneralpublic

Policies international, European Union,national/governmentCulture national, religious, ethical,sector/industry

Economic stability growth/decline, inflation,credit restrictions, protectionism.

Impact of external barriers


88/107

on different sectors andorganisations

E

C

G

I

( E )

/G

E

G /

I

C

23 23 26 23K :

Internal barriers to


89/107

sustainable procurementInternal cost issues internal budgets

and savings targets, recycling and reuseor materials, products and facilities,internal process costs

Internal stakeholder attitudes internal shareholders, management,suppliers, buyers and other employeesPolicies organisational and

departmentalOrganisational culture and stability organisational and departmental.

l b


90/107

Overcoming internal barriersCost issues

Include social and environmental criteria atspecification and sourcing stagesMinimise wasteApply WLC

AttitudesGood communicationDemonstrate successes

PoliciesEnsure alignment with organisationClear direction and leadershipEffective monitoring and reporting.

O i i l b i


91/107

Overcoming internal barriersOrganisational culture/stability

CommunicationEducationCapacity building

Making sustainable procurement part of day-to-day activity.


92/107

Session 9

Potential conflicts and tradeoffs in achievingsustainable procurement

L i bj i


93/107

Learning objectivesAt the end of this session candidates will beable to:use appropriate tools to analyse potentialsustainable procurement conflicts and suggest howthese can be managed explain how these conflicts impact on different

sectors and industriesexplain why tradeoffs may be necessary to achievesustainable procurement objectivesevaluate the advantages and disadvantages of

product and service standardisationanalyse the relationship between investment,reputation and security of supply in the context ofsustainable procurement.

Key sustainable procurementfli t


94/107

conflictsEconomic performance versus social

and environmental responsibilitySourcing from developed versusdeveloping countriesLocal versus international sourcingEnvironmentally friendly products andprocesses versus product legislationLowest achievable price versus ethical

considerations.

Drivers and barriers


95/107

C / I

D H /H

D I E BA IE

G / /C /

C

: A F F D ( :// .12 . /)

/

C

D ' C

G


96/107

Sustainable procurement potential tradeoffs


97/107

potential tradeoffsCommon international standards lead to

more consistency but also morecompetitionComponent and service standardisationfacilitate fairer trade but allow less

opportunity for product and branddifferentiationPaying or investing more up front forsustainable products can enhancereputation and secure long-term supply.

Sustainable procurement andstandardisation advantages


98/107

standardisation - advantagesStandardisation helps to achieve consistency andreliability, reducing costs through economies of scaleand facilitating reductions in scrap and waste.Savings can be made in terms of development time,quotation comparison time and other administrationcosts.

standardised components fewer different stock items,

faster assembly, fewer different assembly tools,reduced investment in spares, more efficient materialhandling, reduced energy usage and standardisedpackaging.Use of international standards leads to less dependenceon specialist suppliers and brands and more opportunityfor lower risk international sourcing leading to morecompetition.Use of standards gives SMEs and suppliers in lessdeveloped countries a clear specification enabling themto understand and to meet tender requirements moreconfidently.

Sustainable procurement andstandardisation disadvantages


99/107

standardisation - disadvantagesOveruse of standards might excludeotherwise suitable suppliersEfficiency of designs and processesmay be compromised in order toachieve specific standards

Loss of differentiation could affectproduct desirability for the customerAchieving standards can be costly for

suppliers.


100/107

Session 10

Future challenges for sustainableprocurement within a global

marketplace

Learning objectives


101/107

Learning objectivesAt the end of this session candidateswill be able to:describe the key future challenges forsustainable procurement in a globalmarketplaceexplain the importance for the future of

sustainable procurement of managing risk andvulnerability within the end-to-end supplychaingive examples showing how sustainable

procurement could become business as usual.

Future challenges


102/107

Future challengesGlobal resource challenges

Stakeholder prioritiesGovernment policies and targets

Risk and vulnerability in the supplychainIdentifying the priorities for supplierdevelopment

Making sustainable procurementbusiness as usual.

Future challenges


103/107

Future challenges

F

50% 2050

G

B , ,

/ &

E

Managing supply chain riskand vulnerability


104/107

and vulnerabilityRegular review of end-to-end supplychainIdentify vulnerabilities in order tomitigate and manageConsider priorities of customers,capabilities of suppliers and sustainableprocurement objectives and strategies.

Managing supply chain risk and

vulnerability sustainablet l


105/107

vulnerability sustainableprocurement examplesRisk identification creating a comprehensive list of thevarious causes/sources of potential supply chain disruptions

(for example, scarcity of sustainable resources).Risk assessment - evaluating the likelihood of occurrenceand the impact that each event will have on the business foreach cause or source of otential disru tions for exam ledelays, stoppages, impact on reputation).

Risk treatment - prioritising the various causes/sources ofpotential disruption and developing strategies for reducingtheir likelihood and/or mitigating their impact on the business.(for example, alternative sources, non-sustainablealternatives, holding stock).

Risk monitoring - monitoring on an on-going basis,developments in the supply chain that may increase ordecrease various risks (for example new material suppliers,increase in global demand, supplier mergers or takeovers).

Future challenges for sustainablesupplier development


106/107

supplier developmentIdentifying priority areas:

economicsocialenvironmental

Process efficiency, re-use and recyclingThe need for innovationFor the public sector, the need to meetFlexible Framework targets.

Business as usualsustainable procurement


107/107

sustainable procurementEffective, embedded professional procurement practices,aligned to corporate strategyAn overarching strategy for sustainable procurement with

a wider strategy for sustainable developmentA strong focus on training and development of purchasing

Procurement decisions based on whole life costing, taking

into account life-cycle issues and recognising all benefitseven when they are accrued outside the purchasingorganisationDemonstrating global responsibility and supporting anddeveloping others in the supply chainEffectively managing vulnerability and risk throughout theend-to-end supply chainHaving a vision of long-term outcomes together with aclear plan for prioritised continuous improvement.

l5 15 sustainable procurement

Documents