UN Expert Meeting on UN Expert Meeting on Sustainable Public Sustainable Public

ProcurementProcurement

Christopher BrowneChristopher BrowneProcurement Strategy ManagerProcurement Strategy Manager

PresentationPresentation

• Background• Overall strategy• Risk assessment• Market appraisal• Supplier development• Conclusion

Our aimOur aim

A better environment for England and Wales for present and future generations

Procurement in the Procurement in the Environment AgencyEnvironment Agency

Agency Procurement: Key FactsAgency Procurement: Key Facts• Agency Operating Costs €1.1Bn• Expenditure with Suppliers €600M• 250 + National Contracts €400M• Top 25 Suppliers €395M• Top 500 Suppliers €470M• SME Suppliers €135M• Supply Chain Africa,Aust/ Asia, S. America €143M• Contracts let per annum 750• Procurement Resource 68 people• Organisation ISO 9001 and ISO 14001 Accredited

Sustainable ProcurementSustainable ProcurementOur ApproachOur Approach

PhilosophyPhilosophy

• Start simple, but make a start

• Learn from experience

• Continuous improvement

Sustainable

Procurement

Strategy

Risk

Assessment

& Action

Supplier

Management

& Development

Integration into

Procurement

Process

Maintaining

Excellence

Sustainable

Procurement

Marketing

Staff Training

& Awareness

Strategy ModelStrategy Model OrganisationalValues

SupportFramework

StakeholderValues

Resource

Our approachOur approach• Risk assessment

– Environmental– Developing World supply chain?

• Contract strategy– Environment, social and economics

• Supplier Management and Development– Environmental– Social management– Diversity

• Support to improve

Raising A

wareness

Risk AssessmentRisk Assessment

Example using IT products

Procurement risk assessment modelIdentification of Business Need and

Assess against Waste Hierarchy

High Level Business RiskAssessment

High Level Business RiskAssessment

High LevelSustainability Risk

Assessment

High LevelSustainability Risk

Assessment

Assessment of Influence with

Supplier

Assessment of Influence with

Supplier

LOW RISKIdentify main issues and

integrate into the contract

LOW RISKIdentify main issues and

integrate into the contract

Score risk, Supplier Influence& Map using Boston Matrix

Score risk, Supplier Influence& Map using Boston Matrix

HIGH RISKMore detailed risk

assessment, rank, allocate and manage

HIGH RISKMore detailed risk

assessment, rank, allocate and manage

Generic Risk Assessments and Generic Risk Assessments and Product Fact SheetsProduct Fact Sheets

• Sand• Gravel• Aggregate• Concrete• Plastic• Steel• Wood• Textiles• Paper• Glass

• Electricity• Gas• Oils• Iron• Copper• Clay• PVC• Electronics• Software• Telecoms

• Machinery• Janitorials• Construction• Transport• Printing• Photography• Horticulture• Lighting• Paints• Varnishes

• Adhesives• Cables• De-

greasants• Solvents

• People /Labour / Consultants

=Priority Action: Potential Developing World Supply Chain

Life Cycle Inputs and Outputs Life Cycle Inputs and Outputs -- PC’sPC’sRaw MaterialsOil based plasticElectronic componentsCablesRubber

DisposalNon-biodegradableLeakage of heavy metalsNoxious Fumes

ManufactureEnergyChemicalsEmissionsPlantPeopleFlame retardant and VOC

UseEnergyNoiseEmissionsPackagingPeople

Likelihood of Supply Chain Entering the D

eveloping World ?

Map Life Cycle to Key Impacts Map Life Cycle to Key Impacts -- PC’sPC’sAspect/Impact1

Raw materials/pre manufacture

Manufacture Use Disposal Comments

Resourceuse

Plastic based productsHeavy and preciousmetals used inelectronic chips

Energy Energy use duringmanufacture and use

Water Use in manufactureVOC Solvent use in

manufactureWaste/Endof Lifeissues

End of life options – up-gradability or re-usepreferable to recyclingor disposal

HazardousSubstances

Use of solvents andother hazardoussubstances inmanufacture

Packaging Reduced packaging withdelivery

Noise Possible noise and airemissions during use

DevelopingWorldSupplyChain

Many raw materialsorginate in dev world,often manufacturing indev world andequipment disposed of

Score 4 7 3 3Total score 17/36

Management ApproachManagement Approach• Impacts at Raw Materials stage, mitigate by:

– Specification, suppliers ethical supply chain management policy, systems, measures

• Impacts in Manufacture, mitigate by:– Supplier selection, appraisal, suppliers own

ethical policy, EMS, measures• Impacts in Use, mitigate by:

– Specification, end user education• Impacts in Disposal, mitigate by:

– Specification, supplier take back, end user awareness

Risk mapping Risk mapping -- Boston MatrixBoston Matrix

Strategic

Security

Strategic

CriticalRisk

Tactical

Acquisition

Tactical

Profit

Value €1.5M

What scope do we have to What scope do we have to influence the supplier?influence the supplier?

