Circular procurement is on the rise. Many companies recognise the value of investing in circular procurement, which seeks to limit the waste of resources and reduce environmental impact within the context of sustainability. However, companies are coming to realise that this is often easier said than done. Ordiges, a management software publisher for companies, shares its eight best practices to help promote circular procurement within your business.
1) Set goals
First and foremost, in order to implement your circular procurement policy, it's important to set clear objectives. This will help provide a general framework that your procurement team and suppliers can draw on.
2) Adopt a gradual approach
When it comes to circular procurement, there are a huge number of possibilities. That's why it's important to move forward one step at a time, based on your priorities. You can start by incorporating sustainable criteria into your tail spend for example.
3) Communicate internally
Circular procurement is essentially about the full utilisation and sustainability of goods and services. By communicating this approach across your company's various departments, you can improve the balance between the needs of each department and therefore extend the lifespan of your products or services. Furthermore, communication is key to gaining the support of your colleagues and therefore ensuring the success of your approach.
4) Reassess your needs
To steer procurement towards a more sustainable solution, internal customers need to be consulted in order to identify their actual business needs. For example, you can better adapt a product for its use, suggest renting instead of buying etc. Circular procurement therefore tends to be about using a product or service, rather than owning it.
5) Think in terms of TCO
Adopting a "Total Cost of Ownership" approach involves analysing the overall cost of a product or service over its entire lifespan. This includes purchase, use, management and disposal costs. Procurement departments must incorporate end-of-life management of its products or services into its technical specifications or supplier selection criteria.
6) Check out the market
To adapt your demand to the available supply, you can examine the market using:
- A benchmark to benefit from the feedback of other buyers, study their best practices and find out about the risks and advantages.
- A sourcing platform to gain a comprehensive overview of the market players, while also ensuring the quality of the selection and the incorporation of sustainable criteria.
7) Reconsider your contracts
You must incorporate your circular procurement policy when drafting your purchase request. This can take the form of prioritised criteria within technical specifications (materials used, presence of hazardous substances, availability of spare parts etc.) or specific services such as repair in case of breakdown. Suppliers then hold all the cards to offer you the most suitable solutions, harnessing their capacity for innovation.
8) Track your progress
To ensure that the project is properly implemented, procurement departments must have a clear view of their progress. By monitoring key performance indicators, based on those suggested by the French organisation ObsAR (Observatoire des Achats Responsables — Observatory of sustainable procurement), procurement departments can measure the extent to which their objectives have been achieved, as well as areas for improvement, frictions points etc.
This list of best practices is, of course, not exhaustive. To begin implementing your circular procurement policy, remember to test out these tips on a non-strategic product category, such as tail spend. For this segment, you will then be able to further develop the circular actions that operate within your business, in order to then streamline and optimise the circularity of your project.