2. Responsible Purchasing workshop Simon Waters Pro Enviro Funded ByDelivered byPartnered by

3. Contents Definition What does responsible purchasing look like? Scope of responsible purchasing Whole life costing Example policies Approach Funded ByDelivered byPartnered by

4. Definition Responsible Purchasing is: – 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, while minimising damage to the environment.” Funded ByDelivered byPartnered by

5. What does “responsible purchasing” look like? Good, stable, long term relationships with the suppliers. – Clear, timely, honest communication. – Price calculation and the establishment of sustainable prices, which covers the cost of production, living wages and enables the supplier to make a level of profit. – Clear lead time and on time, in full payments. Respect for Human Rights in the supply chain Support to the small groups of farmers and workers in the supply chain » Source: www.responsible-purchasing.org Funded ByDelivered byPartnered by

6. Scope Responsible Purchasing should consider the environmental, social and economic consequences of: – design – non-renewable material use – manufacture and production methods – logistics – service delivery –... Funded ByDelivered byPartnered by

7. Scope continued – use of product in life – operation – maintenance – material reuse – recycling options – disposal Funded ByDelivered byPartnered by

8. Whole life costing Purchase cost Direct running costs Indirect costs Administration costs Training Recyclability Refurbishment / maintenance Cost of disposal Funded ByDelivered byPartnered by A barrier to RP is separation of capital and revenue budgets

9. Whole life costing example: renewable energy Funded ByDelivered byPartnered by Solar (2kW)Wind (5kW) Installation costs£10,000£20,000 Direct running costs£100 pa£1,000 pa Income from FIT (@ 36p solar, 27p wind)£2,100 pa£3,900 pa Administration costs£500 pa Training£100£500 Refurbishment / maintenance£200 pa£500 pa Cost of disposal£1,000£3,000 Total profit over 20 years£14,900£14,500 http://www.ofgem.gov.uk/Media/FactSheets/Documents1/fitfs_energy%20prices%20update%20FS.pdf

10. Example Policies Legal and General Kirklees Council Funded ByDelivered byPartnered by

11. Legal and General RP policy 1 Sustainable Procurement Policy – treat suppliers fairly and objectively at all times. – ensure that major supply contracts are reviewed in line with our purchase strategy and that appropriate suppliers have an equal opportunity to win our business at these times. – pay suppliers in accordance with the agreed terms and deal with exceptions in a timely manner. – select suppliers without consideration of the gender of their employees or their ethnic origin. Funded ByDelivered byPartnered by

12. Legal and General RP policy 2 Sustainable Procurement Policy – select suppliers without consideration of the number of their employees or their location, unless this would create unacceptable risk to Legal & General. – maintain an active programme of engagement of which Legal & General's CSR Guidelines for suppliers form an integral part. – work with our suppliers to support improvements in their social and ethical practices. – continuously improve our knowledge of socially and environmentally responsible supply chain management practices. Funded ByDelivered byPartnered by

13. Kirklees council – Purchasing Policy It is the policy of Kirklees Council to: – secure the provision and delivery of supplies, works and services that meet customer expectations provide value for money and achieve a reliable supply – incorporate social, economic and environmental considerations into supplier and product selection and management processes – ensure that suppliers are dealt with fairly, honestly, efficiently and professionally – use collaborative procurement where appropriate – ensure purchasing is undertaken in a cost-effective and efficient manner – ensure appropriate accountability, probity, confidentiality, openness, fairness and transparency on the part of officers responsible for – making purchasing decisions. Funded ByDelivered byPartnered by

14. Kirklees council – Purchasing Policy 2 Section on sustainability – The Council will take account of social, economic and environmental considerations in its procurement decisions. This will include equality and diversity factors. We will seek to work with suppliers to extend sustainability improvements throughout the supply chain Funded ByDelivered byPartnered by

15. Approach What are the indicators of a good approach to implementing responsible purchasing? Levels of progress shown: 1 to 5 (from the Flexible Framework, developed as part of “Procuring the future”, 2006) Funded ByDelivered byPartnered by

