Select a suitable product group
If you are about to implement circular procurement for the first time, be sure to select a suitable product group. This choice depends on several factors. The basic assumption is that you are purchasing a physical product: only then you can apply the principles behind a circular economy, which is all about retaining the value of materials.
Next, your internal organisation needs to determine which product groups must be procured in the short term and what the internal risks are for a procurement project. Externally, you need to ascertain how mature the market is with respect to circularity.
A successful circular procurement project requires careful preparation. That is why you should select a procurement project that allows you sufficient time to perform a market consultation and select an appropriate procedure. Procurement planning is therefore important.
One way ensure you make the right choices is to compare the costs of a procurement with its possible sustainability impacts, as illustrated in the figure below. To create sufficient impact while ensuring that ambitions are not sacrificed to internal risk limitation with regard to high costs, a project that is located bottom right in the matrix (low risk, high impact) would be a logical choice for your first procurement project with circular ambitions. More advanced organisations could decide to move towards the top right quadrant. The primary process of manufacturing companies is often located in this part of the matrix.
The adequacy of a procurement project for your organisation depends in part on the expenses (expressed in the value of the contract) and the possible impact (expressed in, for example, a quantitative indication). Suitable product groups to start with can be found bottom right in the matrix. Source: Copper8 (2018), Circular Procurement in 8 steps
A decisive factor in the selection of a suitable product group is the maturity of the market with regard to circularity. This can be seen, among other things, in the number of market players that are implementing circular principles. The number of procurement projects with a circular ambition is also an indicator. The market for office furniture, for instance, is relatively mature as nearly all key players have embraced circularity. The construction sector is making progress as well, but the number of players in this market is much larger and many of them have only recently started address this issue. Consequently, this market is still relatively young.
- For your first project, choose a product group that does not present to many risks for the internal organisation. Experimenting produces the best results if there is scope for learning.
- Select a product group from a market that is relatively mature, to ensure that the market can actually deliver on the ambitions of your first circular procurement process.
- Examine your procurement power compared to the size of the market. Select a product in a market where you buy directly from the supplier, enabling you to use your ambitions as leverage.
The eBook Circular Procurement in 8 steps (pp.51-54) details how to select a suitable product group for your first circular procurement pilot.