Can we deliver change?

Attractiveness of businessAttractiveness of business

• Are we easy to work with?

• Are we an intelligent client?

• Are we efficient in our business dealings?

• Do we pay on time?• Are we open to

change?

• Are we a key client in the suppliers portfolio?

• Do we represent more than 0.5% of the suppliers turnover?

• Is the supplier operating in a saturated market?

• Are low switching costs present with this market?

Assess the suppliers viewAssess the suppliers viewM

arke

t Gr

owt

h/ A

ttra

cti v

enes

s

Relative Value of Business/ Market ShareCourtesy of PMMS Consulting Group

GreaterInfluence

Development

ExploitableNuisance

Core

Approach to the marketApproach to the market

• If there is a high degree of influence with the market– demand sustainable performance of both

the suppliers business/ the product• If there is moderate influence

– target requirements into a few key areas and explore development opportunities

• If there is low influence– encourage the supplier to develop through

differentiation and wider marketing

Supplier Management and Supplier Management and DevelopmentDevelopment

Driving the sustainability agenda?

Twin track approachTwin track approach• Supplier Assessment

– Top 20 suppliers are researched, leading to an environmental profile and director to director discussions

– Top 500 suppliers assessed on environmental, social and diversity standing

• Supplier Development– Top 20, intense development, actions

agreed and personal support provided– Top 500, feedback given and CD training

package covering environment and CSR

Key Supplier DevelopmentKey Supplier Development

IT Food Labs LabsConstruction

Construction Construction ConstructionIT IT

Construction Construction

Construction

Telemetry Water Treatment

Consultants

IT Telemetry Consultants Vehicles

Review of 500 SuppliersReview of 500 SuppliersAssessed suppliers in the following areas:• Operating Sector• Turnover• Size• Environmental Policy• Environmental Risk

Assessment• Level of Environmental

Responsibility• Assessment of

Environmental Impacts• Targets and Measures• Public Reporting

• EMS• Accreditation• Management of Overseas

Operations and Suppliers• Working conditions• Minimum age• Equality• Pay• Union membership• Policy and Effectiveness• Diversity

Press Reaction:Press Reaction:

Making a start on SustainabilityMaking a start on Sustainability• Where are your suppliers Operating and

Purchasing:– Europe– North America– Asia– Africa– South America– Australasia

• Targeted assessment and development

Environmental and Social RiskEnvironmental and Social RiskSecond Tier Supply Chain (€254M)Second Tier Supply Chain (€254M)

25%€64M

17%€43M

19%€48M

15%€38M 12%

€31M12%€31MSocial

Risk

Key StatisticsKey Statistics• 62% First Tier Suppliers are SME’s• 34% First Tier Suppliers have overseas operations• 58% First Tier Suppliers have no policy for sustainable

overseas purchasing• Policies that do exist cover:

– Working conditions 20%– Employee Age 12%– Fair Pay 16%– Trade Union 10%– Natural Resource 12%– Emissions/ Waste 10%

Only 1 supplier complies with

SA8000

Targeted Development Targeted Development -- A Start ?A Start ?• Identified the suppliers who buy from

developing world continents• Assessed their current policies and Identified

weaknesses• Inform our own policy development and

resource planning• Meet suppliers to agree development areas and

actions for change• CD ROM based education package to assist• Targeted detailed supply chain assessment in

high risk areas e.g. Sandbags, Jute

ConclusionConclusion

ConclusionConclusion• Environment Agency leads good practice

sustainable procurement practices within the United Kingdom

• Philosophy of start simple, but continuously improve

• Risk based approach delivers real benefits• Manage key suppliers and drive the agenda• Target suppliers who have the potential for

social risks in the supply chain• Make a start and learn from

experience

More Information:

http://www.environment-agency.gov.uk/business/317943/

This Presentation can be downloaded from:

http://www.environment-agency.gov.uk/business/317943/319328/?lang=_e&region=

Contact:Chris Browne, Procurement Strategy Managerchristopher.browne@environment-agency.gov.ukTel: +44 (0) 117 914 2624