Collaboration and early market dialog revealed potential cut in environmental impact from procurement of drugs.
In collaboration, 13 municipalities landed a new drug agreement, of a value of approx. 12 million NOK per year, on supply of Medicines, Multidose and Nutrition drinks, to their health care sector. In the proses the municipalities held an open tender competition and a dialog conference. The aim was to review the forthcoming procurement with providers, to investigate possibilities before making the tender documents. To investigate what environmental measures can be taken the suppliers were asked different questions: Where in the production and supply chain the environmental impact is the greatest? In addition, what environmental requirements should be set for suppliers? The response was that in particular two areas that had great impact: transport in the last link and destruction of drugs.
The solution was to change the pricing structure in the tender documents, asking for one delivery per week included in the pricing of the products instead of unlimited deliveries during the hole week. Before, transportation was included in the price of each product, now there is a separate rate for transportation beyond the one delivery included. In addition, it was also specified in the general demands that the municipalities wanted to implement environmentally efficient procurements. The consequence of these changes was much lower prices for the products, and hopefully less transportation, leading to less CO2-emissions.
Resources needed
A project group of three purchasing advisors conducted and planed the market conference and used approx. 8 hours on planning and conducting. In addition a professional group of 16 procurement officers and leaders of the healthcare services from the 13 municipalities participated in the conference.
Evidence of success
The result was separate pricing of the products and for the transportation, with extra fee for additional deliveries and lower prices on each product. In addition, requirements for the supplier to take back outer packaging when delivering new goods, and for this to be reused or recycled. Less transportation to end users, leading to less CO2-emissons, and reduction of waist. It is still early in the agreement period to review all the results.
Difficulties encountered
It has been some protests to the change from unlimited delivery all week to once per week. This applies especially to those units (eg. nursing home) that had poor routines for ordering goods. But overall the municipalities are satisfied with to new arrangement.
Potential for learning or transfer
Even though this procurement wasn’t primarily done with circular principals, the method can be adopted to conduct circular procurements. Circular procurements is still a quite new topic and require knowledge both within the byers-organisation and with the suppliers. Market dialog can be used to reduce misinterpretations, identify opportunities, clear the ground for new demands and get feedback from suppliers. In this example it could have been asked questions about wrapping of the goods to implement circularity.
Bear in mind that the various suppliers will provide feedback that times their business. Don’t use the information from the market dialog direct, but use the information together with information from other sources to form the tender documents. Our experience is that there are fewer complaints and conflicts in tender processes that have undergone some form of market dialogue prior to the purchase.
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Tags: Circular economy, Market, Procurement, Public sector
