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How an LCA can empower the CPO in Procurement

How an LCA can empower the CPO in Procurement

By Responsible Procurement, 16 December 2013, Responsibleprocurement.dk

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As a Corporate Procurement Officer (CPO) it is time to accept, that the Procurement department can no longer rely only on “quick win” projects such as creating responsible/sustainable policies. The question is: How can sustainability considerations be incorporated into the procurement processes? 

Leading companies take on a Product Life Cycle Assessment approach, also called LCA. And when doing so it challenges the Procurement professionals to work cross functionally.

Typically decisions, that determine product sustainability are made by R&D, product design, procurement, marketing and sales teams.

The benefits of using an LCA

  • It is a structured, cost effective and easy to communicate way of improving the sustainable performance with your suppliers.
  • It is a great way to evaluate a products impact on the environment, all the way from raw material extraction, through production, transportation, consumer use to end-of life recycling or disposal. The tool can typically be used by all types and sizes of companies. Public as well as private companies. If used effectively it can reduce the product impacts through innovation and resource substitution.
  • If planned well, the tool can be used to measure on all the 7 waste types: energy, water, materials, garbage, transportation, emissions, biodiversity. Learn more about the 7 waste types in this e-book. Download here.
  • It is empowering other functions to implement projects and new products effectively, embedding sustainability into decision making processes.
  • It can help marketing and communication teams to sell product sustainability.

You can develop your own tool or use existing ones. Check out the PE international’s LCA software platform here.

My best advice to you when developing your own LCA:

Make it simple: Ensure that you aren’t creating a tool which you will need to spend months on. Avoid complexity, eventually this could lead to “analysis paralysis” and will get you nowhere – believe me. The challenge is to create a tool, which everyone understands and where you will be able to measure quantitatively (preferably on financial terms) on the facts and later on the progress you make.

Though you should also end up with data, which are within your “sphere of control”. As an example: when reviewing the data  – and the suppliers involved you could have a look at which tiers your suppliers are placed in (1st, 2nd, 3rd and so on). Is it realistic that you can take control of or demand a change to their component or product?

Make your tool and process repeatable: Make sure that your tool and approach becomes integrated into your business decisions. Otherwise you will still see it as “one-off projects” which isn’t really taken serious. You should train your procurement professionals in the use of the LCA and incorporate it into their performance reviews. You should also ensure that the tool is able to measure across products.

The process should include a “supplier interaction”: Engage with your suppliers and find the “hot spots” – ideas to achieve your reduction goals. It could be cost or environmental goals. Or both. You could also team up with marketing and find out whether there potentially could be some products, which customers would prefer to buy if it had a sustainable profile. Your suppliers would also be able to verify your data. Sometimes a minor detail but quite often a major detail which is often forgotten.

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