What should procurement do about economic sustainability?

Yesterday we discussed the economic aspects of sustainable procurement, and today we’re getting into the ideas and actions that can fulfil two purposes; they help customer organisations while promoting wider economic sustainability and market dynamicism. For instance, encouraging innovation in supply markets, another aspect of sustainable procurement, is an increasingly hot topic for public and private sector procurement, and one that has obvious benefits at both individual customer organisation level and in terms of the health of wider economies.

So we suggest that there are two useful angles of approach.

Firstly, supporting the supply side, helping them to understand how to be better suppliers, and ensuring they understand our needs, how to win work and so on.  (Exactly the sort of work our guest writer Toni Saraiva does incidentally).

Then in our own procurement, we need to be open to smaller, innovative, minority owned, third sector or just plain ‘different’ potential suppliers. We need to make sure we don't erect accidental or deliberate barriers to their participation with us.

So don’t always assume “bigger is better” when you construct contracts and sourcing strategies. Don’t put ridiculous barriers in the way of bidders; “you must have an annual turnover of £5 million in order to do this £500K a year contract” Why?

Be open to smaller suppliers, or more innovative ideas. Use output or outcome based specifications wherever possible that encourage innovation.

What about supporting local suppliers? Well, despite our doubts about some of the theories in this area, there are actions that make perfect sense.  For instance, and this links with environmental sustainability, making sure that true whole life costs are considered in evaluating proposals; I’ve seen many tenders that don’t take transport costs fully into account.

Even in categories such as professional services there’s a relevance - where the competition is around day rates, travel and expenses should be included in the analysis. A true cost assessment would ask for daily rates including all travel; which both reflects the buyer’s true cost and assists the local provider who is burning less carbon getting to the client’s office every day. Good for value for money, and supports the sustainability agenda in two ways (localism and carbon reduction).

Much of this is of course ‘just’ good procurement, you might argue. And that’s what I think we need to be looking for – actions that make business sense and promote sustainable behaviour. Our view at the beginning of this series was that we shouldn’t take it on ourselves to do things just because we personally feel they’re the ‘right tings to do’. But there are many actions we can take – across the various types of sustainability – that make perfect business sense, AND are ‘the right things to do’ from a sustainability point of view.

Having covered the key elements of sustainable procurement, we’ll have some posts over the next couple of weeks looking at how technology can support some of these initiatives, and examples of interesting things organisations are doing – and if you’ve got a good example, particularly if it is a bit unusual or interesting, do let us know and we’d love to feature it here.

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