Sustainable procurementis deploying procurement power in a way that maximises the positive ecological, social and economic impact throughout the lifespan of products, services and work (ISO 20400:2017).
Circular procurement is an extension of sustainable procurement. It seeks to actively contribute to closed energy and material loops throughout supply chains, whilst minimising, and in the best case avoiding, negative environmental impacts and waste creation across the whole life-cycle.
Circular procurement responds to the changing functional needs of users within an organisation. It stimulates maximum cooperation and co-creation with all those involved who are able to help close the loop.
Circular procurement aims to retain the value of the products, components and materials to be purchased as much as possible.
This video from Zero Waste Scotland explains exactly what circular procurement is and what benefits it has to offer.
What is the advantage of circular procurement?
Circular procurement is an important tool for promoting a circular economy. Circular choices in the procurement process stimulate the market for circular products and services. The spending volume of an organisation can therefore be exploited to generate apositive impact for people and the environment.
Circular procurement can also provide economic benefits. A total cost of ownership analysis (TCO) for the various scenarios gives a total overview of the cost over the entire useful life of a product or service, such as the energy consumption, maintenance costs or residual value at the end of life. This often leads to different decisions being taken than when only purchase prices are compared.
Transition to a circulair procurement organisation
Circular procurement is not the sole responsibility of the purchaser, as it goes beyond the technical specifications of the product or service actually purchased. The way in which the product is used and disposed of are also important aspects of circularity. Everyone involved in procurement in an organisation can take steps to promote circularity: purchasers, internal customers, contract managers and management. Suppliers can also contribute to circular solutions if the market is asked the right questions. Offering space for circularity means the entire purchasing chain can start moving, and gets the transition to a circular procurement organisation underway.
If management is convinced of the added value of circular procurement, this can be included in the organisation’s vision and strategy, and will encourage every employee to get on board.
Procurement processes and systems have to be scrutinised to complete the transition. The purchasers’ role will become more strategic. Dialogue with the market and follow-up and evaluation of contracts will become more important.
Douwe Jan Joustra, head of Circular Transformation of the C&A Foundation, made some clear statements during his presentation on the action day on 11 June 2019:
Create new conditions for change. All too often, we’re still investing in optimising existing systems. The transition to a circular economy requires experimentation, innovation, and acceleration.
From 'Waiting for Demand' to 'Mechanism Design'. Consumers aren’t always the driving force behind the change of a product or an economy. Customers often respond to what’s being developed, so it’s important that the roots of change are in the market itself. Start offering circular solutions now!
Performance-based contracting. Purchasers still want too much responsibility for the content and elaboration of the contract. In the contract documents, ask for performance at a specific price. Ask the right questions, and let the market determine the details of the contract documents.
Rising demand for services. Customers are increasingly demanding services instead of products. This is reflected, among other things, in the increasing demand for service models such as LAAS, PAAS and FAAS.
Social responsibility in the chain. In addition to circular principles, it’s also important to take social aspects into account, such as child labour, fair wages and good working conditions.
"Nothing you do is wrong, accept doing nothing."
- Jordie van Berkel, founder of F-Fort and author of 'Inkoop in Strategisch Perspectief’ (Procurement in Strategic Perspective)
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