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International Journal of Social Sciences and Entrepreneurship Vol.1, Issue 7, 2013

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International Journal of Social Sciences and Entrepreneurship Vol.1, Issue 7, 2013 International Journal of Social Sciences and Entrepreneurship Vol.1, Issue 7, 2013 FACTORS AFFECTING INTEGRATION OF GREEN PURCHASING IN PROCUREMENT AT KENYA AIRWAYS LIMITED Allan Mudanya Masters Student, Jomo Kenyatta University of Agriculture and Technology, Kenya CITATION: Lagat, J. (2013). Factors affecting integration of green purchasing in procurement at Kenya Airways Limited. International Journal of Social Sciences and Entrepreneurship, 1 (7), 216-251. ABSTRACT Companies are perceived as important actors in the drive for sustainability. Linked to this, and in response to increasing demands from various stakeholder groups, companies start to look at their supply chain to enhance their overall sustainability profile. Two major triggers can be identified: (1) focal companies are held responsible for environmental and social problems caused by their suppliers, which become more and more important as (2) an increasing share of value is created at the supplier level. In response to such demands, companies have to find ways to incorporate environmental and social aspects into their supply (chain) management. Therefore, environmental and social standards are integrated into supply management by amending the purchasing processes. This paper presents an approach to integrate Green Purchasing into supply policy and supply management at the Kenya Airways limited, a 3-star airline projecting to become world Class Company and a 7 star airline by 2020.The objectives of the study was to establish the ways in which Kenya Airways Limited incorporates Green Purchasing as a best practice in procurement of in-flight Products as well as the challenges being faced in incorporating Green Purchasing. The findings of this research were geared to establish the “as is” situation for green purchasing and this was a case study. Focused interviews were conducted with stakeholders who are the key participant in supplier prequalification and purchase decisions through competitive bidding process. This was a qualitative research focusing on collecting precise and exact facts hence data collected was analyzed using content analysis. The results showed there is limited scope to incorporate green purchasing in purchase decision of core products and even less for support products. The company has a SHE evaluation policy for its suppliers which are a key step to environmental considerations in purchasing. Involvement of the Industrial safety team in supplier pre qualification points to the increased step towards best practices and this is a platform to advance green purchasing practices into supply chain. The study recommends consideration of the environment in procurement may include considering the environment from the outset. There is most scope available early on when defining needs and specifications, and early action is more likely to be successful. Additionally an array of strategies http://www.ijsse.org ISSN 2307-6305 Page | 1 International Journal of Social Sciences and Entrepreneurship Vol.1, Issue 7, 2013 to institutionalize green purchasing in Kenya Airways into their procurement practices has been spelt out. At the end of the study are recommendations for further research in the gray area of green purchasing such as to what extent purchasers are expected to have environmental competence and expertise to face challenges of green purchasing and scope of green purchasing for core products and support products. Key Words: integration of green purchasing, procurement, Kenya Airways Limited Introduction The uptake of green purchasing by business and industry has shown to be rather limited. A decade ago, green purchasing practices mainly occurred in some high-profile organizations and were mainly confined to chemical firms and/or to those firms in the consumer goods sectors that have experienced green consumer pressure directly. Compared with other environmental initiatives, few companies had implemented extensive programmes for green purchasing and social ethics in their procurement structures and supply chain. Environmental concerns are finally finding its way from strategy and board room meetings to operations and to supply chain management (SCM). A growing number of companies have realized the world over that implementing supply chain management is only one of the objectives they need to realize. The other important agenda is to make this SCM environmentally friendly. This has catapulted SCM to a new height by looking beyond their own facilities but also involving their suppliers in environmental initiatives and agendas. This is done by screening suppliers for environmental performance, working collaboratively with them on green design initiatives and providing training and information to build suppliers’ environmental management capacity. The Concept of Green Purchasing Environmentally Preferable Purchasing (EPP), often referred to as “green purchasing,“ is the affirmative selection and acquisition of products and services that most effectively minimize negative environmental impacts over their life cycle of manufacturing, transportation, use and recycling or disposal. Examples of environmentally preferable characteristics include products and services that conserve energy and water, minimize generation of waste and releases of pollutants; products made from recycled materials and that can be reused or recycled; energy from renewable resources such as biogases fuels, solar and wind power; alternate fuel vehicles; and products using alternatives to hazardous or toxic chemicals, radioactive materials and biohazardous agents. Green purchasing is adding environmental aspects to price and performance criteria when making purchasing decisions. Ultimate goal is to reduce environmental impacts of sourcing and to increase resource efficiency. Such impacts may be associated with any stage in the production, use or disposal of a product. Tuitoek (2007) in her research project stated that Environmental life cycle assessments of products have shown that the environmental impacts created when a product is used are often much greater than those resulting from manufacture of the product. The aim of green purchasing is to buy products or services that have less impact on the environment http://www.ijsse.org ISSN 2307-6305 Page | 2 International Journal of Social Sciences and Entrepreneurship Vol.1, Issue 7, 2013 than otherwise comparable products hence it’s important for to take the costs of these into account when comparing products. There is a range of green purchasing strategies available to companies. Different strategies have different effects on the environmental behavior of suppliers. The strategies can be grouped into three major categories: product standards, behavior standards, and collaboration. The effect of the various strategies on supplier environmental performance tends to follow a continuum from low (product standards) to high (collaboration). In general, more effort by buyers is needed to increase the environmental performance of suppliers. Thus buyers must make a cost-benefit analysis regarding how much they want their suppliers to improve. Lastly, Green Purchasing is responsible purchasing going beyond price and volume. In global market economy stock listed, responsible companies are expected to be transparent and manage their reputation. Transparency calls for responsibility and cooperation of all players in supply chain. Environmental standards apply for all operations everywhere and throughout the supply chain. Responsible purchasing is hard work and requires systematic auditing and controls. The most uniformly successful way to promote improved environmental performance is through the supply chain. No supplier will ignore a justified request from an important buyer who wants to know about the supplier’s environmental performance, and such requests demonstrate to suppliers that there is a serious market reason to achieve improved environmental performance. There are a small but growing number of companies that have demonstrated that buyer-supplier collaboration on environmental issues results in better economic as well as environmental performance for both parties. Lessons from these experiences should be examined and disseminated widely to business as a means for improving environmental management practices. Green Purchasing as a Best Practice Drucker, (2005) defines a best practice as a technique, method, process, activity, incentive, or reward that is believed to be more effective at delivering a particular outcome than any other technique, method, process, etc. when applied to a particular condition or circumstance. The idea is that with proper processes, checks, and testing, a desired outcome can be delivered with fewer problems and unforeseen complications. Best practices can also be defined as the most efficient (least amount of effort) and effective (best results) way of accomplishing a task, based on repeatable procedures that have proven themselves over time for large numbers of people. The purchasing handbook (2007) expounds essential elements of an effective Purchasing program from where best practices can be drawn as among others: Understanding the principles of Continuous Quality Improvement and how they can be applied to the purchasing process, Utilizing Continuous Quality Improvement tools to perfect processes and procedures to better serve customers, working cooperatively to reach consensus on major issues that impact stakeholders and familiarity with the latest forms of technology, products or services available in
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