Philippine Procurement Today
The overall consumer expenditure in the Philippines increased to ₱ 1,342,297 Million in the fourth quarter of 2015 from ₱ 1,321,980 Million in the third quarter of 2015. Shifting that spending towards more sustainable goods and services can help drive markets in the direction of innovation and sustainability, thereby enabling transition to a green economy.
Traditional procurement focuses upon value-for-money considerations. Nowadays, procurement go beyond the traditional purchasing criteria of price, performance and quality, taking account also of the environmental and social impacts of your purchasing choices, reducing adverse impacts upon health, social conditions and the environment, thereby saving valuable costs for organizations and the community at large.
Society’s Receptiveness on Sustainable Procurement
Thinking about our purchasing decisions and making informed choices can significantly reduce our environmental and social impacts. Our purchasing power can be used to positively influence supply chains, promoting the productive use of resources and materials and the engagement of ethical and socially responsible suppliers.
According to 2014 Nielsen Report, 55% of global online consumers across 60 countries say they are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact. Asian-Pacific region was the most willing to pay more for products with social-good benefits, surpassing the global average at 64%.
These sustainability-minded consumers based their choice of goods and services on:
Benefits of Responsible Purchasing
Consumers are not the only ones interested in purchasing greener, healthier products. Many organizations from large to small enterprise are looking to make more sustainable choices.
For many of these organizations, responsible purchasing is more than “doing the right thing.” Green purchasing priorities are frequently connected with specific business objectives like:
- Enhanced Brand Image:An organization that has gone green is seen as a good corporate citizen. This increases its image in the eyes of the public.
- Customer Satisfaction:An organization that goes green in response to customer concerns increases its levels of customer satisfaction, a key point in customer retention.
- Reduced Risk:Not only is any company that does not go green risking a run in with the law by failing to comply with green regulations but it is also maintaining more liability than it needs to. Hazardous chemicals are just accidents, and lawsuits, waiting to happen. With green purchasing, you can offset financial and environmental risk, rather than just inheriting it from your suppliers.
- Cost Reduction:Going green doesn’t cost more. Most of the time it actually saves money, especially when the new products use less energy, generate less waste, and last longer. Plus, sometimes green products work better than their lethal counterparts. Going green can reduce the following costs, among others:
- hazardous material management costs
- operational costs
- repair and replacement costs
- disposal costs
- health & safety costs (which often come in the form of liability insurance and expensive settlements)
- Increased Shareholder Value:A better brand with happy customers who keep coming back and drive up sales while costs keep falling results in significant ROI, interest more shareholders to invest in your company.
ISO 20400 – Sustainable Procurement: Purchasing from Greener and More Sustainable Companies
A purchasing entity, regardless of its location in the world, can now no longer exempt itself from accountability for what occurs at its suppliers. Now, given multiple levels of subcontractors and cross-border procurement, a globally accepted standard will be needed to regulate the best practices of responsible purchasing.
ISO 20400, a standard for Sustainable Procurement provides guidelines on purchasing greener, healthier and more sustainable products from greener and more sustainable companies. Its development started in 2013 with a proposal of France and Brazil. At the moment 33 countries are participating and 7 liaison organizations while 13 countries are observing.
The ISO 20400 Standard is based on several principles, many of which share the intent of SPLC’s Principles for Leadership in Sustainable Purchasing and this includes:
Understanding – Understanding the relevant environmental, social, and economic impacts of its purchasing.
Commitment – Taking responsibility for the relevant environmental, social, and economic impacts of its purchasing by committing to an action plan.
Results – Delivering on its commitment to improve the relevant environmental, social, and economic impacts of its purchasing.
Innovation – Actively promoting internal and external innovation that advances a positive future.
Transparency – Soliciting and disclosing information that supports a marketplace of innovation..
The four main parts of the guidance standard consists of:
Clause 4: Fundamentals
This clause is primarily written for use by top management of an organization to help define the strategy and policies in connection with sustainable procurement. As a result it considers what sustainable procurement is, what the main organizational sustainability issues and drivers are, and how sustainability should be integrated into procurement policies and strategies.
Clause 5: Integrating Sustainability into the Organization’s Procurement Policy and Strategy (Policy and Strategy)
This clause provides guidance about how sustainability considerations should be integrated at a strategic level within the procurement function of an organization to ensure that the intention, direction and key sustainability priorities of the organization are documented and understood by all parties involved in sustainable procurement. This clause is applicable to all but help top management define sustainable procurement policy and strategy.
Clause 6: Organizing the Procurement Function towards Sustainability (Enablers)
Clause 6 is primarily written for use by procurement management and describes the conditions that need to be created and management techniques that should be employed to enable sustainable procurement to be successfully implemented and continually improved. These conditions are key to successfully integrating sustainability considerations into the procurement process described in clause 6. Five enablers are discussed: priority setting, enabling people, governing procurement, engaging stakeholders and measuring performance.
Clause 7. Integrating Sustainability into the Procurement Process (Procurement Process)
This clause addresses the procurement process and is intended for individuals who are responsible for the actual procurement within their organization. This clause may also be of interest to those in associated functions.
When adopting sustainable procurement, it should be integrated into existing procurement process steps like: planning, specifications, supplier selection, contract management and contract review and lessons learnt.
Buying greener, healthier, more sustainable products is one way we can all improve our own lives while building a better world. To strengthen this initiative, ISO 20400 was created and launched for a consultation to a wider audience than the experts from the mirror committees of the involved countries. The vote terminates on 2nd of December, 2016 and the final version of the standard is expected to be released on the early 2017.