16. Approach - People 1.Sustainable procurement champion identified. Key procurement staff have received basic training in sustainable procurement principles. Sustainable procurement is included as part of a key employee induction programme. 2. All procurement staff have received basic training in sustainable procurement principles. Key staff have received advanced training on sustainable procurement principles Funded ByDelivered byPartnered by

17. Approach - People 3.Targeted refresher training on latest sustainable procurement principles. Performance objectives and appraisal include sustainable procurement factors. Simple incentive programme in place. 4.Sustainable procurement included in competencies and selection criteria. Sustainable procurement is included as part of employee induction programme. 5.Achievements are publicised and used to attract procurement professionals. Internal and external awards are received for achievements. Focus is on benefits achieved. Good practice shared with other organisations Funded ByDelivered byPartnered by

18. Approach – Policy, strategy and communications 1.Agree overarching sustainability objectives. Simple sustainable procurement policy in place endorsed by CEO. Communicate to staff and key suppliers. 2. Review and enhance sustainable procurement policy, in particular consider supplier engagement. Ensure it is part of a wider Sustainable Development strategy. Communicate to staff, suppliers and key stakeholders. 3.Augment the sustainable procurement policy into a strategy covering risk, process interrogation, marketing, supplier engagement, measurement and a review process. Strategy endorsed by CEO. Funded ByDelivered byPartnered by

19. Approach – Policy, strategy and communications 3.Review and enhance the sustainable procurement strategy, in particular recognising the potential of new technologies. Try to link strategy to EMS and include in overall corporate strategy. 4.Strategy is: reviewed regularly, externally scrutinised and directly linked to organisations’ EMS. A detailed review is undertaken to determine future priorities and a new strategy is produced beyond this framework. Funded ByDelivered byPartnered by

20. Approach – Procurement process 1.Expenditure analysis undertaken and key sustainability impacts identified. Key contracts start to include where appropriate general sustainability criteria. Where possible contracts to be awarded on the basis of value- for-money, not lowest price. 2. Detailed expenditure analysis undertaken, key sustainability risks assessed and used for prioritisation. Sustainability is considered at an early stage in the procurement process of most contracts. Whole-life-cost analysis adopted. Funded ByDelivered byPartnered by

21. Approach – Procurement process 3.All contracts are assessed for general sustainability risks and management actions identified. Risks managed throughout all stages of the procurement process. Targets to improve sustainability are agreed with key suppliers. 4.Detailed sustainability risks assessed for high impact contracts. A life- cycle approach to cost/impact assessment is applied. 5.Life-cycle analysis has been undertaken for key commodity areas. Sustainability Key Performance Indicators agreed with key suppliers. Progress is rewarded or penalised based on performance. Barriers to sustainable procurement have been removed. Best practice shared with other organisations. Funded ByDelivered byPartnered by

22. Approach – Engaging suppliers 1.Key suppliers spend analysis undertaken and high sustainability impact suppliers identified. Key suppliers targeted for engagement and views on procurement policy sought. 2.Detailed suppliers spend analysis undertaken. General programme of supplier engagement initiated, with senior manager involvement. 3.Targeted supplier engagement programme in place, promoting continual sustainability improvement. Two way communications between procurer and supplier exists with incentives. Supply chains for key spend areas have been mapped. Funded ByDelivered byPartnered by

23. Approach – Engaging suppliers 4.Key suppliers targeted for intensive development. Sustainability audits and supply chain improvement programmes in place. Achievements are formally recorded. CEO involved in the supplier engagement programme. 5.Suppliers recognised as essential to delivery of organisations’ sustainable procurement strategy. CEO engages with suppliers. Best practice shared with other/peer organisations. Suppliers recognise they must continually improve their sustainability profile to keep the clients business. Funded ByDelivered byPartnered by

24. Approach – Measurement and results 1.Key sustainability impacts of procurement activity have been identified. 2.Detailed appraisal of the sustainability impacts of the procurement activity has been undertaken. Measures implemented to manage the identified high risk impact areas. 3.Sustainability measures refined from general departmental measures to include individual procurers and are linked to development objectives. Funded ByDelivered byPartnered by

