Guidance for Leadership in Sustainable Purchasing Running a Sustainable Purchasing Program Part 3:...

Guidance for Leadership in Sustainable PurchasingRunning a Sustainable Purchasing ProgramPart 3: Plan, Commit, Implement & Report

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March 10, 2015

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Recording

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Chapter 2. Create the Program

Agenda

1. Context

1. Upcoming Pilot Program Education Sessions

2. Brief Strategy Cycle Overview

2. Running a Sustainable Purchasing Program

1. Strategy Planning

2. Strategy Plan Commitment

3. Strategy Plan Implementation

4. Strategy Reporting

3. Q&A + Discussion7

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Education Sessions Schedule

All sessions take place from 11:00-12:30pm ET.

February 24: Creating a Sustainable Purchasing Program

March 5: Running a Sustainable Purchasing Program (Part 1 of 3) – Understanding and Launching Strategy Cycles

March 10: Running a Sustainable Purchasing Program (Part 2 of 3) – Spend Analysis

March 12: Running a Sustainable Purchasing Program (Part 3 of 3) – Planning Strategies, Implementing & Reporting

March 17: Professional Services

March 19: IT Hardware and Services

March 24: Transportation

March 26: Paper

April 1: Cleaning and Sanitizing Chemicals for Facilities Care

April 8: Landscaping and Grounds Maintenance

April 15: Electricity

April 22: Food

April 29: Construction and Renovation

May 6: Furnishings

https://attendee.gotowebinar.com/register/9175476575718160642










Agenda

1. Context









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Key Terms

A sustainable purchasing program that has all four components the Council considers essential for a program to be capable of achieving genuine leadership.

Achieving genuine leadership means taking meaningful responsibility for all the significant environmental, social, and economic consequences of the organization’s purchasing.

Sustainable Purchasing Program (all-caps)

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Strategy Cycles

Strategy Cycles provide a flexible process for a group of key stakeholders collaborate to:

• understand opportunities for improvement;

• prioritize strategies for addressing them;

• commit to specific strategic actions;

• implement those actions; and

• measure the results over time.

Strategy (capitalized)A specific area of focus for which a plan of action is being developed or has been developed.

Examples could include an organization’s “Electricity Strategy”, “Supplier Diversity Strategy”, “IT Strategy”, “Human Rights Strategy”, etc.

There are several types of Strategies an organization might prioritize for their Sustainable Purchasing Program:• A category Strategy• A Strategy focused on a specific aspect of the supply chain’s

environmental, social, and economic performance• A supplier-specific Strategy

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Key Terms

Strategy Plan (capitalized)A planning document that describes, in detail, the projects/activities that make up an organization’s Strategy in a given area of focus.

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Key Terms

In this cycle, we’re going to develop a strategy for managing the consequences of our fuel purchasing. We’ll call it our “Fuel Strategy.”

Boss, we’d like you to review and approve our Fuel Strategy Plan.

FuelStrategy

Plan

We got the green light! Now, we can implement our Fuel Strategy Plan!

Environmental, Social, and Economic Performance Environmental, Social, and Economic Consequences Positive or negative influences on the natural, social, and market systems on which life, communities, and commerce depend.

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Key Terms

Leadership in sustainable purchasing involves thinking expansively and holistically about these influences and identifying how to optimize them in order to advance a positive future.

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Worksheet handout available for download:www.sustainablepurchasing.org/performance

https://www.sustainablepurchasing.org/performance

https://www.sustainablepurchasing.org/performance

Program LeaderGeneric term for the person who leads an organization’s Sustainable Purchasing Program.

A wide range of professionals have been found to be serving the Program Leader role. In some organizations, the Program Leader is a Sustainable Purchasing Coordinator, in others it’s a sustainability staffer or someone in Environmental Health & Safety, and so on.

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Key Terms

Strategy StakeholdersEveryone who could be affected by the Strategy and therefore needs to be kept informed so they are not blindsided and are prepared to give input at appropriate points.

Strategy TeamThose stakeholders who need to be involved throughout the process of developing and implementing the Strategy.

