The collaboration between public procurement and businesses as a contribution to a more circular economy: proposing a holistic framework

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Polly Boone
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1 Copernicus Institute of Sustainable Development The collaboration between public procurement and businesses as a contribution to a more circular economy: proposing a holistic framework Sjors Witjes (s.witjes@uu.nl) Rodrigo Lozano (r.lozano@uu.nl), Utrecht University

2 Circular Economy... addresses economic growth while considering raw material shortages (Yuan et al., 2006) is based on closing loops through recovery and changing industrial systems (EC, 2014; Yong, 2007) UNEP (2014) proposed sustainable public procurement to encourage CE transformations and contribute to the development of more sustainable business models (Murray et al., 2015) 2

3 Research objective To develop a framework to understand the contribution to a more circular economy through the collaboration between public procurement and businesses. 3

4 Public procurement Procurer Supplier selection Supplier Preparation stage Specification stage Sourcing stage Utilisation stage Stakeholder demand inventory and selection Definition of product or service Criteria specification Selection of suppliers and signing of the contract Supply of product or service Use of product or service (Kiiver & Kodym, 2014) 4

Sustainable public procurement (SPP) SPP is an important incentive to integrate sustainability requirements in companies procurement processes

5 Sustainable public procurement (SPP) SPP is an important incentive to integrate sustainability requirements in companies procurement processes (UNEP, 2014) The application of sustainable public procurement motivates companies to develop more sustainable business models (Brammer and Walker 2011) 5

6 The link between SPP and business models Different stakeholders economic, environmental, and social requirements over time (López-Fresno, 2010) can be specified in the tender quality criteria (Kiiver & Kodym, 2014). Production Price per unit Delivery Raw materials Supplier Product Procurer Waste Technical specifications

7 Business Models Three main elements: value proposition, value creation and delivery, and value capture (Bocken et al., 2014; Osterwalder, et al., 2010; Osterwalder, et al., 2005) Articulate the logic, the data, and... the processes that support a value proposition and a viable structure of revenues for the company (Teece, 2010) 7

8 Sustainable business models Increased research on several theories and models (Bocken et al., 2014; Boons and Lüdeke-Freund, 2013; van Tulder et al., 2013) Related to the redesign of processes (see also Murray et al. (2015)). Are based on product-service systems: addressing the use phase to reduce the total environmental burden of consumption (Mont, 2002). 8

9 More sustainable business models (MSBMs) PSS and processes, based on sustainability, should be integrated into the overall organisational business model in order to be successful (Lozano et al., 2013). MSBMs change the levels of exchanged information and the nature of the collaboration between the supplier and procurer and other actors in the system (Lay et al., 2009; Lockett et al., 2011) 9

10 Collaboration Everybody wins Appears when organizations jointly develop activities (Lozano, 2007) By using information, divergent insights and spontaneity to solve problems and develop new understandings (Denise, 1999) The question is: how to encourage individuals and organizations to be more collaborative? 10

11 Traditional procurement Collaboration for more Sustainable Public Procurement Procurer Supplier Supplier selection (mainly physical criteria) Preparation stage Specification stage Sourcing stage Utilisation stage Stakeholder demand inventory and selection Definition of product or service Criteria specification Selection of suppliers and signing of the contract Supply of product or service Use of product or service Sustainable procurement Procurer Supplier Supplier selection using physical, economical, social-cultural and environmental criteria

12 Link between SPP and business models Production Price per unit Delivery Raw materials Supplier Product Procurer Waste Technical specifications

13 Sustainable procurement for more sustainable business models Recovery Raw materials Shared responsibility Specifications (technical and non-technical) Waste Supplier Collaboration Procurer Product providing a service Service Use of products Price per service (functional unit) At t = 0, 1, 2, etc. 13

14 Collaboration More sustainable: - Products and services - Procurement - Business models Time 14

15 Conclusions The tender has to be holistic, including criteria about: Physical Economic Socio-cultural Environmental Recovery Collaboration is a conditio sine qua non to link SPP and SBM The time dimension must be included in all levels and processes

16 Thank you Sjors Witjes & Rodrigo Lozano 16

Re-conceptualising Sustainable Business Models

Re-conceptualising Sustainable Business Models Rodrigo Lozano, PhD email: rodrigo.lozano@hig.se & rodlozano@org-sustainability.com Associate Professor University of Gävle November, 2017 Sustainable business