G e t y o u r G r e e n S u p p l i e r s o n B o a r d

procurement workshopFMANZ Summit

Villa Maria -- May 2015

Strategies for FM procurement Innovative & Green Suppliers

Please leave your name & email You will receive our info package & survey

Check: CIPS meetings & the Internet Check: FMANZ Master class & AUT - MBA

“And stop calling it a family holiday !!”

. . G e t Y o u r G r e e n S u p p l i e r s o n B o a r d . .

Get Your Green Suppliers on Boardprocurement workshop

FMANZ SummitVilla Maria - May 2015

with Anne Staal

Strategies for FM procurement Innovative & Green Suppliers

Please leave your name & email You will receive our info package & survey

Check: CIPS meetings & the Internet Check: FMANZ Master class & AUT - MBA

This publication uses work of others for educational and research purposes - please check the references.

Procurement = easy !?

Buy or

Make

wheel

A Dutchie in New Zealand Industry experience (15 years)Large (international) organizations include positions of supply chain manager, B2B account manager, procurement manager, project manager and consultant.

Senior lecturer (6 years)At the Hanze University - School of Facility Management (with 1000 students). Teach change management, marketing & procurement to (under)graduates. Supervise final bachelor theses. Teaching to a wide range of students in different settings. Teach FMANZ master classes at AUT.

Applied research (3 years)Started PhD in NOV13. Specialize in management of innovation & procurement. Research context is construction & sustainability. Thesis ready: AUG / DEC 16.

BackgroundBEng, MA, DMS, MBADutch; married, 2 kids.

We live on the Shore near the beach

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This workshop

Trends in procurement & innovation

Others using green & innovative suppliers

Three discussions & takeaways: how can we manage?

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LATER: more info & brief survey

No man steps in the same river twice: it’s not the same river & he’s not the same man.

Change is Constant Heraclitus 6

We do not live in changing times

but move into a new era in history

Professor Jan Rotmans - Erasmus University at the ASITO Facility Management Conference – March 2015

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But what exactly is GREEN?

Hill (1915)

That depends on what you want & what the market thinks is possible !

Money

Environ-ment

People Culture

generate profit while improving societal & environment conditions

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sustainable business network NZ: www.sustainable.org.nz

From (conflicting) overlapping perspectives slowly moving towards a nested model

to…from…

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Giddings: Environment, Economy & Society – fitting them into sustainable development (2012)

There’s more than money …10

What Gross Domestic Product (GDP) does & does not measure

Deutsche Bank Research - Measures of Wellbeing (2006)

Waves of innovations (1)

Hargroves & Smith (2005) | McKinsey report (2013)

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… of Innovations (2)12

Gartner: Annual Technology Report (2014)

Circular model & cost saving potentials

EllenMacArthur Foundation: Report on European Circular Economy (2013)

Computers & office machinery NZ 150 mio ?

Furniture NZ 500 mio ?

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(p.a.)

example

Green drives (will drive) business & innovation

… it will take some time …(WBCSD => 2050)

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?2050?

BUT: Customer strategies green?15

Example next slide

Treacy & Wiersema: Discipline of Market Leaders (1997)

YES: LEAN equals GREEN 16

Website: goleansixsigma.com (2015)

example

Improvements AND Innovations 17

Procuring: Simpson ice traders vs fridges

2015: portable ice maker

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… it will take some time …(WBCSD => 2050)

1 minute video

Source: Informed procurement decision-making – a guide for government agencies (2014)

Zooming in: NZ19

IT projects

39%

ZOOMING IN: Current FM procurement20

• Procurement often & still cost-driven

• Global sourcing is best-practice,

often at low-cost

• Outsourcing 50 – 90% of turnover

• Services more important than goods

BUT:

• Risks associated with global sourcing have impact on sustainability & profits

• Total costs & life-cycle perspectives

• Procurement becomes a key player

Johnsen: Purchasing & Supply Chain Management (2014)

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• FM procurement 2 billion NZD?

• Still technical focus & business continuity

• Not yet hospitality & value-driven?

• More or Less outsourcing?

• FM users want: Delivery instead of Lowest price?

• Often lot of suppliers; tough contract mgmt

• No whole-of-life costs; short-term outcomes

• Multi-service contract vs specialist supplier?

• Suppliers bear risk & liability

• Service levels at target cost; averse relationships

• Improving Service Levels & Service Delivery

ZOOMING IN: Current FM procurement

NZCIC, 2006; Hinton 2013; Van Weele 2010; FMANZ Masterclasses; Programmed, 2014

FM – Times are Changing22

What can we learn from others on: Innovation & Green procurement?