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Key Terms

Strategy Stakeholders

Strategy Team

Everyone in the organization, suppliers, and the public

Potential Strategy Stakeholders

Internal stakeholders could include:• Business units;• Procurement;• Finance;• Operations units; and• the program’s managerial sponsor.

External stakeholders could include:• Customers;• Suppliers;• Investors;• Public interest advocates

Implementation TeamThe individuals that will implement the projects within a Strategy.

These could be the same as the Strategy Team, but often it will include staff with specific implementation expertise. (E.g., Print Shop Manager is on Strategy Team, but implementation responsibility is passed to Print Shop Foreman.)

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Key Terms

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Strategy Cycle Phases

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Strategy Cycles in Practice

• Flexible on scope and scale

• Varying levels of complexity

• Establishes reporting that goes beyond implementation

• Promotes continuous improvement

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Two Stages of Prioritization

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Strategy Cycle

A structured process for selecting and designing specific strategies to advance the goals of an organization’s sustainable purchasing program.

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Questions?

Agenda

1. Context









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Planning Phase: 10 Steps

Step 1 Adjust Strategy Team

Step 2 Explore potential decision criteria

Step 3 Select decision criteria

Step 4 Explore potential projects

Step 5 Select short-list of potential projects

Step 6 Further investigate short-listed potential projects

Step 7 Select projects for implementation planning

Step 8 Create Strategy Plan timeline, metrics, targets & milestones

Step 9 Plan implementation coordination & communication

Step 10 Draft the Strategy Plan

Expand options, then narrow


Expand options,then narrow

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Example: GHG Strategy Plan (outline)Executive Summary

• This plan presents a set of five (5) complimentary projects which will, together, realize Acme Corp’s goal of reducing its greenhouse gas emissions by 20% by 2020, while saving an estimated $10m overall.

• The plan’s execution requires management to commit ABC funding and XYZ staff resources• This plan has the full support of the stakeholders represented on the Strategy Team and the parties

responsible for implementation. It was also received positive reviews from a larger group of Stakeholders.

Strategy• Overall Plan

• Projects and benefits list• Metrics and targets • Funding, financing and resource needs• Implementation coordination and communications plan• Master timeline for all projects

• Individual Project Plans (one per project)• Detailed explanation of planned project• Metrics for success• Task list with responsible parties• Timeline• Funding/resource needs

Appendix I: Summary of the Strategy Planning Process• Stakeholder engagement• Spend analysis process• Strategy planning process

Appendix II: Future Plans• List any promising additional projects the team thought may be worth planning and implementing as well.

Project 3

Project 1

When Projects Are Better Together

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Project 2

Project 4

Aggregate Improvement (%)

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Project 5

Supplier Diversity Strategy

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Goal

Increase % of spending with diverse suppliers by 8% in 3 years.

Supplier Diversity Strategy

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Aggregate Improvement (diversity spend %)

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Potential projects Growth Cost

1 Target big upcoming contracts 4% - $25

2 Grow biz w/ existing diverse suppliers 8% - $15

3 Attend supplier diversity tradeshows 4% - $6

4 Online portal & pre-qualification 6% $10

5 Host own tradeshow .1% $20

6 Provide a supplier training program

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Project Development

Individual Project Plans

New projects are thought up all the time. When it looks like there will be time and resources to implement one, a plan is developed for it.

Advantages

• Nimble and responsive

• Process has low overhead

Disadvantages

• There often isn’t time or resources to implement even very good projects

• One-off projects can struggle to get management or stakeholder attention

• Individual budget/stakeholders can feel like they’re being singled-out

• Difficult to get green light for projects that don’t offer a good financial return on investment (ROI)

• Easier projects tend to get done. Not necessarily most strategic.

Strategy Plan

New projects are developed as part of reviewing all the project options available for achieving a priority strategic objective, and selecting a complimentary set of the most strategic projects to plan and implement.

