In-Depth
Best practices to making MRO purchases more sustainable

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Large scale initiatives in the mainstream media have become commonplace due to retailers becoming more vocal in their demands for suppliers to reduce packaging, use more sustainable materials in their products and packaging, plus the push to shift their fleets to green fuel alternatives, such as hybrids, electric or propane.

Sustainability is possible across most industries when reviewing their core operations, such as in manufacturing, construction, warehousing and others. MRO purchases are a major area of opportunity for an organization to improve or implement sustainability practices.

Sustainability as a key strategy can be positioned as an organization’s competitive advantage, from all communication perspectives, when interacting with customers, employees and even shareholders. Both employees and customers view the positive brand story that a sustainability-focused organization offers.

The sustainability message can help with talent attraction and retention as well as attracting customers. Having a shared sustainability value between employees and customers helps build a more vested and emotional connection. Some employees will value the opportunity to work for an organization that believes in and operates sustainably, and may also use this as a deciding factor to work for a new possible employer; especially common with millennials.

Shareholders and investors benefit directly from cost savings of sustainability initiatives, such as reductions in hazardous goods use, including the downstream disposal and handling costs. Overall, there is a positive brand reputation story to be shared across these critical stakeholders.

Integrating sustainability metrics into contracts should be implemented at the beginning of the procurement process when a contract goes out to the tender. Various metrics can be considered for the tender depending on the industry or operation, including: a product’s end of life (ability to re-use), the percentage of recycled content used in the product (e.g. oil, paper, plastics), types of recycled content used (e.g. post-industrial VS post-consumer), elimination of hazardous goods use (e.g. CFCs in aerosol products, VOC in paints, mercury in lights), changing the type of disposable needed (standard disposal VS recycling VS special hazardous goods disposal), freight modes (e.g. air VS rail VS truck), country of origin to reduce the carbon footprint related to shipping (e.g. global VS domestic VS local), the type of energy used during manufacturing of products (e.g.: coal VS nuclear VS electric VS solar), and lastly, having the manufacturer provide their own sustainability initiatives (e.g. waste reduction, emissions reduction, supporting local environmental causes, etc.).

An important factor is engaging suppliers early on by communicating an organization’s strategy and expectations, in addition to sharing its own targets and best practices to demonstrate their commitment to sustainability.

Considerations include incorporating a point or scoring system to reflect those suppliers that provide sustainable solutions and products alternatives, to products denoted in the tender’s criteria, such as quality, service and pricing.

Another attribute to consider is including the tender to reflect sustainability in use reduction and lifecycle of products. Use-reduction is reducing the consumption of a product by using one product over another. For example, reducing the usage of single-use plastic bags by using metal containers for storage of goods.

Another factor is product lifecycle, which considers a product’s full process from “cradle-to-grave” of sourcing of raw materials (recycled vs. virgin), manufacturing, packaging, distribution, maintenance and servicing.

Lastly, a product’s disposal at its end-of-life. For example: hydraulic fluid manufactured from virgin base oil and shipped across the globe, which requires very extensive multi-layer packaging due to high-level of handling, which generates a very significant carbon footprint compared to a locally manufactured hydraulic fluid, made of recycled base oil.

Making environmentally focused MRO choices can result in cost-savings, when approaching sustainable procurement from a whole-of-product life perspective, as opposed to solely concentrating on an invoice price.

Driving savings for an organization is possible when procurement balances both the long-term and short-term costs. New equipment or tools’ initial investment may seem at first to be a significant cost to an organization, however, when amortized over the duration of life of the equipment, the annual cost is reduced, in addition to the reduced energy-use, and maintenance or operating costs.

For example, installing LED lighting or reduced water consumption plumbing fixtures; the average energy and water consumption reduction helps to offset the higher initial investment, in addition to the longer lifespan of the equipment, which requires less servicing and replacement.

Through sourcing environmentally friendlier MRO supplies, organizations can also save tremendously in disposal and handling fees. For example, when using harsh chemicals to clean equipment, an organization needs to invest in the proper PPE for employees to ensure their safety.

Disposal of used cleaning chemicals needs to be processed by a hazardous waste service, which can be costly when contrasted with using gentler chemicals that may not require PPE (or as much), or require special and costly hazardous waste disposal.

When an organization starts on its sustainability sourcing journey for MRO supplies, there are many third-party certifications that can provide guidance.

Commonly recognized Canadian and North American certifications include: CSA Energy Efficiency Mark (gas appliances, HVAC), CSA Sustainable Forest Management (paper products), Forest Stewardship Council (paper products), ECOLOGO by Underwriters Laboratories (sealants, disinfectants, hand cleaners, etc.), GREENGUARD by Underwriters Laboratories (adhesives, sealants, etc.), Energy Star (HVAC, lighting) and USDA Bio preferred (lubricants, building materials).

These industry certifications can offer assurance that a third-party has thoroughly assessed and confirmed the manufacturer’s sustainability and “better for the environment,” claims. An easily identifiable certification mark on a product’s packaging can aid in categorizing a product, or the product can be verified by contacting the respective certifying body.

Best practices for making MRO purchasing more sustainable include ensuring all stakeholders are aware of an organization’s sustainability strategy from the onset, in addition to including them in the decision-making process as part of a strong change management initiative throughout the journey.

Ensuring success when shifting to sustainable purchasing is best to start on a small-scale with simple changes, such as switching to greener alternatives on high consumption products, like cleaning supplies, personal protective equipment and cutting tools.

Some examples of alternative “better for the environment,” products include: Simple Green’s offering of biodegradable and non-toxic cleaning chemicals, or Watson Gloves’ “Green Monkey” nitrile gloves, which has enhanced biodegradability so as to have a shorter lifespan in landfills of 10 years vs. conventional nitrile gloves, which degrade in 200 years.

In the manufacturing and automotive sectors, Greenfield Industries purchases used high speed steel cutting tools from its customers, and processes the spent products into new tools. More extensive sustainability steps can be taken as part of an organization’s long-term capital investment strategy, such as upgrading lighting and plumbing fixtures. For example: GE provides a variety of LED lighting integrated with motion sensors to assist with energy reduction.

In plumbing fixtures, manufacturers such as American Standard provide water conserving products, such as toilets and faucets. For organizations in search of turn-key solutions, there are options to engage third-party service providers that offer additional support through an energy audit, or other initiatives such as recycling services or waste diversion programs; like LifeCycle Revive who recycles used disposable PPE into new PPE.

Sourcing sustainably within MRO is more than a passing fad, and is now seen as a strong long-term strategy to strengthening an organization’s competitive advantage in the marketplace, both for common stakeholders, such as investors, customers and employees, but also the communities they operate in.

There are a variety of tools available to assist organizations focused on implementing a sustainability focused MRO purchasing program; from leveraging sustainability service providers to third-party certification bodies, and even simply, working more closely with existing suppliers to learn more about their environmentally friendlier product options. MRO
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Mariete F Pacheco, MBA, PMP, Managing Director, FRW Services Inc. has over 15 years of procurement and supply chain management experience across a variety of industries including industrial, construction, retail and more.