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How can circular procurement foster collaboration in the supply chain?

Thursday, May 16, 2019

Circular procurement can encourage suppliers to collaborate and implement circular economy principles. Luca Meini, Head of Circular Economy at Enel, shared some insights about the opportunities and challenges of implementing the circularity concept in procurement at the global level during CSR Europe’s Brussels SDG Summit.  As a follow-up, we are organising a  workshop to explore common grounds for a collaborative platform on circular business models in renewable energy.

 

Circular procurement can provide a holistic overview about the environmental impact across the whole lifecycle of products and services. But it can also act as a tool in helping businesses to improve their collaboration and understanding about their suppliers, leading to increased performance and reduced environmental impact. This approach was set up by Enel through its “Circular Economy initiative for suppliers engagement”, a project based on the Environmental Product Declaration (EPD) project.

In 2017, Enel launched the project to assess and measure the life cycle impact of the materials and energy used in its global supply chain. Luca Meini, Head of Circular Economy, mentioned: The initial stage was to develop the circularity criteria for products and engaged with suppliers to evaluate their level of understanding about circularity. Two of the main challenges in the pilot stage were suppliers’ reluctance towards engagement and defining the parameters of ‘circular economy’”. To overcome these, Enel organised workshops and presentations to provide an understanding of the benefits of using circular procurement. Further, they defined their own circular model by developing specific KPIs and assessing key issues for each technology. For the future, Enel is planning to introduce circularity criteria as a key factor in the tenders.

8000 SUPPLIERS

Another challenge faced by Enel was the complexity of its supply chain with a network of 8000 suppliers worldwide. However, one important aspect that helped to overcome this issue was Enel’s step by step approach, based on including ‘waves’ of new technologies according to a planned agenda. Currently, more suppliers have realized the long-term benefits of this tool and have started to engage with this initiative. This proves that collaborating with suppliers can take time, but ultimately it can lead to more impactful environmental and business results.

One of the issues raised by the participants during the discussions was the multitude of circular economy models or KPIs on circularity. As seen in the example of Enel, implementing circular procurement within a comprehensive network of suppliers can be challenging. But in order to achieve circularity, there is a need for clear objectives, KPIs and a redesign of the supply chains all developed within the context of the business. However, according to Luca Meini: “The role of procurement is changing, and the focus should be on circularity and how it can help the supply chain and other functions of the business to better deliver on performance” and collaboration with supplier plays a central role within this context.’

CSR Europe organised 16 roundtables during the 3rd Brussels SDG Summit to discuss and share knowledge on different sustainability topics, including circular procurement.

 

For more information:

Bernedine Bos

Director of Business Transformation

bb@csreurope.org