Advantages

• The strategic scope and framing helps attract senior management and stakeholder attention. When senior management is involved:• the most strategic projects are more likely to get

prioritized, even if they are more difficult• budget and operational silos can be overcome• cooperation increases; personalities tempered• they want scale and impact; aggregation offers it

• Budget/stakeholders are less likely to feel singled-out in a process that makes the bigger picture clear, and gives them a say

• Projects with high return on investment (ROI) and low/no ROI can be packaged together to achieve a moderate ROI, overall, while doing more to advance the organization’s strategic objective

• Some projects are synergistic

• More planning overhead. Slower to respond.

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Step 1: Adjust Strategy Team

With planning phase Scope in mind, ask:• Anyone not needed anymore?• Anyone need to be added?

Example:• Cycle focus area: Food• Spend analysis prioritizes: Meat and dairy purchases• Planning phase: Adjust Strategy Team

1. Allow produce buyer to drop-off

2. Recruit additional staff involved in sourcing meat and dairy

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Decision CriteriaThe criteria stakeholders would like to see a project meet before it is included in the Strategy Plan.

Decision criteria can vary widely:

• Some will be quantitative (e.g., tons of greenhouse gas emissions avoided)

• Others will be qualitative (e.g., alignment with executive priorities)

• Some will be applicable across-the-board (e.g., return on investment)

• Some will only apply to a specific aspect of environmental, social, and economic performance (e.g., greenhouse gas emissions reduced per dollar invested)

• Some will be minimum performance criteria (e.g. 99.9% up-time)

• Others may be logistical in nature (e.g., feasibility within an existing long-term con-tract)

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Key Term

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Step 2: Explore potential decision criteria

Ask the Strategy Team and Strategy Stakeholders to identify criteria that they think projects included in the Strategy Plan should satisfy.

This brainstorm can be conducted as part of a group meeting, by survey, and/or in one-on-one meetings, such as with management.

At this point, all ideas are good ideas because they tell you how the stakeholder wants to evaluate the success of the process.

TIP! Research shows that brainstorms are more

effective when individuals think by themselves first,

before anyone shares with the larger group.

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Step 3: Select decision criteria

1. Organize and prioritize the suggested criteria.

2. Ask the Strategy Team to agree on a final set of key criteria.

3. Agree on standard coefficients for the key criteria.

Suggested Criteria

• Feasibility within existing long-term contracts

• Avoid many tons of GHGs

• Alignment with key executive priorities

• >15% Return on investment

• 99.9% up-time

• Low maintenance

Organized Criteria

Absolute Performance

• Avoid lots of GHGs

• 99.9% up-time

Efficiency Performance


• Low maintenance cost

Other Criteria



Organized Criteria

Absolute Performance

• GHG reduction potential

• 99.9% up-time

Efficiency Performance



• GHGs avoided per $

Other Criteria



Prioritized Criteria

First Pass


• 99.9% up-time

Second Pass






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Agreed Upon Criteria

First Pass


• 99.9% up-time

Second Pass






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Agreed Upon Criteria

First Pass


• 99.9% up-time

Second Pass






In order to calculate GHGs avoided per dollar, I need to know how much each gallon of gasoline not-burned would

have cost.

In order to calculate GHG reduction

potentials, I need to know how many GHGs are produced by 1 unit

of each type of fuel.

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Step 4: Explore potential projects

1. Brainstorm a wide range of potential projects.

2. For each potential project, assign a team member to collect the necessary data to evaluate the “First Pass” decision criteria.

Stay high-level and outcome-oriented!!

Useful Guidance & Resources to Feed Brainstorming

• SPLC Guidance (Chapter 4, solutions worksheet, case studies database)

• Guidance produced by others

• Standards, certifications, labels

• Suggestions from existing and competitor suppliers

• Collaborative efforts focused on a particular challenge (e.g., Healthy Building Network, Sweatfree Purchasing Consortium)

• Expert advice from NGOs, consultants, public agencies

• Examples set by peers in professional or trade associations

• In-house research

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• Brainstorm a wide range of potential projects.

DETAILED GUIDANCE

SOLUTION STRATEGIES TO CONSIDER

Strategy Description Example

Efficiency Reduced impact through reduced use Implementing a Purchase-to-Pay IT system reduces impacts associated with printing and transporting paper documents.

Process change Design the impact out of a process Air pollution from medical waste incineration is reduced by switching to reusable surgical tools that are steam sterilized.

