In the last blog edition, the point that tactical activities are often the result of strategic decision that was made.  Further, that some strategic decisions will be impacted by the reality of tactical implementation on a day-in-day-out basis.  Think if the interplay between strategy and tactics as a spiral who, as the journey is made, hits a certain point in which realignment of strategy and tactics are made.  A realignment at the end of each cycle.  That cycle can be based on annual, quarterly or other basis, but should be seen as required.

Multiple elements need to be considered for starting your Green Procurement journey.  First, of course, is the decision to start the journey.  There must be a recognized need to do this.  Usually, it will come in the form of a requirement by your organization’s customers.  Change creates cost and cost means money.  No enterprise is likely to opt for higher cots, even if it is the right thing to do, unless it has to do so.  That means government intervention, or more likely, customer driven requirements.

Once the decision to start the journey to effective Green Procurement is made a goal has to be identified.  Goal setting will be covered in another blog edition in the future.  For now, consider the goal of achieving effective Green Procurement to actually mean multiple goals with multiple measure for each goal.  As a procurement professional, you know already that each goal your group has is really multiple goals that are often traded off.  Going green is no different. 

After your goals are identified and agreed to by your organization’s management, you will have to establish a baseline that corresponds to those goals.  Establishing a baseline assessment and conducting will not be easy.  It will take time and commitment.  How to approach this key area of starting your Green Procurement journey will be covered in a future blog edition.  For now, assume that you have formed a team of people and conducted an assessment of purchasing activities and found gaps between your current state and your desired future state – your goals.  You now have to derive the path forward to move your organization to those goals, some short term and some long term, and that is the beginning of your strategy.  It is definitional and part of the Procurement picture.  As stated previously, the tactical elements should be considered more of the Purchasing activity.

  Your organization now derives the steps to close the identified gaps.  Each major step identified is a strategy.  The fact that you have implemented an assessment to derive your gaps analysis is, in itself, part of a strategy for improvement.  The assessment is the tactical implementation of that improvement strategy.  Likely candidates for your gap closure are: 

• Training personnel;
• Contract Coverage;
• Supplier Assessments;
• Amount of ‘Green’ goods purchased;
• Amount of scrap reclaimed;
• Amount of waste re-used.

Each organization will have different goals and different gaps to close and different strategies to close those gaps.  The above listed items are common gaps to anticipate.  Each of these will be briefly discussed and explored to identify the interplay between strategies for Green Procurement and how that relates to the tactics involved in Green Purchasing.  It cannot be stressed enough, the above list is only a partial and incomplete list.  Every organization will be different with different needs.

Training Personnel.  In closing the gap on knowledge your organization may develop one overarching strategy – to close the gap of knowledge, but also multiple detailed strategies depending on circumstances.  For example, you may have Buyers, Senior Buyers, Commodity Managers and Purchasing Staff in your organization.  Do these individuals require different knowledge and skill sets to successfully implement your organization’s green plan?  Arguably, the answer is, ‘Yes.’  Are the skills sets and knowledge cumulative or are they different?  At a Staff level, there may be only high level maintenance of the system.  At the other levels, a more hands on approach is likely required.  Does the Buyer need to know the laws and theory about going green or does the Buyer just need a set of questions?  The answer to that question is really the differentiator between Strategy and Tactics.  If the Buyer only needs to know certain questions to ask suppliers, then they are working at a tactical level.  The decision to make it that was is a strategic decision.

Contract Coverage.  Similarly, the decision as to whether or not your organization will value and then implement and then track the number of contracts that contain green contractual requirements, clauses, is a strategic decision.  The actual implementation of those terms is largely tactical.  Someone to write the clauses.  Someone to negotiate the clauses.  Someone to track the information and report on it.  Behind the development of the clauses and the more successful implementation of Contract Coverage is Training.  You can now begin to see that how the tactical issues are implemented will, in fact, drive strategy.  It is an iterative process.

Supplier Assessments.  As above, the goal first must be to go green followed by increasing the level of green, as your organization defines it, and applying measure.  A Supplier Assessment is a tool.  It is strictly a tactical item.  The decision to implement one and how it is implemented is strategic.  Strategy is partly driven by the goal.  What is the gap to close.  Is it 10% of the supplier base that needs an assessment or 90%?  The choice will tell you how many companies get the assessment, perhaps how long the assessment should be and who on your team implements.  The gaps found in the answer to those questions become part of the feedback loop into strategy.

Green Goods Purchased.  Just as with Supplier Assessments, setting a goal on the level of green goods purchased requires some for of definition, assessment, reporting and training.  Each of the strategic gaps your organization defines will have the same basic elements. Of goal, tool and training.  For this area, your organization needs to define a ‘green good.’  In fact, your organization may also need to assess if all Services are considered ‘green’ or not and apply a definition for goods, services, equipment and all areas of purchase.  For now, the consideration your organization has on good is the level of ‘green.’  What is the definition and therefore what is the goal. 

Scrap and Spoilage.  Production companies have scrap from their production lines.  There are some esoteric differences between the terms of ‘scrap’ and ‘spoilage’ in which scrap are left over remnants from the manufacturing process and spoilage is the failed production units.  For ease of conversation, we will just consider any material not sold as a Finished Good as scrap.  Does this area fall under Procurement?  Perhaps it does not but perhaps it does.  There is a great deal of tradeoff in this area between Production and Procurement that will the subject of a future blog edition.  For now, we will assume some portion Scrap falls under your organization’s responsibility and that responsibility requires your organization to efficiently get rid of scrap.  What do you do?  How do you do it?  What are your measures?  Again, there is an issue of goals, definition, tools and training.  That pattern repeats again and gain.

  Waste Streams.  Not included with the concept of Scrap are waste streams.  These could be anything from left over food scraps from the company cafeteria to chemicals that have been used in production that are no longer suitable for production.  Your company’s EHS staff is assuredly concerned with the proper disposal of waste streams.  However, is your organization?  What is the approach?  How good a job is your organization doing?  Is the current method of ‘proper’ disposal actually considered green or is it just legal?  Learning, coaching, setting expectations will lead your organization, and the EHS department as well, to higher performance.  The development of a cohesive strategy with an internal partner, development of tools, etc. are required.  The purpose of this blog edition has been to highlight the interrelationship between strategic element of Green Procurement and the tactical elements of Green Purchasing and to provide a few basic examples of how thin interrelationship should work.  More information on the various topics will be discussed in future blog editions.  The next blog edition will touch on the larger issue of the Green Supply Chain.  Procurement is the organization and Purchasing the act.  The Supply chain, let along a green one, is a theoretical construct.

[1] www.recyclechain.com

© 2009