The Power of Sustainable Procurement - Joanne Gorski

Joanne Gorski, President

CSCP, CFPIM, Green Manufacturing Specialist

The Power of Sustainable Procurement

Joanne Gorski

• 25 years of business and educational experience spanning Fortune 100 companies and college faculty member

• BS Business ADM Ohio State University, MBA

• APICS CFPIM, CSCP

• SME Green Manufacturing Specialist

• ISO Auditor: 14001, 20121

• Sustainable Event Alliance: Accredited Professional, Auditor

Session Overview

Answer three key questions

– What is sustainability?

– What is sustainable procurement?

– Why is sustainable procurement important?

• Explain the 6 Steps to Sustainable Procurement cover all 6 steps

– Sustainable Procurement Policy

– Risk Management

– Customized Metrics and Scorecards

Why Sustainability?

Pre-assessment

Answer the following questions:

– What is sustainability?

– What is sustainable procurement?

– Why is sustainable procurement important?

What is Sustainability?

• There are as many definitions of sustainability as there are groups trying to define it

Key concepts

• Balance environmental, social, and financial outcomes

• Ensures current needs are met without compromising the ability of future generations to meet their needs

Activity: Imagine Your Favorite Things

• What resources are needed?

• Do they have limits?

• How does the sourcing/use affect the environment?

What is Sustainable Purchasing/Procurement?The process of acquiring goods and services that:

– Meet user’s need

– Deliver long term value for money

– Maximize social and economic benefits

– Minimize damage to the environment and health

Source: http://www.forumforthefuture.org/sites/default/files/project/downloads/buying-better-world.pdf

The Power of Sustainable Procurement

• Purchasing is the gateway into your organization

• Setting guidelines and criteria transfers control over sustainable performance to your organization

• Drives marketplace toward adopting sustainable practices for long-term improvement

• Purchasing dollars = power!

Sustainable Purchasing:

• Encourages the use of recycled or sustainably produced materials

• Ensures fair labor and compensation

• Drives the reduction of waste

• Avoids harmful/toxic substances

• Ensures compliance with environmental and social legislation

Steps to Sustainable Procurement

1. Create a sustainable procurement policy

2. Develop supplier specifications based upon sustainable development criteria

3. Identify Key metrics/scorecards

4. Work with suppliers and potential suppliers

5. Evaluate supplier performance throughout procurement cycle

6. Document and implement improvement opportunities

Step 1:Create a Sustainable Procurement Policy• Provide guidelines for organization to follow

• Ensures adherence to principles of sustainable development

• Minimizes supply chain risk

• Controls costs

• Enhances brand reputation

• Ensures compliance with environmental and social legislation

Step 1: Create Sustainable Procurement Policy

Define purpose of policy

The Big Green Sustainable Music Festival recognizes and is committed to our responsibility to procure resources in a manner consistent with the principle of sustainable development and the mission of our event. We strive to make purchases in a manner that balances social, economic, and environmental goals.

Step 1: Create Sustainable Procurement PolicyDefine key sustainability objectives

Evaluate all the significant sustainable development issues associated with your organization and create procedures to manage them in a responsible manner.

• Support local business to strengthen our community

• Minimize solid waste

• Use local sourcing

• Promote fair working conditions

• Protecting habitats and biodiversity

• Minimize water waste

• Minimize use of fossil fuels

• Measures and targets for each objective will be defined and measured annually or more frequently as needed.

Step 1: Create Sustainable Procurement Policy

Define scope of sustainable procurement

This policy applies to all aspects of purchasing activities for The Big Green Sustainable Music Festival. Purchasing shall incorporate fiscal responsibility, social equity, community and environmental stewardship in all procurement decisions. Life cycle costing, where relevant, will be used to evaluate the long term value for purchase decisions.

Step 1: Create Sustainable Procurement PolicyIdentify level of performance desired

• It is the goal of our organization to go beyond basic legal compliance in the context of sustainable procurement in our organization’s practices. Through the use of supplier requirements and evaluation sustainability values will be built into The Big Green Sustainable Music Festival’s supplier strategies.

• The level of sustainable performance will be identified for all identified key areas of spend or prioritization.

Step 1: Create Sustainable Procurement PolicyIdentify level of performance desired

• What is defined in your organizational sustainability plan?

• Has your organization made any outside commitments such as signed the UN Global compact?