Behavior change Implement programs to shift attitudes and practices

Voluntary “green office” competitions reduce energy and material consumption, while increasing recycling.

Combining Projects Combine multiple projects into a single positive ROI project

An energy efficiency project is combined with a solar project. Energy savings offset the solar costs for a good overall ROI.

Supplier engagement & accountability

Engage suppliers and hold accountable for a specific impact

Some universities require apparel manufacturers to permit independent audits of factory conditions and provide retribution-free grievance and remedy processes.

Product substitution Choose a different product with lower ESE impacts

Chemical costs and workers compensation insurance premiums reduced by switching to green cleaning products.

Supplier substitution Choose a supplier with lower ESE impacts

Making evidence of bribery or extortion automatic grounds for suspension of business with a supplier.

Servicizing Convert a product acquisition to a long-term service relationship

Instead of owning copiers, establish a pay-per-copy service relationship so that the price of each copy reflects the true cost.

In-source In-source a function to better reduce impacts

Hiring LEED expertise in-house to optimize and streamline green building across all of org’s construction and renovations.

Out-source Outsource when an external party can better reduce impacts

Contract out utility bill management to firms that leverage energy market expertise to cut energy and carbon costs.

Offsetting Pay for an impact reduction to offset impacts elsewhere

Buying carbon offsets; paying to put land in permanent conservation to offset development of other land.

Download this table as a handout at www.sustainablepurchasing.org/resources

https://www.sustainablepurchasing.org/resources

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1. Brainstorm a wide range of potential projects.

2. For each potential project, assign a team member to collect the necessary data to evaluate the “First Pass” decision criteria.


First Pass


• 99.9% up-time

Second Pass






Potential project Strategy Type Max GHG reduction potential 99% up-time

Weatherization Efficiency 5 metric tons C02 Yes

HVAC, automation upgrades

Efficiency 100 MTCO2 Yes

Switch fuel-oil boilers to natural gas

Process change / product substitution

150 MTCO2 Yes

Improve fleet fuel economy by 5 mpg

Efficiency / product substitution

80 MTCO2 Yes

Buy wind power Product substitution / offset

Unlimited Yes

On-site solar Product substitution / in-source

3 MTCO2 Yes, grid tied

Replace windows Efficiency 5 MTCO2 Yes

Step 5: Select short list of projects

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1 Weatherization .2%

2 HVAC, automation upgrades 5%

3 Switch fuel-oil boilers to natural gas 8%

4 Improve fleet fuel economy by 5 mpg 4%

5 On-site solar .1%

6 Replace windows .2%

7 Buy wind power Unlimited

1 2 3 4 5 6 7

Which projects do you want to invest time in investigating further?

Step 5: Select short list of projects

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1 Weatherization .2%

2 HVAC, automation upgrades 5%

3 Switch fuel-oil boilers to natural gas 8%

4 Improve fleet fuel economy by 5 mpg 4%

5 On-site solar .1%

6 Replace windows .2%

7 Buy wind power Unlimited

1 2 3 4 5 6 7

Would any of these projects affect the performance of one or more of the other projects?

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Step 6: Study short-listed projects further

Assign team members to lead investigation of 2nd Pass criteria and implementation pathways and responsible parties.


First Pass


• 99.9% up-time

Second Pass






Potential project Implementation pathway ROI Mainten-ance

Cost / ton GHGs


Energy performance contract with HVAC and building systems automation company.

N/A Moderate - $25

Switch fuel-oil boilers to natural gas

Get larger NG pipeline installed. New boiler. Facilities Dept is on-board to implement.

20% Low - $15

Improve fleet fuel economy by 5 mpg

Reduce fleet by 15 vehicles. Replace lowest mpg tractors, trucks and sedans with models in top quintile of fuel economy over next five years. Buy three sedans with electric vehicles.

5% Moderate - $6

On-site solar Cover roof of headquarters with solar PV. Buy solar power through power purchase agreement.

N/A Low $ 20

Buy wind power (70 MW)

Buy just enough power to get to 20% GHG goal. N/A Zero $ 10

Buy wind power (500 MW)

Make multi-year, and larger purchase to get better pricing under different purchase vehicle.

