Need for a balances suite of KPIs

The activities of all organisations will have multiple forms of significant sustainability impacts and therefore organisations will need to use several KPIs to enable these to be monitored. The use of a balanced suite of KPIs is also important given that there can be tensions between different environmental or indeed other sustainability objectives.

For example, globally fish stocks are under intense pressure, including those in British waters. A procurement response might be to prioritise the purchase of fish from fisheries certified through the Marine Stewardship Councils sustainable fisheries scheme or to boycott certain species of fish altogether. In practice this would be likely to lead to a greater use of imported fish species such as Alaskan Pollack. We are not aware of any studies of the carbon footprints associated with the use of different fish species but it seems reasonable to assume that the use of imported fish species will entail greater use of fossil fuels (and therefore CO2 emissions) to preserve and transport the product than would be the case where a fish from UK waters was used. In this instance if your sole object is to reduce the greenhouse gas emissions associated with your supply chain then this may lead you to purchase a UK product which may on balance arguably be a less environmentally sustainable option.

In short organisations should be wary of adhering slavishly to the pursuit of individual KPIs without giving consideration to a wider range of impacts. To enable this it is good practice to use a suite of KPIs which reflect the organisation‘s significant impacts and priorities. This should include social and economic considerations in addition to environmental as again there may be tensions between different priorities which may not be picked up on if the key variables are not being measured.

As a final area for consideration we need to consider one further key classification of measure type. This is the difference between generic and specific measures. It is arguable that this is a key distinction that runs right through the procurement process and is therefore a consequence of procurement as much as a separate distinction. This is interesting from an academic perspective
however what is important here is that this is a real and practical distinction.

Whilst there is a need for a sufficiently wide range of KPIs to enable a reasonable assessment of an organisations performance to be made, this must be balanced against the availability of resources for data capture and management. For example the environmental impacts of procurement are only one subset of an organisation‘s overall range of impacts. Environmental impacts themselves form a subset of sustainability which in turn is only one of the performance areas which an organisation will wish to measure. There is a need to limit the number of KPIs used. The difficulty lies in choosing indicators capable of covering the range of an organisation‘s activities. This is particularly true of large complex organisations such as local authorities which run multiple services, all of which have some form of environmental impact.

Organizations can use social clauses on procurement classification systems. All an organisation‘s procurement systems will breakdown procurements into classes, for example an organisation can have 16 different top level classifications such as Transport. However the most effective and flexible mechanism for applying a corporate policy is to generate a generic clause that can be inserted in all tenders so for example.

The Alpines Ltd is committed to working together with local communities and other partners. The procurement strategy for Alpines Ltd is to achieve community benefits through procurement and to actively engage with a diverse range of suppliers, including small and medium‐sized enterprises (SMEs). To this end, the Alpines Ltd would like you to provide details of what community benefits your organisation can offer when providing this contract.‖) If in addition to this the clause is included as a core requirement of the procurement contract this greatly strengthens its use within the process. It is for this reason that generic clauses and consequent measures are both powerful and preeminent. Generic clauses are not however the complete answer. They will almost always inevitably
(because of their generality) be more strategic and corporate in approach.

There is an additional role for KPIs that are specific to particular policies and procurements. These more targeted KPIs are likely to occur not in every case but where more detail is required. An example is shown for the candidate measures in the table below. However it is perfectly possible to have a generic measure such as ‗% of spend within the region‘ that is applied in all procurements as a matter of corporate policy. However only in more directly relevant procurements would the sub measures such as ‗% spend with producers and suppliers‘ be used. Where this leads is to the adoption of a ‗basket‘ approach where there are a small number of
generic measures that should be applied either as selection or monitoring measures in all procurements and grants. These will meet all of the tests outlined above and have direct strategic and corporate applications. These are then supported by a basket of specific measures.

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