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Closing the loop through circular procurement

Closing the loop through circular procurement

The KPMG Circular Procurement Round Table event

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On the 22nd of November 30+ CPO's and CSR managers of both international corporations and Dutch public entities came together in Amstelveen for the KPMG Circular Procurement Round Table event.

The event offered a unique opportunity to share insights, get inspired and at the end of the day walk away with new opportunities to increase circularity within supply chains. At this moment, consumption is growing, resources are becoming increasingly restrained and prices become more volatile. Additionally, our world economy is only 9,1% circular , which makes this an international complex challenge (according to Circle Economy, 2018). Therefore, the CPO's and CSR managers discussed alternative approaches to accelerate the circular economy with new business models that retain the value of materials and products, prevent resource depletion and deliver financial benefits.

Jeroen Cox (senior manager Energy & Environment) and Michelle Baker (CPO) from KPN kicked off the event with a keynote on how to transform towards a circular business model, with procurement as a key enabler. In their presentation insights were shared on how KPN is growing towards 100% circularity by 2025. This means that new equipment used in the KPN network infrastructure or installed in the data centers as well as all devices and products built for KPN will be designed to be reused or refurbished.

After the keynote, the group of CPO's and CSR managers teamed up in two round table sessions, which were facilitated by John Tros, partner Procurement & Network Management at KPMG, and Arnoud Walrecht, director Sustainability and Circular Economy at KPMG. In the interactive round tables three topics were discussed more specifically:

  1. Reasons why companies should transition towards circular procurement;
  2. Obstacles that prevent the transition and;
  3. Enablers for procurement professionals needed to overcome these obstacles.

Reasons for circular procurement

Procurement plays a key role in the acceleration of the Circular Economy, but what are other reasons to choose for circular procurement? We asked 30 CPO's and CSR managers to share their view on the following proposition: Circular Procurement will lead to cost reduction. More than half of the participants agreed with this statement. However, they did make a distinction between short term and long term effects. On the short term the costs might be higher due to new product design or investments in different end of life or use treatments. On the long term the process will get more efficient and a balance will be reached between the costs and the time spend on the process. Other reasons to choose for circular procurement are:

  • Impact throughout the supply chain: through the use of circular procurement, companies can expand their impact to different parts of the supply and value chain. For example in product design, packaging and distribution and end of life treatment.
  • Collaboration: circular procurement stimulates collaboration with customers, suppliers and companies from other sectors. 
  • Competitive advantage: adopting circular practices in procurement can create a head start for your company, as resources are becoming increasingly scarce and companies will compete more for the access of these resources.

Obstacles that prevent a rapid transition

The second overarching topic of the round table sessions is about the obstacles that prevent a rapid transition towards circular procurement. We asked the participants: What are the largest obstacles to circular procurement in your company at this moment? The following obstacles were mentioned:

  • Not having the right mindset: circular procurement is only on top of mind for a small group of corporations around the globe: "As a production company, we should strive towards influencing our supplier base. It is all about changing the cultural mindset within your supplier base as well as within our own corporation". 
  • Insufficient pressure to procure circular: governments can play an important role in the transition towards circular procurement. However, the government cannot always affect the behavior of companies. 
  • Relatively high initial investments.

Enablers of circular procurement

The round table sessions ended with a discussion about the enablers of circular procurement. We asked the participants: What would help procurement to increase circularity? Participants concluded that an increase in transparency and useful data will help circular procurement. The startup Circular IQ (partner of KPMG) shared their experience on how to use smarter performance measurements of products and services to accelerate circular procurement decision-making. Other enablers that were mentioned are:

  • Better Circular metrics to incentivize working towards a circular business. 
  • Creating alliances with suppliers: an example is the KPN Circular Manifest, which is a partnership between several suppliers of KPN to improve the circularity of its products. For more information click here.
  • Support from within the company and its value chain, such as management support and a clear vision.

The Round Table event ended with short CPO guidelines for a circular supply chain (see image) and a presentation by Sabine van Dooren, consultant Procurement & Network Management at KPMG, on how to source renewable energy to close the circle also on the energy side. In close cooperation with KPMG, she developed a decision-making model that proposes a tailor-made and technology-based Renewable Energy sourcing strategy for organizations. The tool reveals the optimal combination of technologies and ways of contracting whilst dealing with interwoven energy complexities such as resource availability, economic incentives dependency and social acceptability. In doing so, the innovative decision-making tool assists companies in their transition to renewable energy and in their journey towards a more sustainable future.

Closing the loop Infographic

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