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Sustainable Procurement

Published: 10th May 2016

The environment is a concern for all. How can we protect and save the environment around us? How can we reduce industry’s impact to sustain the planet’s natural condition? Climate changing is starting to occur and will negatively affect all life on Earth.

This became a driver for all to think about sustainability and how we can be ‘greener’ when it comes to our use of natural resources: from the sourcing of raw materials at the start of the supply chain, through to manufacturing and production processes, until the end product reaches the consumer market.

New terms have evolved to make us focus on saving the environment and finding new ways to recycle products and decrease the consumption of natural raw materials. Green building, carbon footprint and eco-friendly have become buzzwords, used by manufacturers and governments to show that they are doing their bit for sustainability.

We’re all accountable

It should be clear that saving the environment by any means is the responsibility of all - starting with governments and manufacturers, and ending with consumers. Governments should set the proper regulations that support sustainability and educate people on how to use their resources in a way that will reduce the carbon footprint and save natural resources. Manufacturers have to look long and hard at their supply chain ethics, considering not just the end price of their product, but the overall cost to the environment. Finally, and equally importantly, consumers should seek to educate themselves on supply chain ethics. They have the power to force the hand of manufacturers, boycotting certain products until they are produced in a way that is not just environmentally sustainable, but also ethical and fair to all in the supply chain.

Sustainability, rather than a set of regulations and rules, is a way of life. This can be understood from the definition of sustainability: “The quality of not being harmful to the environment or depleting natural resources, and thereby supporting long-term ecological balance.” Therefore, sustainability can be achieved by meeting today’s needs without compromising the ability of future generations to meet their needs, improving the quality of human life while living on the Earth’s supporting eco-systems and stabilising the relationship between Earth’s two most complex systems: humans and the world in which we live.

It is obvious that businesses should also be responsible and support sustainability. Therefore, sustainability and being environmentally aware should be part of the business strategy in any sector and industry. It should be part of the supply chain and procurement strategies. Being green and eco-friendly should mean that businesses and industries base decisions and policies on how they can contribute to saving the planet’s natural resources.

Sustainable procurement

Procurement is called sustainable when it integrates requirements, specifications and criteria that are compatible with and support environmental protection, social progress and economic development, namely by seeking resource efficiency, improving the quality of products and services and ultimately optimising costs.

Through sustainable procurement, organisations use their own buying power to give a signal to the market in favour of sustainability and base their choice of goods and services on:

• Economic considerations - best value for money, price, quality, availability and functionality

• Environmental aspects - the impact on the environment that the product and/or service has over its whole life-cycle, from cradle to grave

• Social aspects - effects of purchasing decisions on issues such as poverty eradication, international equity in the distribution of resources, labour conditions and human rights

The adoption of sustainable approaches may reduce the ecological impacts of the business operation across the supply chain, as well as leading to benefits such as making the supply chain more streamlined and efficient.

Ensuring the lowest environmental and most positive social impact of procurement does not only build on the international community commitments, it also:

• Manages the reputational risk of exploitation or environmental damage in the supply chain

• Gives a strong signal to the market and encourages the innovative production of cleaner and more ethical products

• Enhances the benefits for the environment and for local communities

Sustainable procurement is not about loading the market with extra requirements; rather it is a well-defined strategy that gradually introduces sustainable requirements in bids and supporting measures, promoting dialogue and open communication between suppliers and buyers.

Sustainability and footwear

Sustainability is at the top of the agenda in both the business and public sector. In light of recent broad changes in the world’s economy and heightened consumer awareness of sustainable production, the footwear industry and its supply chains are now facing an increasing number of different challenges.

Challenges include product safety, quality, functionality and value for money, as well as environmentally and socially sustainable production of footwear products. From a product safety and quality point of view, that includes VOCs (Volatile Organic Compounds) issues with adhesives, excessive chromium VI in leather and the risk of phthalates in plastic accessories in footwear. Aspects of concern during production include the environmental management of production facilities and the occupational health and safety of workers. As a result of stakeholders’ demands, brands, retailers and their supply chains are required to become more transparent, secure and efficient.

Sustainability approaches include taking into account the environmental and social impact of the footwear manufacturing and production operations, as well as adopting product life cycle thinking by considering the selection of raw materials, use of technologically innovative production methods, and applying this thinking all the way to retailing and disposal of the end products.

Moreover, in the production process footwear manufactures should consider all the required modern manufacturing technology and continuous optimisation of its production systems to be able to reduce manufacturing waste by a percentage that aligns with the requirements of sustainability regulations. In addition, manufacturers in the protective footwear sector should collaborate with technology partners on a comprehensive raw materials recycling concept. In future, a continuous recycling process will exist, creating new manufacturing materials out of raw material waste. To comply with sustainability rules a number of tonnages of plastic waste should be recycled and reused in production every year.

As a result of having modern technology in place, footwear manufacturers should be able to reduce energy consumption by a percentage over the years that will comply with sustainable regulations and requirements. A new lighting system based on LED (light-emitting diode) technology can be utilised in footwear factories that can boost the energy savings. As a result, fewer lamps will be needed and the lifespan of the energy savings from the lighting system will double, helping to further reduce waste. This simple change will make an important contribution to reducing CO2.

Footwear manufacturers can protect the environment by focusing on effective measures for reducing their industry’s greenhouse gas emissions. The carbon footprint of protective footwear can continually be reduced by switching to a more efficient heating system; for example, shifting to heating systems powered by gas rather than oil will reduce CO2 emissions. In addition, investing in a solar power system will also reduce the annual CO2 output, and with the additional energy gained from the solar power the manufacturing capacity can increase.