• Does your organization have any green labels, seals, or certifications?

• Examples: Fair Trade, LEED, Green Seal, Forest Stewardship Council, Greener Choices, Cradle to Cradle Certified

• Any of the above listed commitments need to be included in your policy

Step 1: Create Sustainable Procurement PolicyCreate process for assessing suppliers during tender evaluation

• Purchases will be made using the best practices available in sustainable procurement, and evaluation techniques will be updated as best practices evolve and improve. This may involve new standards, procedures, etc. as practical.

Step 1: Developing Sustainable Procurement PolicyCreate process for assessing suppliers during tender evaluation

• Suppliers will be evaluated and assessed based upon sustainability criteria developed into a scorecard. Suppliers will be encouraged to propose improvements and sustainable solutions that support the overall purpose of this policy. Suppliers will have input into the evaluation process and given reasonable time to adjust to the evaluation criteria.

Step 1: Developing Sustainable Procurement PolicyEnsure supplier performance requirements are in line with your own organizational expectations

Don’t expect more of suppliers than you do of your internal organization

Step 2: Develop supplier specifications based upon sustainable development criteria

Risk Assessment on key spends

• Many methods available (ISO 31000)

• Prioritize key risks

• Decide for key risks:

– Do nothing

– Share risk

– Reduce risk

– Avoid

Sustainable Procurement Policy –Aiming for Measurable Improvement

Targets & Measures

Sustainable Evaluation Criteria

Objectives

Scope

Step 2:Develop supplier specifications based upon sustainable development criteria

• What are the big issues for your industry?

• What are the results of your impacts assessment?

• How are your suppliers and partners managing their risks?

• Critical issues/risks in your industry? Locations? Markets?

Step 2: Develop supplier specifications based upon sustainable development criteriaSignificant Environmental Aspects (from ISO 14001)

• Identify environmental aspects of organization’s activities, products or services that you can have control over

• Determine the aspects that have significant impacts on the environment

• Manage the significant environmental aspects


Think efficient and cradle to cradle

Input Process Output Product End of Life

What you buy What you doIn your organization

What your customer gets

Where product ends up

responsiblematerials sourcingresponsible transportrecycled content

efficientlow emissionsnon-hazardous

minimal packagingtransportation efficient

maximizerecyclabilitynon-toxicFeedstock for other productsAvoid landfill

Step 2: Develop supplier specifications based upon sustainable development criteriaSignificant Environmental Aspects (from ISO 14001)

– Frequency (Actual Use) – Frequency of use at the facility. Scale 1 to 5.

– Quantities – Volume of aspect involved based on actual quantity and/or regulatory impacts. Scale 1 to 3.

– Controlled – Control of aspect through environmental permits, regulations, or not controlled. Scale 1 to 3.

– Severity – Relative to risks to environment (air emissions, land, water, etc.), employee safety (toxicity, exposure), and/or resource reduction. Scale 1 to 5.

– Effect on Public Image or Concerns of Interested Parties (employees, community, government, etc.). Scale 1 to 5.

• Add each of the individual aspect rankings together for a maximum score of 21. Total rankings 15 or greater are considered significant environmental aspects (SEA).


AspectTask Team

Process /

Activity

UnitFacility

AreaWaste Stream

Resp.Disposal, Physical Controls

Freq

ue

ncy

Qu

anti

ties

Seve

rity

Co

ntr

olle

d

Pu

blic

Imag

e

RA

NK

ING

Cleaning Station 1

ABC Wash line 300 gal unit cleaning line WastewaterOperator,

Maintenance

pH control, wastewater permit 5 3 3 2 3 16

Inputs to Specifications for Sustainability Requirements

Sustainability Specifications

Prioritized Spend Results

Key Sustainability

Risks

Significant Environmental

Impacts


Standards ISO 14000ISO 90000LEED

Certifications Forest Stewardship Council – FSCFair Trade CertifiedGreen SealEnergy Star

Processes Organically grownCage freeGrass fedChlorine free paper

Attribute Locally sourcedGMO free% recycled content

Minimum Standard of Performance Water footprintCarbon footprintMiles per gallonUseful life

Step 3: Key Sustainable Criteria and MeasuresSMART

• Specific

• Measurable

• Attainable/Achievable

• Relevant

• Time bound

Step 3: Key Sustainable Criteria and Measures

Example for paper company with objective to increase their sustainably sourced wood and paper products

Year Target % of FSC Certified Fiber

2013 50%

2014 60%

2015 80%

Step 3: Key Sustainable Criteria and MeasuresHow does this fit our criteria?

