Professor Helen Walker

Chair of Operations and Supply Management

Sustainable procurement: how can we buy and supply responsibly?

BP Sustainability Review in 2008

BP Sustainability Review in 2008

Public vs Private

• Big spend (25% GDP), power to influence supply markets

• Can align with other agendas e.g. Buying from SMEs, local economic development, waste

• Have to observe EU procurement rules

• ‘The business of business is business’ (Milton Friedman, 1970) but . . .

• Sustainable SCM on CEO, CFO and supply managers agendas (PWC, 2011)

• Survey of 1500 execs (Hopkins et al., 2009) important to engage suppliers on sustainability in the value chain.

Characterising current research

• More studies looking at all 3 elements

• CSR-challenged industries

• Regional studies with a more holistic view

Characterising trends in research

International Research Study on Public Procurement

• ‘Unbundling’ contracts (e.g in South Africa) so SMEs can bid in direct contrast to common procurement objectives such as consolidating spend for economies of scale.

• In Canada, US and Australia, incentives for selecting SMEs run by minority groups

• In Australia, initiative to ‘buy Australian’. This would go against EU regulations

• Using procurement as lever for social reform

• Sustainable procurement policy may compete with other procurement policies and objectives

280 responses from 25 countries

100+ UK

52 US and Canada

49 Western European countries 36 Eastern

European

29 Scandinavia

15 Rest of World

International SP survey

US – minority owned

businesses

Europe - environmental

UK – buy local

- UK lead engagement of SP, along with Eastern Europe - 80% buy from SMEs, 60% elsewhere - 70% buy local, 60% elsewhere

West, East Europe & Scandinavia – 48% ask suppliers to commit to waste reduction goals, <30% elsewhere – 46% ask suppliers to reduce packaging materials, <30% elsewhere

US – 63.5% purchase from minority and women-owned SMEs, 10.9% elsewhere – 38.5% have formal programme for buying from minorities, 6.5% elsewhere

Examples of SP initiatives in UK Environmental • Green energy • Recycling • Waste

• Recycled paper

• Sustainable products • Green travel • Reduce packaging • Sustainable food • Sustainable timber • Recycle building materials • Pollution • ISO14001 • Water efficiency

Social • Fair Trade • SMEs • Local • Minority owned businesses • Living wage • Countries sourced • Voluntary sector

Internal

Costs Lack of awareness

Conflicting priorities Lack of training

Lacking long term view Lack of management commitment

Culture Lack of legitimacy

Decentralised structure

Barriers

Poor supplier commitment

Industry specific barriers Regulation

Walker et al (2008)

Internal Desire to reduce costs

Improve quality Improve firm performance

Values of the founder Management commitment

Employee involvement Policy entrepreneurs

Procurement processes Procurement strategy

Sustainability / CSR strategy Team commitment

Enablers

Government policy

Collaborate with suppliers

Pressure from investors

Pressure from media

Pressure from NGOs

Pressure from stakeholders

Pressure from consumers

Gaining competitive advantage

Regulation & legislation

Walker et al (2008)

Our SP research and sponsors • SSCM workshop with leading academics and practitioners in

June 2012. Established research network • How does public sector buy sustainably, and how is that

changing over time? • How do policies and practice vary internationally? • Are views of sustainability imposed along global SCs? • Is power or collaboration more influential with suppliers? • Why are some companies more proactive on SP? • How does decision-making about SP occur? • How can SMEs be encouraged to behave sustainably? • How does SP differ between manufacturing and services?

What can you do?

• Good corporate citizen, neighbour, employer

• Engage stakeholders, NGOs, social enterprises, consider impact within community

• Conduct supplier risk assessment • Conduct supplier audits • Support local suppliers for regional

development • Support SMEs in more innovative green

products and services, consider unbundling contracts

• manage spend (i.e. consumption) e.g. reduce (use less), re-use, recycle

• manage process, e.g. reduce inefficiency in transaction processes

• avoid the purchase

• Identify a champion • Train key staff

• Analyse expenditure and identify key impacts

• Key contracts include SD issues

• High sustainability impact suppliers identified

• Engage in dialogue with suppliers • ‘green’ the specification e.g. using eco-

label criteria, community benefit clauses

• Comply with regulations such as WEEE and packaging directives

• measure appropriate sustainable SCM criteria

• Align sustainable SCM strategy with corporate strategy

Some publications

Some recommended papers • “Sustainable procurement in the public sector: an international comparative

study” (2012) (Brammer, S. & Walker, H.) published in International Journal of Operations & Production Management chosen as an Outstanding Paper Award Winner at the Literati Network Awards for Excellence

• Won the IPSERA Conference 2009 Best Paper Award for: Walker, H. Sustainable procurement; a literature review. IPSERA, Wiesbaden.

• Won the Journal of Purchasing and Supply Management 2008 Best Paper Award for: Walker, H., Di Sisto, L., & McBain, D. (2008) Drivers and barriers of environmental supply chain practices: lessons from the public and private sectors. Journal of Purchasing and Supply Management, Vol 14, No 1, pp 69-85.

• Guest editor for Journal of Purchasing and Supply Management special issue on Sustainable Procurement

• Guest editor for International Journal of Operations and Production Management special issue on Sustainable Operations Management