Getting started with circular procurement: requirements and criteria

Organizations that want to become circular are bound to make a difference. They do this, for example, through their procurement policy. You change the steps in the procurement process to work towards a system where fewer primary (polluting) raw materials are needed: the circular economy.

Classic examples include reducing paper use or replacing plastic products with biobased products, such as bamboo. It gets more complicated with larger “products,” such as a drawbridge or viaduct. However, you can always apply the principles of circular procurement.

An essential question is: what should you comply with in circular procurement? In other words: what requirements and criteria make procurement circular?

We discuss this with Suzanne van Haren, program manager at MVO Nederland and active in the circular domain since 2016.

For starters: how does circular procurement differ from traditional procurement?

“Traditional procurement is the regular procurement profession. It is a question of ‘I want to buy so much Y from party X’ or a tender with the question of who can deliver Y to your organization at the best price.

Traditional procurement is about buying the best quality for the lowest price. You don’t think about what you want to achieve together, or how your purchasing power can contribute to the world. Recycled paper, for example, is not a requirement.

In circular procurement, you don’t say: I want to buy paper, but I want to buy a product to write on. You make the procurement description functional, describing the goal. Then you also add circular requirements that the product must meet at a minimum. This ensures the product’s quality. By specifying functionally, you give the market space to offer other materials, thereby stimulating more innovation.”

What are some requirements for circular procurement?

“Based on your organization’s sustainability objectives, you formulate an ambition for your procurement process, such as the number of products you want to reuse or recycle. In principle, you can be even more ambitious than the organization, but then getting the organization on board could become a challenge. The R-ladder offers good support for setting up your procurement ambition.”

There is a difference between whether circularity is part of the organization’s philosophy or just a small checkbox in the process. Your impact is most powerful when you think about incorporating circularity into your procurement process from organizational objectives and know what you want to achieve. You are really doing things differently than when you just check a box.

For example, a requirement is quarterly reporting on the percentage of food waste. You commit to this requirement as a supplier by subscribing to the assignment. As the procuring organization, you must request such a quarterly report and steer it. If you don’t, the supplier won’t get an incentive to keep developing and improving.

This shows how essential contract management is. During the contract phase, you steer the agreements made and ensure that it is more than just a circular requirement and thus becomes a reality.”

What should we pay attention to in circular procurement?

“The entire organization must become circular, not just procurement. Take printer paper, for example. Recycled paper is essential, but you should review your printing policy. Not printing is even better. The whole organization needs to think about things like that.

With other products, you must also consider what happens to them after use. In jargon, this is called the end of life, which means at the end of a product’s lifespan. With printed paper, you can’t do much more than recycle the paper. But what happens to the printer itself? Does a supplier pick it up, and what happens to the parts? The possibilities differ per product group, so your objectives also differ. Using the R-ladder, you can investigate which R-strategies you can apply.”

Read our blog about laptops, tablets, and smartphones being e-waste-neutral

How do you formulate the right award criteria for circular procurement?

“It’s quite a challenge to write your requirements and criteria in such a way that you achieve your circular goals and make the assignment attractive for suppliers to subscribe to.

I have an example with food packaging. During a knowledge session on the buyer group food in healthcare, one of the suppliers in this sector talked about experiences with circular requirements in tenders. They said, “I want the requirement to reduce packaging waste by 10 percent in a few years.” Clear, you would think. But an honest supplier said that you should phrase this differently. Otherwise, parties will now quickly add extra packaging so that no innovation is needed to reduce by ten percent later. This way, you bypass such an award requirement. In this case, you should have also added a requirement about how much packaging material can be used initially.”

How can an organization ensure compliance with circular agreements in contracts?

“That’s a good question. Once the contract with the supplier is final, the most critical agreements have been made. But how do you ensure that the supplier actually complies with the circularity agreements? This is another clear difference from traditional procurement. In traditional procurement, a supplier delivers the products, completing the work. But if the supplier also takes care of maintenance and takes back the items after use, someone must maintain contact and contract with the supplier. Indeed, this is an additional task for the organization.”

Do you have any tips for buyers?

“Internal support is essential because circular procurement is an organizational issue. As a buyer, you can do your best to write everything down correctly, but the contract manager must also have the capacity to monitor the contract.

It helps to organize an internal kick-off. This ensures that everyone understands the organization’s objectives and the project. Collaboration with suppliers is different from traditional procurement. Because you enter into different contracts, there is more emphasis on it. You are walking a new path together.

With more complex products, such as the Cruquiusbrug, functional requirements, and criteria help a lot. You want to be able to cross the water. Someone should be able to lean on it at 1.20 meters, and no one should fall through. Then you have roughly described a bridge, but the interpretation is entirely open. This way, you arrive at innovative solutions.

Always ask yourself whether your organization needs something new. Do you really need all new sit-stand desks? Something high to work on is nice, but a bar is enough. That saves you six tables for which you need new materials and electricity. Critical self-questioning always helps.”