25. Approach – Measurement and results 4.Measures are integrated into a balanced score card approach reflecting both input and output. Comparison is made with peer organisations. Benefit statements have been produced. 5.Measures used to drive organisational sustainable development strategy direction. Progress formally benchmarked with peer organisations. Benefits from sustainable procurement are clearly evidenced. Independent audit reports available in the public domain. Funded ByDelivered byPartnered by

26. Summary Responsible Purchasing requires: – Commitment to sustainability – Recognition that barriers exist to be overcome in moving towards RP/sustainability – Recognition that environmental pressures are exercising themselves on the supply chain – Recognition of what can be done and what good practise looks like – A structured approach Funded ByDelivered byPartnered by

27. Questions Funded ByDelivered byPartnered by

29. Responsible Purchasing and Transport - sample action areas Simon Waters Pro Enviro Funded ByDelivered byPartnered by

30. Construction Transport: – Delivery of material to sites, taking of waste from site Logistical planning to reduce trips – Vans/company cars Fuel cards, driver training Responsible purchasing – During planning stage, decide which environmental controls need to be addressed, e.g.: Erosion control of engineered slopes Habitat surveys – Building materials to be used......although constricted by design Funded ByDelivered byPartnered by

31. Construction Transport: – Delivery of material to sites, taking of waste from site Logistical planning to reduce trips – Vans/company cars Fuel cards, driver training Responsible purchasing – During planning stage, decide which environmental controls need to be addressed, e.g.: Erosion control of engineered slopes Habitat surveys – Building materials to be used......although constricted by design Funded ByDelivered byPartnered by

32. Food processor Transport: – Contract hauliers/own transport Fleet management, fuel purchase, driver training – Vans/company cars Fuel cards, driver training Responsible purchasing – Seeds, compost, fertiliser, tractor fuel, electrical energy for process/lighting Funded ByDelivered byPartnered by

33. Food processor Transport: – Contract hauliers/own transport Fleet management, fuel purchase, driver training – Vans/company cars Fuel cards, driver training Responsible purchasing – Seeds, compost, fertiliser, tractor fuel, electrical energy for process/lighting Funded ByDelivered byPartnered by

34. Utility broker Responsible purchasing – Green energy, sourcing information for customers, education of customers on green energy pricing plans Funded ByDelivered byPartnered by

35. Utility broker Responsible purchasing – Green energy, sourcing information for customers, education of customers on green energy pricing plans Funded ByDelivered byPartnered by

36. Medical practise Transport: – Employee and company cars Fuel cards, driver training Responsible purchasing – Source of medicines, natural remedies Funded ByDelivered byPartnered by

37. Medical practise Transport: – Employee and company cars Fuel cards, driver training Responsible purchasing – Source of medicines, natural remedies Funded ByDelivered byPartnered by

38. Palletised transport of goods Transport: – Contract hauliers/own transport Fleet management, fuel purchase, driver training – Vans/company cars Fuel cards, driver training Responsible purchasing – Green energy, pallets from sustainable forests Funded ByDelivered byPartnered by

39. Palletised transport of goods Transport: – Contract hauliers/own transport Fleet management, fuel purchase, driver training – Vans/company cars Fuel cards, driver training Responsible purchasing – Green energy, pallets from sustainable forests Funded ByDelivered byPartnered by

40. Packaging Transport: – Contract hauliers/own transport Fleet management, fuel purchase, driver training – Vans/company cars Fuel cards, driver training Responsible purchasing – Materials from which packaging is made Recyclable? Is source of material renewable? Energy used in production/recycling Funded ByDelivered byPartnered by

41. Packaging Transport: – Contract hauliers/own transport Fleet management, fuel purchase, driver training – Vans/company cars Fuel cards, driver training Responsible purchasing – Materials from which packaging is made Recyclable? Is source of material renewable? Energy used in production/recycling Funded ByDelivered byPartnered by

42. Questions Funded ByDelivered byPartnered by