N/A Zero $ 6

Step 7: Select final projects

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Potential project Reduction

Cost

1 HVAC, automation upgrades 5% - $25

2 Switch to natural gas 8% - $15

3 Improve fleet fuel economy 4% - $6

4 Buy wind power 6% $10

5 On-site solar .1% $20

1 2 3

4 5

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Step 8: Timelines, Metrics, Milestones

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Switch to natural gas

Improve fleet fuel economy

Buy wind power

On-site solar

Plan adopted

Implementation

Implementation

1 Year 2 Years 3 Years

Implementation

Purchase

Implementation

10% lower GHGs

$100k

15% lower GHGs

$200k

20% lower GHGs

$300k

Overall, how much of an environmental, social, economic and financial performance improvement does the team expect the Strategy Plan to deliver? When?

Improvement

Cumulative Savings

Step 8: Timelines, Metrics, Milestones

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Financial Projections

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Step 9: Plan implementation coordination

If management commits, who will lead implementation?

Who will be on the Implementation Team?

How will they work together?

How will communication happen with stakeholders?

This becomes part of detailed Strategy Plan and the Project Plans

within it. It’s the roadmap for Implementation phase!

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Step 10: Draft Strategy Plan documentExecutive Summary

• This plan presents a set of five (5) complimentary projects which will, together, realize Acme Corp’s goal of reducing its greenhouse gas emissions by 20% by 2020, while saving an estimated $10m overall.

• The plan’s execution requires management to commit ABC funding and XYZ staff resources• This plan has the full support of the stakeholders represented on the Strategy Team and the parties

responsible for implementation. It was also received positive reviews from a larger group of Stakeholders.

Strategy• Overall Plan

• Projects and benefits list• Metrics and targets • Funding, financing and resource needs• Implementation coordination and communications plan• Master timeline for all projects

• Individual Project Plans (one per project)• Detailed explanation of planned project• Metrics for success• Task list with responsible parties• Timeline• Funding/resource needs

Appendix I: Summary of the Strategy Planning Process• Stakeholder engagement• Spend analysis process• Strategy planning process

Appendix II: Future Plans• List any promising additional projects the team thought may be worth planning and implementing as well.

Agenda

1. Context




1. Plan

2. Commit

3. Implement

4. Report


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Plan the Request

• Who has the necessary authority to approve the allocation of the financial, political, and staff resources necessary to implement the Strategy Plan?

• Who should present the team’s work and the Strategy Plan to the management decision-maker?

• How would the team like to see management express its commitment to the Strategy Plan?

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Tips for Planning the Request

Lead with the business case

Target only the level of management required

Leverage stakeholder engagement

Show that implications of commitment are well understood

Emphasize the plan’s use of conservative scenarios

Include sign-off on implementation steps

Provide options

Seek management ownership

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Commit to the Program

Make the request

Announce the commitment Have management announce with a memo from their office

Consider press release

Newsletters, blog, social media, etc

Celebrate the accomplishment with those who made it

possible!

Agenda

1. Context




1. Plan

2. Commit

3. Implement

4. Report


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Questions

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Education Sessions Schedule

All sessions take place from 11:00-12:30pm ET.

February 24: Creating a Sustainable Purchasing Program

March 5: Running a Sustainable Purchasing Program (Part 1 of 3) – Understanding and Launching Strategy Cycles

March 10: Running a Sustainable Purchasing Program (Part 2 of 3) – Spend Analysis

March 12: Running a Sustainable Purchasing Program (Part 3 of 3) – Planning Strategies, Implementing & Reporting

March 17: Professional Services

March 19: IT Hardware and Services

March 24: Transportation

March 26: Paper

April 1: Cleaning and Sanitizing Chemicals for Facilities Care

April 8: Landscaping and Grounds Maintenance

April 15: Electricity

April 22: Food

April 29: Construction and Renovation

May 6: Furnishings











Sam Hummel

Hyperlink all the rest of these?

www.sustainablepurchasing.org/summit

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Summit workshops will feature Guidance-based training, case study

presentations, and peer-to-peer dialogue.

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