100 Hungarian SMEs

Public green procurement

(1)

(2)

(3 & 4)

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1 Big-firms went GREEN 24

1 Big-firm behaviour prevents suppliers from delivering more value

Hughes & Weiss: Kraft Food - Getting closer to key suppliers (2007, cited in Johnsen 2014)

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DISCUSSION 1 – what Big-Firms do6 minutes with your neighbour(s)

please use the format

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1) Rank the group’s TOP 3 barriers (3 min)

2) Discuss underlying reasons (3 min)

2 Why green procurement … (a)

Vörösmarty: SME research at Budapest University. IPSERA (2015)

WHY: Attitude % of responses

Avoidance of negative effects (Avoidance) 13%

Compliance to expectations (Compliance) 58%

Achievement of positive goals (Positive) 28%

WHY: Motivation Scale 1-5

Regulation & Law 4.2

Cost saving targets 4.0

Customer demand 4.0

Top management support 3.9

Procurement value 3.9

109 Hungarian SMEs

These SME areprobably ‘front-runners’

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2 What these 109 SMEs did (b)

1. Require product content restrictions

2. Supplier evaluation with environmental requirements for purchased items

3. Supplier evaluation with environmental requirements for packaging

4. Supplier must disclose the environmental attributes of product content

5. Supplier evaluation with environmental requirements for the suppliers operations

6. Supplier must have ISO 14000

7. Product lifecycle analysis is part of supplier evaluation

8. Suppliers must commit to waste-reduction goals

9. Environmental assessment of suppliers' processes

10. Setting environmental standards for suppliers

11. Cooperation with the suppliers to develop environmentally better products

12. Educate suppliers about environmental issues

(In decreasing order)

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109 Hungarian SMEs

Vörösmarty: SME research at Budapest University. IPSERA (2015)

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1) Rank the group’s TOP 3 topics (3 min)

2) Discuss how to realise this TOP 3 (3 min)

2 DISCUSSION– what those SMEs did6 minutes with your neighbour(s)

please use the format

3 Different & more relationships?

Stakeholders needed for low-energy buildings (Source: WBCSD)

It depends on Money & Risk

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Public Procurement

www.business.govt.nz/procurement MBIE (2012)

(acquisition) (profit)

(strategic)

The Kraljics matrix does the same, but changes the X and Y axes.

313 GREEN procurement strategies (a)

Public Procurement

www.business.govt.nz/procurement MBIE (2012)

3 GREEN procurement strategies (b) 32

www.business.govt.nz/procurement MBIE (2012)

3 Ways of procuring services (c)33

OutputSpecification

(what supplier sells)

Inputspecification

(what supplier needs)

Throughputspecification

(what supplier does)

Outcome specification

(what YOU want in the end)

Focus on the functionality or the performanceof the service.

Focus on resources & capabilities of the supplier to produce the service.

Focus on supplier processes needed to produce the service.

Focus on the economic valuefor the customer to be generatedby the service.

Van Weele: Purchasing & Supply Chain Management (2010)

Public Procurement

3 DISCUSSION– on specifications6 minutes with your neighbour(s)

please use the format

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1) Relate the group discussion to critical

(strategic) suppliers or services i.e. with high risk

& big money.

2) Rank the specification strategies (3 min)

3) Discuss to what extent the group is satisfied

with results from such strategies (3 min)

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We need :

Long-term focus: trees do not grow faster

Combining continuous improvement & radical innovations

Early FM-involvement to increase potential to change

More parties involved?

4 Innovative suppliers in UK (a)

Van Weele: Purchasing & Supply Chain Management (2010)

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Innovation pays off (in survey of 725 suppliers for public procurement) : 60 % of suppliers got more business contract because of an innovation.AND this figure raises to 72% with more friendly public procurement.

4 Innovative suppliers in UK (b)

Rigby: OECD conference on Public Procurement (2013)

http://www.slideshare.net/STIEAS/developing-a-framework-for-measuring-public

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4 Innovative suppliers in UK (c)

Rigby: OECD conference on Public Procurement (2013)

http://www.slideshare.net/STIEAS/developing-a-framework-for-measuring-public

innovative procurement

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55%

85%

4 Innovative suppliers in UK (d)

Rigby: OECD conference on Public Procurement (2013)

http://www.slideshare.net/STIEAS/developing-a-framework-for-measuring-public

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1) Rank the TOP 4 of the groups’ organisations (3 min)

2) Discuss what should change or remain the same (3 min)

4 DISCUSSION– innovative suppliers6 minutes with your neighbour(s)

please use the format

Value stream mapping: procurement savings40

Johnsen: Purchasing & Supply Chain Management (2014)

Simple or Complex – keep an open dialogue

ADS: 21st Century Supply Chains - relationship management tools (2012)

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Structured problem solving(within contract & development management)

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Talking money & examples

NZBCSD: Sustainable Procurement in Government (2010)

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Some reasons for doing nothing …

1. Short-term interest & other priorities

2. Market failure – we cannot find suppliers

3. Too high in uncertainty & risks

4. We’d rather be a steady follower with better results

5. No best-practices available

6. I will retire next year

7. No resources – no business case

8. We are satisfied with the status-quo

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1 Big firms

2 Hungarian SMEs

3 Specifications

4 Innovation

Wrapping up …

Thank you46

• You will receive

- slides & collectedinformation.

- a brief survey on:o Today’s topico I&G suppliers

Check the AUT - FMANZ Master classes

Check the new AUT - MBA procurement paperCheck the Sustainable Business Network

Or check the CIPS educational offering in NZ