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Circular Value Chains
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Circular Economy

What role does the government play as a buyer?

In addition to policy formulation, governments use their role as a buyer and launching customer to drive the circular economy. In the role of a buyer, it is crucial for governments to consider the entire lifecycle from production to disposal. To effectively fulfill the role of a launching customer, it is essential for governments to proactively seek collaboration with businesses.

Circular Procurement by Governments

Collectively, governments have an annual procurement volume of around 85 billion euros (RIVM, 2021). Traditionally, procurement has been about achieving the best price-quality ratio. Nowadays, governments use their procurement policies to create impact in line with policy themes, such as Circular Economy. The focus is on fostering supply chain collaboration, emphasizing sustainable commissioning, and integrating with the organization’s sustainability policy.

Some examples of government initiatives promoting supply chain collaboration from the client side include:

Read more about the steps that both governments and businesses can take to engage in circular procurement here.

Governments as Launching Customers

As an extension of their role as buyers, governments can also act as launching partners. The government’s commitment to being a more frequent launching customer is outlined in the coalition agreement. In practice, this role is challenging to define. Essentially, as a launching customer, the government actively stimulates the development and application of innovative solutions for its societal challenges, contributing to further scaling (Pianoo, 2019).

The Expertise Center for Procurement PIANOo highlighted four recommendations for governments to fulfill their role as a launching customer:

  1. Support those who want to innovate, both internally and externally.

Invest in an organizational culture that values innovation. Ensure that policy and execution jointly define ambitious and accountable goals and create room for customization and experimentation. Provide support to those who want to innovate and strengthen communication and collaboration.

  1. Raise the bar for suppliers.

Governments should clearly communicate their ambitions to the market. Encourage the market to take action and contribute to these ambitions. Involve less conventional suppliers, outline their earning potential, and allow room for innovation in procurement processes.

  1. Participate in development.

Sometimes, active government involvement in the development of desired innovations is necessary. This involves supporting innovation efforts that help market parties meet the government’s set standards. Collaborate with the market on (concept) development, make agreements about roles and returns, and establish portfolio management for innovations.

  1. Support scaling up.

Scaling up and rolling out pilots prove to be significant challenges. The focus of pilots often centers on technical proof, with limited attention to learning about the conditions for scaling up. There is a tendency to opt for proven technology. Concretely, this means developing scaling plans, generating support, and involving platforms that stimulate innovations.

For more information, visit PIANOo’s webpage.