• Specific – company goal for each year

• Measurable – can be quantified

• Attainable/Achievable – based upon reality

• Relevant – addresses significant environmental impact

• Time bound – gives measures for each year

Step 3: Key Sustainable Criteria and MeasuresHelpful tips:

• Use existing industry benchmarks, certifications and frameworks

• Start with smaller scope, then expand

• What you measure, you can manage and thus change

Step 3: Key Sustainable Criteria and Measures

Categories Quantitativ

e Evidence

Soft

Evidence

In Process Negative or Not

Addressed

Score 5 3 1 0

Profit% of spending done with locally based suppliers at significant locations of operation

% of employees earning a living wage or higher

Positive economic value generated and distributed through business operation

Measurement of gender pay equity among employees

Third party certifications for sustainability

Planet

Measurement of direct and indirect energy consumption with reduction plan

Total water withdrawal measurement with reduction plan

Total solid waste sent to landfill with reduction plan

Total materials used by weight and % recycled or diverted away from landfill

Weight of materials generated deemed hazardous by local or international standards

Green/sustainable supply chain policy in place

Measure GHG emissions Scope 1 & 2

Active Environmental Management System (EMS) in place

People

Active Green Teams with goals and measurements that meet on regular intervals

Published Sustainability Plan w/ continuous improvement process

Communicate sustainability goals and results to all employees at least twice a year

Formal or informal sustainability training

Provide continuing education and measure hours per employee

Community outreach provided and measured

% of employees who receive regular performance and career development reviews

Total Score

Step 4: Work with suppliers and potential suppliers

• Communicate goals, process

• This should not be the first time supplier has been included in this initiative

• Education

• Implement program

Education

Waste HierarchyWaste is the result of poor design

Prevent Most Favored

Reduce

Reuse

Recycle

Energy Recovery

Disposal Least Favored

Education

Conduct a waste audit

• Sort waste

• Measure waste

• Apply waste hierarchy

• Involve supplier and employees

• Create waste reduction plan Elementary school food waste

Education

What a Waste!

• You bought it

• You paid to transport it to your organization

• You paid to move it to a dumpster

• You paid to ship it to landfill

• You paid a tipping fee to dispose of it Elementary school food waste

Hazardous Substances/ ToxicsInternational Drivers for Change

(Restriction of Hazardous Substances)

EU (European Union) directive banning six hazardous materials

REACH (Registration, Evaluation, Authorization and Restriction of Chemical Substances) EU directive that all chemical substances be registered into a centrally manage database

WEEE (Waste Electrical and Electronic Equipment) directive responsibility for end-of-life management of waste from electrical and electronic equipment onto the manufacturers of such equipment.

Hazardous Substances/ Toxics

• Best to avoid using hazardous/toxic materials

• Conduct life cycle cost analysis to evaluate different processes

• Keep looking for new technology / processes if not currently feasible

Green Chemistry

Definition:

Sustainable practice of chemical science and manufacturing within a framework of industrial ecology that is safe, non-polluting, consuming minimum amounts of energy and material resources while producing virtually no wastes.

Source: Purdue Research Foundation – Included in Green Manufacturing Specialist BOK

Education

Sustainable procurement tips• Buy less – is this item really needed? Can we use less of it?

• Rent or hire instead of purchasing

• Buy things that are reusable & durable

• Buy a used item in good repair

• Buy things that can be recycled

• Buy things that have a low environmental footprint

• Buy things that are non toxic

• Buy things that are made with fair labor and responsible manufacturing processes

• Buy things made from sustainable materials

• Does someone in organization already have one that can be shared?

• Buy from a local source if possible

Step 5: Evaluate supplier performance throughout procurement cycle

• Evaluate and measure supplier performance

• Provide feedback on regular intervals and as needed

• Gather feedback from supplier:

– What is working well

– What is not working well

– Potential improvements

Step 6: Document and implement improvement opportunities

• Document lessons learned

• Incorporate improvement opportunities into review process

• Implement changes as needed

Contact Information

• Joanne Gorski

• Email: [email protected]

• Website:

• www.sustainableinsightsllc.com

mailto:[email protected]

Documents

The Power of Sustainable Procurement - Joanne Gorski