Develop ISO 20400 Sustainable Procurement Tools for NZ SMEs

Just before X-mas, we discussed our plans to develop unique procurement tools for SMEs in New Zealand. These will help small businesses (1-49 fte) to improve on their sustainable & innovation procurement. This 3rd blog discusses developing tools based on the ISO 20400 sustainable procurement standard.

 Over 70 countries ratified the ISO 20400 standard, which shows a steady uptake in large organisations. They work with sustainable procurement and reap benefits (EcoVadis, CAPS Research). For example our neighbour Australia uses the standard for buying recycled materials. NZ works hard on sustainable procurement and also on social procurement – but so far we have not adopted the ISO 20400 standard.

 It is expected that the ISO 20400 standard will be reviewed from 2021. The non-for-profit website ISO20400.org offers webinars, tools & guides, case studies and business cases. Although the standard claims to be suitable for all types of organisations, so far the uptake in SMEs seems limited.

 A small business is not a little big business. (Harvard article by Welsh & White, 1981). We know much about procurement in large organisations. And also how to kickstart or improve on sustainable procurement (Staal 2018, 2021). However, we do not know much about procurement in SMEs. Research indicates that SME procurement is different (Ramsay, 2008; Ellegaard, 2006, 2009; Morrissey & Knight, 2011; James ea, 2011, 2012; Paik 2009, 2011;, Adams, 2016). One of the reasons is that SMEs have less money & specialist resources and also less buying power. We also know that SMEs use fewer management tools (Staal 2016).

 SMEs often have less formal procurement processes and are loyal to their key suppliers (partners). Some research suggests that SME procurement is as effective as in large organisations (Ellegaard, 2006; Pressey, 2009); others disagree (Park & Krishan, 2001; James ea 2012). And although we easily use terms like small companies, SMEs, small businesses, in fact these organisations show an enormous variety. SMEs not only differ in size, but more importantly in their contexts and industries, and also in ambitious levels, strategies, organisational structure, decision-making, and their performance. (Meijaard ea, 2005; Davidson ea, 2010; Keijzers, 2007; Torres & Julien, 2005; Julien, 1996; Reboud, 2014). This all impacts SME procurement.

 SMEs are important and procurement in SMEs has huge leverage effects. After all, 30-60% of economic value & sustainable impact are created in their supply chains. (McKinsey, 2020, Ex. 3; Johnsen, 2019, p. 3).

 All SMEs in NZ together buy 90 - 130 billion NZD of goods & services. This is huge, and our procurement tools help SMEs on their bottom lines: realise cost-savings, improve supplier performance, reduce supply chain risks. And on their top lines: sell innovative and sustainable products and services to their customers.

 When SMEs use these tools, they also optimise their ‘normal’ procurement. Tools will be easy-to-use, web-based and interactive. Think about a validated checklist based on ISO 20400, an audit tool based on ISO 20400, procurement tools to improve overall company performance for newbies or more experienced entrepreneurs. We plan to co-create such tools with interest groups for general usage, and for specific purposes. Such as with Māori SMEs, or with SMEs who want to reduce their CO2 emissions with suppliers, or with SMEs who want to import from overseas suppliers.

 We have applied for MBIE funding. Our project is a collaboration between Dr. Barbara Allen (Victoria University, NZ), Prof. Margreet Boersma (Hanze University, NL), a/Prof. Nic Naismith & Dr. Anne Staal (both AUT, NZ). Experts from Grant Thornton play an important role in validating the tools with industry.

More info to follow!

 Please contact us if you want more info or want to participate in this research!

Contact: Dr Anne Staal, Auckland University of Technology ([email protected]).