To be more eco-friendly, footwear manufacturers have to do their utmost to reduce water consumption to an absolute minimum, so as to comply with sustainability regulations. The water used in the manufacturing process should completely vaporise and as a result there will be no single drop of waste water. In addition, they can also collect rainwater for use in employees' sanitary facilities.

Taking steps toward sustainability would create strong sustainable brand values and loyalty among the consumers and other stakeholders. These competitive advantages are important assets for a brand to build resilience against economic cycles and consumers’ shifting expectations.

Innovation is the key

Sustainability will drive innovation throughout the business and will add value. To go green, manufacturers should think out of the box and find new ways to do things. Innovation should be in all the production processes starting with raw materials, component manufacturing, footwear assembly, finished products, packing, recycling, retailing, and ending with logistics.

Let's take recycling as an example, knowing that at present less than 5% of 20 billion pairs of shoes produced per year are recycled or reused, with most being disposed of in landfill sites around the world. Reusing the shoes in developing countries is often the preferred option for the charity organisations behind current shoe collection schemes; however, not all of the collected shoes are deemed suitable for reuse, with a sizeable amount of these old shoes more suited for material recycling due to their poor condition. Material recycling of footwear products is a challenging problem, however, with most modern shoes containing a complex mixture of leather, rubber, textiles, polymers and metallic materials. Furthermore, due to the relatively low value of recoverable materials, the cost of the shoe recycling processes has to be kept to a minimum.

Research undertaken at Loughborough University by Dr Mike Lee has created a number of modified material recycling processes, designed specifically for the separation of various footwear material categories. This is achieving by grinding the shoes into small pieces, which are then separated into five different material categories – rubber, leather, foam, textiles and metals – based upon their difference in density and size.

The process operates in a semi-automated manner to keep manual intervention and the associated processing costs to a minimum. For each of the reclaimable materials a number of useful applications has been identified to create a range of ‘material value chains’, such that profit can be made from commercial implementation of the technology. A number of potential applications have been investigated in the construction industry, such as for surfacing, insulation and underlay products. In addition, for a subset of the reclaimed materials (some rubbers and leather), it is also deemed possible to use the reclaimed materials for the manufacture of new products, including new shoes.

Such an innovative approach was supported by a large number of stakeholders across the footwear supply and recovery chain including manufacturers, retailers, associations and governmental organisations. These organisations have all benefited from involvement in the footwear recycling project and have expressed their willingness to be involved in future research activities.

Sustainable selection

Procurement professionals should consider all of the above and hold sustainability as a main factor in the selection criteria. It should be given a heavy weighting to have a direct impact on the selection methodology and be one of the main drivers of buying decisions.

A very important factor that has not yet been highlighted is the safety approaches that manufacturers are following. Being a manufacturer of PPE items such as protective footwear makes safety a big concern through the production process. Procurement professionals should investigate if the safety has been considered and implemented through the supply chain of the protective footwear. Do all the related parties consider the safety factors during the manufacturing of safety items? It is crucial to know such facts before coming out with your buying decision. Procurement professionals should support the manufacturers and suppliers that value safety and ethics and implement them through their supply chains.

Safety shoe manufacturers and suppliers should take the responsibility for the quality and safety of their products very seriously. They should have product safety and quality assurance policies and guidelines to help them ensure that every safety product is safe for the customers, consumers and the environment. They should monitor the safety and quality of products and communication materials all the way from planning to shipping to market. Catalogues, labels and advertisements all have to comply with safety and quality-related laws and regulations, industry and voluntary standards. They should also verify these items through the required testing of products and materials.

Protective footwear manufacturers and suppliers should have clear procedures and protocols in place to ensure they respond appropriately and promptly whenever a quality issue is reported. It should be part of the organisation's policy to promote consistency in its approach to product safety and quality. This helps to standardise the ways of sharing information and how it can adopt new quality assurance and product safety guidelines. They also should carry out staff training to make sure safety guidelines are implemented correctly. All these facts should be examined by the procurement professionals before selecting any vendor or product.

Set sustainable criteria

The supplier evaluation criteria should be considered before making any agreement or contract with suppliers about the particular requirements and inquiries. The best time to consider supplier evaluation criteria is during the initial contract risk assessment and to finalise it once the risk assessment is complete.

The areas for supplier evaluation are a function of the sustainability risks identified in the contract. When a contract is first being planned risks should be identified and documented. Example risks may include:

• High CO2 emissions due to poor energy efficiency/ logistic management

• Supplier sub-contracts the work to an organisation with poor sustainability credentials

• Suppliers' staff are not properly trained in the sustainability issues associated with the required product or service

• Unsustainable materials in the product

• Employees exploited by supplier

• Reputation damage to the organisation through supplier’s poor sustainability practices

Although selecting the vender is very important when sustainability is a concern, sustainability criteria can be applied at all stages of the procurement process. Specifications also should address the sustainable requirements and compliance. Some of the above risks can be indicated in the specification to ensure the supplier compliance. Furthermore, during the bid evaluations such requirements or risks should be given proper weighting, aligning with its importance and impact on the organisation's business and reputation.

In conclusion, procurement professionals should select and work with a footwear manufacturer that has a lower carbon footprint, which applies sustainability throughout its supply chain, uses sustainable materials and methods during the manufacturing process, promotes safety among its employees, has strong ethical code of conduct and respects the human rights of its employees.

Published: 10th May 2016 in Health and Safety Middle East

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Ali Sadeddin is a mechanical engineer who has been involved in the construction field for more than 20 years. Having more than 14 years of intensive exposure to procurement and operations in the construction sector, he is currently serving as Procurement Director (Head of Procurement) at Khidmah LLC, a leading company in facility and property management.