Far from being viewed as a liability, some especially proactive purchasing professionals see environmental procurement, or "green" purchasing, as a way to open the door to bigger buyers while cutting down on waste and operational costs. At the same time, they understand it as a means of helping their companies reach the compliance levels of increasingly strict environmental regulations. For these purchasers, environmental procurement is the classic case of taking the lemons that environmental regulation has handed them and using them to make lemonade.

Key to the rising popularity of green purchasing is a host of factors. The first is the fact that big buyers are starting to demand environmentally sound business practices. Businesses of all sizes, even small and medium-sized enterprises (SMEs), are expanding their business relationships into global markets. Many of the potential partners that SMEs encounter are large enterprises that are required to meet environmental improvement standards. In order for these enterprises to become fully compliant, their suppliers must meet the considerations as well. Being able to offer an environmentally compliant track record could be what tips the scales in favor of one supplier over another.

Another reason to consider environmental purchasing is that environmentally friendly supplies and equipment are typically more cost-effective and efficient than their less friendly counterparts. Furthermore, as new technologies are increasingly being developed with the environment in mind, environmentally unfriendly products are becoming scarcer. Businesses would be lax not to upgrade once older technologies become outdated. More often than not, environmentally sound technologies are available as replacements.

Also adding incentive for SMEs to adopt environmental purchasing is the fact that many environmentally unfriendly products have been banned in various parts of the world. Countries whose businesses continue to operate without regarding environmental standards may very well find themselves less competitive in a world marketplace where such standards have become the norm. In addition, consumers have expressed a desire for more environmentally friendly products, resulting in legislation limiting imports of certain goods. A recent law limiting the use of specific chemicals in processing tiles is an example of the type of action that directly affects SMEs.

As far as concrete benefits are concerned, environmental purchasing can help companies save money by combating the "invisible" procurement costs that crop up from time to time, such as product liability and the losses that businesses accrue from the inefficient use of their resources. In addition, meeting or exceeding environmental compliance levels helps companies save money by avoiding fines and legal tangles. It also helps them meet the preferences of an increasingly pro-environment consumer base and sharpen their overall competitiveness. Once environmental procurement is adopted it creates a synergy within the company where each benefit strengthens the others. In the long term, this synergetic state fosters continuous improvement in the quality of products and services and improves the company's image in the public eye. Authorities that favor environmental procurement are likely to view the adopting company in a positive light.

Incorporating green purchasing requires considering four stages of a product's "life-cycle." Each of these stages; production, distribution, use and end-of-life; needs to be evaluated in regards to the product's performance. Purchasing – as an operation that affects each of the product's life-cycle stages - is of the utmost importance in realizing the product's benefits. From a production standpoint, purchasing managers have to assess whether a product is created from resources from environmentally sensitive areas or is made of mostly virgin materials, as opposed to recycled ones. Purchasers should ask themselves: Does the production process create an inordinate amount of waste? Can this waste be reduced? As far as distribution is concerned, environmental purchasers should evaluate how the product is transported; what resources are used in moving the product and what sort of materials the product is packaged in. Turning to the product's use and end-of-life stage, purchasers need to ask similar questions about what influence their product will have on the environment. Tweaking a product's environmental impact could mean avoiding the use of an environmentally unfriendly material in the product's makeup or substituting it with a less harmful one. An example would be opting for recycled glass instead of virgin glass. Also, non-degradable materials should be avoided as much as possible, both in creating the product and its packaging.

SMEs face special challenges in adopting environmental purchasing. For one thing, many have limited means of production and storage. Thus they have less say when it comes to purchasing and shipping quantities. As a result, more fuel is spent transporting fragmented shipments and more production resources are wasted due to stock-outs. In addition, the lack of a proper management and handling system can cause losses in storage. These challenges have solutions, however. SMEs can purchase common requirements collectively, thus avoiding many of the aforementioned dilemmas. Also, an analysis of purchased items can show what the critical needs are for the enterprise to operate. An updated supply strategy can use this analysis as its basis. Furthermore, reassessing plant and warehouse layouts can improve space issues. To a large degree, these adjustments are matters of common sense and practicality.

Another challenge that SMEs face is the fact that suppliers often keep information under wraps with the excuse that they are business secrets. In addition to keeping records of the performance characteristics of their purchased items, SMEs can seek information from a variety of alternate outlets. To begin with, they can try consulting other buyers, chambers of commerce and industry organizations. They can also utilize the Internet to view suppliers' catalogues. The web is also a good source of information on green purchasing, with several sites devoted to the topic. And, of course, there is also the very real challenge of overcoming the insistence on doing things the old way. SMEs can overcome this obstacle by realizing that environmental procurement is little more than refining practices that are already considered good procurement.

If adopting environmental purchasing seems less important to SMEs now, keep in mind that this may not always be the case. As ISO 14000 and other such standards are being applied by more and more firms, few will be able to avoid them over the long term. Whether they like it or not, many purchasers are realizing that their operations are being increasingly affected by environmental concerns. Early adopters of environmental procurement may eventually have an edge that their competitors lack.

Source: Environmental Competitiveness: "Green" Purchasing
International Trade Forum
http://www.intracen.org