In this year’s March/April edition of INCLEAN, I shared three strategies for getting the best outcome from a sustainable procurement policy.
One of these strategies focused on managing your supply chain, meaning the companies that supply the goods and services used to run your own organisation.
Many organisations spend a large proportion of their revenue on their supply chain. But unless they have the buying power of multi-national, it can be incredibly challenging for procurement managers to obtain accurate data (especially from imported goods) or to influence the outcome.
Even when the credentials are proven, buying departments may be reluctant to award a tender to a more sustainable option if the upfront costs are higher, or an innovation represents too much change.
As a result, sustainable procurement gets put into the too-hard-basket or paid lip-service to – an all too familiar pattern when procuring cleaning services.
For suppliers of sustainable products and ethical services, and even for people within the organisation, this barrier can be very frustrating.
Because sustainable supply chain issues are global ones, the International Organisation for Standardisation (ISO) has developed a new standard for sustainable procurement – ISO 20400.
Social and environmental sustainability
ISO 20400 is a guidance standard, not a requirements standard like ISO 14001, so organisations can’t be certified for compliance.
The purpose of this Standard is to provide the buying organisation with a clear framework and practical guidance for ensuring their expenditure matches their sustainability policy. It consists of four sections:
- Fundamentals: underlying principals, considerations and drivers (i.e. reputational risk, shareholder or government policy).
- Policy and strategy: plan and prepare for sustainable procurement.
- Enablers: conditions that need to be in place to make it happen, and
- Procurement process: a step-by-step guide to incorporating sustainability into a procurement process.
Accountable, transparent and ethical cleaning services
Topping the list of key principals for procuring products and services are; accountability, transparency and ethical behaviour. This is not just wishful thinking. The Standard emphasises the responsibility of the procurer to conduct due diligence and to avoid “complicity”.
That means not turning a blind eye to bad practices in their cleaning service supply chain. It acknowledges that it is the client who sets the price via the tender they accept. In fact, unless the contract price is fair, none of the environmental and social sustainable principals of ISO 20400 can be effectively achieved.
Competitive bidding in the cleaning industry has created a race-to-the-bottom without any winners and there are no signs of it abating. Every service provider I have spoken to lately has expressed dismay at the number of bids they are missing out on due to price.
If a contract is under-priced, it stands to reason that the new contractor will need to cut their own service costs to maintain a profit margin. And their largest cost is labour. This is driving illegal sub-contracting and cleaner exploitation to new levels, and good companies to the wall.
But any short-term gain at the purchasing stage causes long-term pain over the life of the contract. For a start, the purchasing organisation and responsible individuals are at risk of financial penalties and reputational damage for accessorial liability, if a breach of the Fair Work Act (FWA) is found. But there are also multiple other risks and hidden costs, including:
- Poor standards of cleanliness and hygiene, increasing complaints and loss of customers/tenants
- Surface damage from missed periodicals and grime build-up requiring additional cleans and costs
- High turn-over of workers needing retraining of security / waste / requirements
- Under-resourced supplies and cheap (or missing) consumables
- Overall lack of control and poor communication chewing up management time
- Business continuity risk
- Security risk (who is really cleaning the building?
To find out more about ISO 20040, go to: www.iso.org/publication/PUB100410.html
This first appeared in the November/December issue of INCLEAN magazine. To read the article in full, click here.