Circular Procurement with MKI: As buyer, you’re in charge

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This page gives you the tools to get started with circularity. It goes into how to 'understand' circularity but also how to 'quantify' (measure) it. As a buyer, you can steer for circularity in tenders.

The transition to a circular economy has been embraced by the Netherlands. The nation-wide Programme ‘Netherlands Circular in 2050‘ (September 2016) provides for the realization of circularity for 2050.

The ambition of the cabinet, together with social partners, is to achieve an (intermediate) target of reducing the use of primary raw materials (mineral, fossil and metals) by 50% in 2030. With this objective on raw materials use, the Netherlands is in line with the level of ambition of surrounding countries. The program is expected to have a major impact on governments.

While governments are not producing organisations, they are large consumers of various product categories that are used to maintain our prosperity (construction, GWW etc.). If governments want to fulfill their circular ambitions themselves, they will have to actively work with circularity in their ‘thinking’ but also in their tenders.

This mini-guide is especially for buyers at governments who want to know more about quantifying circularity. It is a ‘high-over’ mini-guide in which a number of fundamental things are described. It contains no details on standards, methodologies, and instruments. The document is intended as an introduction for ‘starters’ so that they can understand some foundations.

Circularity in bird’s eye view

Circularity means that raw materials and materials needed to make a product after use can be used as high quality as possible for the same or other applications.

Circularity stands for minimizing waste of raw materials and energy and maximizing value preservation of materials. It is a simple ecoogical starting point: if humans continue to use raw materials in the way and scale on which we do now, then the earth simply becomes exhausted. For maximum circularity, both material use, design, production and assembly must facilitate future reuse.

Circularity: R list

In its publication from 2013, the Ellen Mac Arthur Foundation provides a framework for circular solutions in a number of ways that have now been summarized in an ‘R-list’ that provides solution directions for circularity:

PurposeActivityDescription
Making smarter/usingRefuseRefuse Make product redundant by forgoing its function or supplying them with a substantially different product
Making smarter/usingRethinkThinking differently For example, sharing the product, multifunctional design or not buying the product but the service
Making smarter/usingReduceReduce Manufacture product more efficiently or use more efficiently, reducing the need for materials
Extend lifetimeRe-useReuse Reuse discarded but still good product in the same function
Extend lifetimeRepairRepair Maintain and repair a product for use in the same function
Extend lifetimeRefurbishRenovating Refurbishing and modernizing an outdated product
Extend lifetimeRemanufactureRecreate Reuse parts of a discarded product in a new product with the same function
Extend lifetimeRepurposeRe-tuning Reuse discarded product or parts in a new product with a different function
RecycleRecycleRegaining Process materials to the same (high quality) and lower (low-quality) quality
RecycleRecoverEnergy recovery by burning waste materials.

Source: PBL, Adaptation Light & Dark Advice and Ecochain

Life Cycle Assessment and circular procurement

We’ve become accustomed to a world of recycling in recent decades. At home we separate an important part of the raw materials, such as paper, glass, textiles, plastic and vegetable, fruit and garden waste.

Circularity, however, goes far beyond recycling. We also look at the raw material extraction, design, the production process and the phase of use. Depletion of raw materials, energy consumption and the release of toxic substances are also important. In short: circular thinking and doing is relevant throughout the life cycle, with the aim of keeping all raw materials safe in our economy.

The methodology of the Life Cycle Assessment (LCA) and environmental cost indicator (MKI),which other sectors already work with, can play an important role in this. The LCA methodology is already leading in the asphalt and concrete industries and is on the rise in, for example, the textile, packaging industry, chemicals, electronics and food & agri.

At the moment, there is no generally applicable KPI that allows circularity to be measured in full. A number of companies have started recycling rates.

Product Lifecycle

However: a recycling rate as such says nothing about environmental impact. For example, if a product or material has to be transported over a large distance to enable recycling, this may lead to a higher environmental impact rather than a lower impact. In that case, it does not pay to recycle.

The LCA instrument looks at environmental impact in full to make it look integral. And in this way, the most favorable scenario can be chosen with the most minimal impact. The MKI makes it extra easy because in the MKI all environmental impacts are consolidated into one number.

Buy forward-looking

Anyone responsible for a purchasing process has the opportunity to create space for new solutions. This applies to buyers, internal clients, managers and managers for contract management. It is therefore necessary to consider the starting points of the purchasing issue. This raises important questions such as: Purchase your products, buy in services or make a combination of both? And if you buy services, what period does the agreement apply to? What is the budget for services? All these questions lead to a different business case than in a traditional purchase transaction.

roadworks
MKI is an important tool for GWW procurement

In traditional purchasing processes, technical specifications or programmes of requirements are often drawn up. In this way, tenderers can only distinguish themselves on a plan of action or the price offered. This approach only makes limited use of the innovation and creativity of market players in order to achieve circular solutions. In order to promote this, it is important to open up market demand in the form of a functional or result-oriented specification rather than a technical solution. In this way, the market can be better challenged to come up with circular solutions themselves. One of the ways to apply for results is based on LCA results or MKI values.

Circular purchases with LCA and MKI

The use of LCA is already ‘business as usual’ at Rijkswaterstaat, ProRail and some large municipalities for contracting large GWW works.

In such tenders, tenders are also selected on the basis of their MKI. In that case, all tenderers are asked to draw up an LCA on which award may take place. However, there are several solutions imaginable.

For example, in the case of contracts where products and/or services are purchased for longer term, ‘monitoring’ is conceivable. In this way, the supplier is challenged to continuously improve over the years in order to contribute to the circular ambitions.

LCA is also a strategic tool par excellence. It can be used for basic choices such as expected longevity, lease/buy decisions etc. Here are some examples of LCA applications as a decision-making tool:

WhatPurposeHow
Hotspot AnalysisDetermine which purchasing categories deserve the most attentionA footprint organisation containing the main purchasing categories (important: completeness of the analysis)
Scenario AnalysisDetermine which strategic solution direction delivers the mostComparative footprint analysis of different solutions (this is important: correct assumptions for different scenarios)
MKI questionDetermine which tenderer has the lowest environmental impactLca by each tenderer (this is important: comparability between different providers)
MKI monitoringEncourage continuous improvement among suppliers, for example on the basis of MonitoringPeriodic LCA measurement by supplier, for example annually (this is important: consistency scope)

Circularity, MKI en LCA
Circularity, MKI and LCA

Circular purchasing: Challenges

Not everyone is equally familiar with the preparation of LCAs and interpreting the results.

Although the discipline has evolved into a full field, not every purchaser will be familiar with all foot angels & clamps. If governments decide to deploy the LCA instrument, it is important to understand the added value and limitations of the instrument and what is necessary to properly request things in a tender, for example.

Of course, this should be taken to find the right balance between minimizing the administrative burden (costs) and realizing valuable and reliable insights that can be usefully used in decision-making. In this way, the LCA instrument can be optimally used in the realization of circular initiatives.

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