Sustainability is high on our priority list, but how can we make it an integral part of indirect MRO procurement?
Greater use of renewable energy, reducing the amount of waste going to landfill, switching to electric vehicles: these are just some of the practices that respondents to the annual RS and Chartered Institute of Procurement and Supply (CIPS) survey said their organisation has in place as part of a strategy to reduce carbon emissions.
At a series of roundtable events hosted by RS in late 2021 and early 2022, experienced indirect procurement professionals gathered to reflect on results from the survey, as captured in the 2021 Indirect Procurement Report: From Disruption to Recovery. At these discussions, attendees identified strongly with the finding that, for the first time, sustainable and ethical procurement was one of the top three business pressures facing those in Maintenance, Repair and Operations (MRO).
Why is sustainability now so crucial to MRO? Because it isn’t just an MRO issue. Sustainability is a business issue – and a major one.
After a couple of years in which the coronavirus pandemic and Brexit severely affected all organisations, there is growing awareness that the climate crisis could be the next cause of disruption.
“Whereas a few years ago this would have been almost laughed off, these are no longer freak weather events,” remarked Martin Allen, Commercial Manager at machine builders PP Control and Automation. “You maybe realise that an island in the Caribbean makes a particular product and think what if they experience more hurricanes?”
Many businesses are adopting more serious commitments to sustainability in the past. As one participant admitted, “Our contracts have long included a sustainability element, but one almost paid lip service to them. Nowadays they are heavily considered.”
Not all organisations, nor all MRO teams, are at the same stage of this journey towards more sustainable operations. “As a procurement function, we aren’t far down the road, but we have certainly started off and are making progress,” said Kevin Cheetham, Category Manager at brick manufacturer Ibstock. “It’s a hot topic within the group.”
“Some are further back in terms of progress,” he added. “Some people are more advanced.” An engineer working for a large food manufacturer, for instance, commented that “Sustainability is at the core of what we do, from the farm to the factory.” Julie Swanepoel, Procurement Officer at SUEZ Recycling and Recovery UK, expressed a similar sentiment, saying “We’ve been talking about sustainability for a long time and our contracts include sustainability clauses.”
“I would expect to see sustainability in any report today,” she continues. “If a report doesn’t have something about the ESG (Environmental, Social and Governance) framework in there then it’s not a report worth reading.”
Within this context, measures to improve sustainability within MRO contribute to wider sustainability targets within an organisation. Roundtable participants shared their views on how this can be achieved.
1. Repair, reuse, refurbish
Developing a more sustainable approach to MRO doesn’t just involve policies for sourcing new products. On the contrary, repairing and reusing what’s already in existence has an important role to play too.
“Something we are looking at is refurbishing,” responded Grace Dowland, former Regional Sourcing Lead at SUEZ Recycling and Recovery UK. “It’s one of our main goals. Do we want to be in that throwaway culture or do we to keep it in our stores for a couple of years then use it? Surely that’s better than sticking it in a skip.”
“It’s within the DNA of our company to make things last”Martin Allen, Commercial Manager, PP Control and Automation
Allen agrees. “We have automatically repaired things, partly because some of the equipment we have couldn’t be readily obtained and it’s a major capital investment.
“It’s within the DNA of the company to make things last and get the most value out of them.”
2. Look for likeminded partners
“We can’t achieve our goals without bringing our suppliers along too,” observes Cheetham. “We have to include them too.”
Take energy as an example. Among respondents to the RS and CIPS survey, 67 percent having practices in place for energy management and 66 percent for use of renewable energy. Given that emissions from suppliers count towards your overall carbon footprint too, it makes sense to look for partners who are equally committed to reducing their environmental impact in this area. At RS, for instance, the distribution centres run on renewable energy, with the Bad Hersfeld distribution centre in Germany even generating its own electricity.
Aligned values, the effort our organisations are putting into these initiatives and how seriously they take them: that drives a partnership approach
Emma Botfield, Managing Director for UK and Ireland, RS Components
“That’s where the partnership element comes in,” says RS Managing Director for UK and Ireland, Emma Botfield. “Aligned values, the effort our organisations are putting into these initiatives and how seriously they take them: that drives a partnership approach rather than a transactional, price led approach.”
Cheetham shared a great example of supplier partnership and collaboration in action. “We hosted a supplier sustainability day and invited our principal suppliers, including RS, along,” he explains. “They did a presentation of where they are on the sustainability journey. The idea is to keep these going, holding them once or twice a year, to check on progress and to keep the momentum going.”
3. Save time, save emissions, save waste
Energy isn’t the only aspect of sustainability where supplier partnership is important. Packaging waste and recycling is also an area for collaboration, with potential to reduce the amount of plastic used and the volume of waste.
This is a particularly pertinent issue within indirect procurement given the potential number and frequency of deliveries from suppliers. “We had one supplier that was delivering to our business every single day,” says Dowland.
Like 45 percent of respondents to the RS and CIPS survey, she sees consolidated orders – and therefore less transportation – as a less carbon heavy solution: “We talked to that supplier about doing just one delivery per week and it’s working. There’s a lot less packaging and our stores are not getting irritated because they’re constantly picking up goods.
“There are areas that you can work on to help with the impact of packaging besides just the size.”
Dowland offered another related example of waste reduction within her organisation too, saying “Various departments were ordering from RS and we realised that there was a purchase order being raised for every single order.
“We knew about blanket orders and tools to do that, so RS management supported us in getting Purchasing Manager into place. We had a bit of resistance to the change but now our stores are fully signed up and it’s working well.”
The right supplier will be able offer solutions such as these – technologies and services that save time and money as well as make a positive contribution to ESG targets. If your business is taking sustainability seriously, you need a supplier who is too. Working together, you can make more of a difference.
For more insight on the Indirect category of supplies for MRO, read the RS & CIPS 2021 Indirect Procurement report here.