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8/14/2019 L5 15 Sustainable Procurement
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Sustainable procurement
Level 5
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Session 1
Defining sustainable procurement andanalysing current and emerging global
trends
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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.
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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
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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
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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)
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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)
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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.
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Why sustainable procurementshould be good for businessF H BC,
, , .
(H BC H , 2007) F ,
.(B 2007/8)
I ,
.
.( C 2008)
,
, , . (B 2007)
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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
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Global trends
C
I/
C
A ,
?
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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.
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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.
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Session 2
External and internal factors influencingsustainable procurement
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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.
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ValuesMarkets
Triple Bottom Line (TBL) drivers
Corporate
Environmental
Time
Partnerships
Lifecycletechnology
Transparency
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TBL for the purchasing function
A D
E
A F
/ E
E
D
C
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External factors
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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.
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External factors
Social/ethicalavailability of skillsworking conditions and practicescorruption
corporate c t zens psocietal valuesfair trade.
Technologicalcommunicationinnovationnew sustainable materials and processes.
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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.
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Internal factors
Organisational strategies, policies,and procedures
CSRcorporate governance
people development.
Internal stakeholder attitudes
managementemployeessuppliers.
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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
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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
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Session 3
Sustainable procurement aligned toorganisational strategy
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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.
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Alignment to organisationalstrategy ?
/ /
?
H ?
B C
( )
H ?
/ ?A H
D .
(B 2007).
C
B
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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?
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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.
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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.
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Session 4
Sustainable procurement policy, policydeployment guidelines, and
implementation
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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.
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Sustainable procurementimplementation processCommunicate strategic plansObtain commitmentFraming policies and procedures
Assigning responsibility and authorityChanging structuresAllocation of resources and budgets
TrainingMonitoring response and revision.
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Communication of strategicplansNewslettersManagement reviewsCore team meetings
Web portalPress releasesAdvertising
Annual shareholder reports.
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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.
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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.
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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
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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.
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Session 5
Sustainable specification and sourcing ofproducts and services across different
organisations and sectors
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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.
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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.
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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.
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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
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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?
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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.
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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
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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.
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Status of sustainable sourcing
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Status of sustainable sourcing
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.
Status of sustainable sourcing
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Status of sustainable sourcing
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)
Status of sustainable sourcing
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Status of sustainable sourcing
across different organisationsand sector
Third sectorFocus on lobbying, reporting, and influencingother large organisationsMay be missing the opportunity to contribute
Many smaller organisations suffer resourceissues.
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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.
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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
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Contract managementactivities
Contract/relationship management
Asset managementReceipt of products and services
.
S i bl / l i hi
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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.
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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.
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S li l ti hi d l t
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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.
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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
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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
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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.
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Session 7
Measurement, monitoring and developmentof sustainable procurement withinorganisations and supply chains
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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
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of sustainable procurementactivity
AuditsInspectionsQuestionnaires
us ness rev ewsEconomic, social and environmentalKey Performance Indicators (KPIs)Source planning
Stakeholder mapping/communicationSupply chain mappingTransparent sustainability reporting
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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
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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
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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
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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
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/
/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
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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
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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
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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
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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.
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Setting sustainability targets,objectives, and requirements
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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)
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Session 8
Drivers and barriers to achievingsustainable procurement across different
organisations and sectors
Learning objectives
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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.
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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
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External barriers to
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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
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on different sectors andorganisations
E
C
G
I
( E )
/G
E
G /
I
C
23 23 26 23K :
Internal barriers to
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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
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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
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Overcoming internal barriersOrganisational culture/stability
CommunicationEducationCapacity building
Making sustainable procurement part of day-to-day activity.
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Session 9
Potential conflicts and tradeoffs in achievingsustainable procurement
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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
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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
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Sustainable procurement potential tradeoffs
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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
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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
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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.
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Session 10
Future challenges for sustainableprocurement within a global
marketplace
Learning objectives
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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
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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
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Future challenges
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Managing supply chain riskand vulnerability
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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
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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
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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
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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.