True cost of purchase priority for New Zealand big spenders

New Zealanders with the greatest buying power are making better buying decisions, the 2010 Fairfax Media-Shape NZ survey has found.

The annual sustainable business practice survey, conducted in support of the 2010 Sustainable60 Awards, shows 44 per cent of those with personal authority to spend more than $100,000 on behalf of their organisations now buy solely or mostly on a whole-of-life cost basis, compared with 36 per cent last year.

Whole-of-life buying means the true cost of using goods and services is considered, including environmental and social impacts.

"We are fast reaching a tipping point where cheaper day-one price deals become a poor way to do business," New Zealand Business Council for Sustainable Development chief executive Peter Neilson said. "Close to half of the most powerful buyers have shifted to sustainable procurement. This will affect billions of dollars a year in buying decisions." Mr Neilson said businesses and governments that have introduced sustainable procurement report between 8 per cent and 30 per cent efficiency improvements.

He advocated that the principles of value-based, as opposed to price-based, tendering be adopted in New Zealand.
"This could save the central Government alone more than $1.6 billion a year," he said.

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