Circular procurement is the purchase of goods and services that support a circular economy. It requires procurement teams to consider the entire life cycle of a product from cradle to grave or, as the circular economy would have it, rebirth. This could mean buying products that are designed for reuse or repair, materials that flow in closed-loop systems or goods that are part of a product stewardship scheme or supplied via a product-as-a-service business model.
"One important key aspect of circular procurement is that, done well, it requires a significant level of engagement and collaboration up and down the value chain," Edge Environment's Jenni Phillipe writes.
"Procurement teams not only need to work with suppliers, but also need to think about how customers will use the products and services that they provide and also the wider system in which they’re operating."
Embracing circular procurement will mean recalibrating the way procurement teams work, affecting everything from strategic goals and procurement policies to day-to-day operations. But, when effectively implemented, circular procurement can improve efficiencies across the entire supply chain.
Chair of our newly formed Procurement Working Group and CEO of the Supply Chain Sustainability School, Hayley Jarick, has a deep understanding of the benefits circular procurement could bring to the variety of stakeholders she works with. These include reducing costs, reducing workload, streamlining suppliers, increasing efficiency, protecting against risk and reducing waste.
"Everybody benefits from this, there isn't really a downside," Hayley says.
Hayley's diverse professional portfolio includes roles in governance, strategic management, adult learning and advocacy. In her current position as head of the Supply Chain Sustainability School she works with everybody up and down the supply chain, from procurement teams to customers, across all sectors.
"We teach people about triple bottom line sustainability across different areas, from diversity, inclusion, respect and modern slavery right through to carbon, energy management, waste management and environmental management," Hayley says.
"We work with industries to develop collaboration between groups to try and tackle some of these issues and really put forward that viewpoint that this is a collaboration, not a competition, space."
If we're going to tackle and resolve some of the big issues of the world, we can't keep competing in every field, we're going to have to work with each other, especially up and down the supply chain.
The importance of collaboration is a lesson Hayley is keen to integrate in her role as Chair of the Procurement working group, which includes representatives from all levels of government, procurement experts and senior sustainability professionals from a range of sectors.
"There is such a depth of knowledge in that group and diversity that we've managed to get across the group is exceptional," she says. "I think it is going to be a really constructive group to try and get some change in this space."
In Hayley's view, the biggest barrier to circular procurement is inertia.
"People are used to doing what they have been doing and we've just come out of a period of extreme volatility, so people have doubled down on areas where they feel comfortable," she says.
The pandemic has exposed vulnerabilities in supply chains and forced companies to reassess the risks of procuring products from overseas. This, she argues, means companies are now in a better position than ever to improve their processes by considering circular approaches. But education and social norming is needed to help procurement teams understand that circular economy is not an additional risk but actually creates new opportunities.
A lot of people use a risk assessment model to determine objectives and activities. And often the challenges that circular economy or any other sustainability objective throw up are viewed as additional risks. Whereas you can actually view them as control measures for your current problems.
Hayley believes communicating that circular economy is not a target teams have to hit in addition to climate, carbon or modern slavery goals, but rather a holistic approach that makes achieving these objectives easier is critical to getting industry on board.
"If you get people thinking in that circular economy mindset, there's just so much efficiency to be had throughout all the processes that makes everything simpler," she says.
By requiring procurement teams to consider the entire lifespan of a product, circular procurement approaches can improve efficiency and even circumvent entire stages of the process.
"I can appreciate that it must be hard managing three suppliers for every input into your production process but imagine if you could reduce the number of inputs," Hayley poses.
"Wouldn't it be easier to manage all of those suppliers if you reduced the amount of packaging or products in that process? And why do you need to have a waste stream manufacturer and a supplier of goods? What if the same person who picks up your waste, recycles it and resupplies the product back to you?"
These approaches factor in environmental impacts as well as customer experience in the product use phase, meaning organisations hit their social and sustainability goals as a result of a circular procurement process rather than in addition to it.
Hayley believes early adopters and innovators have a key role to play in developing the tools government and businesses will need to implement circular procurement, and that's where the Procurement Working Group comes in. The group brings together experts to evaluate procurement opportunities and policies, identify metrics for circular procurement, determine priority areas of work and a develop and implement a roadmap for circular procurement in Australia.
"When a lot of people think about circular economy, they think the end of the spectrum: recycling and making sure we're stopping stuff before it goes to landfill," Hayley says.
"But the biggest part of that spectrum is designing out problems at the start and that's where procurement is pivotal because it allows us to ask questions around what products we need, where they are coming from, how they will be used and what will happen to them at the end of their life."
These are the questions the Procurement Working Group will encourage practitioners to consider across government and business, with the goal of harnessing their purchasing power to support the circular shift and drive demand for circular products in Australia.
You can find out more about the Procurement Working Group here.