3. Largest Customer Base Biggest Asset base
13.5 Million customers 70,000 KMs sewers
1 in 4 UK adults 31,000 KMs water mains
£1.5 Billion revenues 349 STWs and 265 WTWs
Capital city with 300 yr old 2530 pumping stations
infrastructure 58 Reservoirs
UK’s largest Water and
Sewerage provider
Highest daily activity levels
2.8 Bn litres of water daily
Highest quality standards
2.6 Bn litres of sewerage treated
daily 99.98% of EU Water Standard
200,000 highway excavations pa 100% STW compliance
1300 miles of new mains laid in
London pa
3
4. Strategic Context
• Fixed 5 year income set by Regulator (Ofwat)
• £5 Billion Capital programme with big in-built efficiency
challenge
• TW acquired by PE in late 2006 (McQuarie Bank)
• New Executive - challenge the norm – no sacred cows
• Ruthless business focus on cost & performance
– OPA from 23rd (of 24) to 2nd in 3 years
• All key stakeholder targets met 4 years in row
• “Tired” procurement function – dis-engaged from business
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5. AMP 4 AMP 5
No programme – project by project Business in control
“chasing the game” High-calibre procurement team
Dis-empowered under-weight Well defined asset programme
procurement team
Fully aligned contractors
Contractors in commercial control
Client in commercial control
No cost transparency
Full cost transparency 5
7. We placed consultants at the heart of the transformation –
their staff need to role-model the “new brand” and execute
with real “pace and passion”
Clear Procurement
AAA Strategies Excellent PMA
High Strategic Sourcing
Performance Process
Staff & Teams
Delighting Specialist High-quality Data
Customers
Consultancy
TEC Active Support DWYS
Savings Baked into
Supplier Business Plans
Management
Strong
Smart Drive Culture
Policies &
Processes change
Procedures
& Systems
NBDB WEIT
“Aspire, Excel, Enjoy” 7
8. Consultancy is now core to our procurement service delivery – we have
outsourced our team to the professionals – a revolution not an
evolution, to “turbo-boost” capability and service to internal customers
LAY FOUNDATIONS – TRANSFORM – EXCELLENCE ON-TAP
Functional up-grade and Capital Procurement Managed Procurement
OPEX Sourcing Transformation Service
“Accelerate” “Game-changing” “Bigger, Better, Faster”
Deep opportunity analysis Create factual Baseline Innovative “in-sourced”
& functional competence from 840,000 original market model
assessment documents
Procurement as a service
Clear deliverables agreed Control of T2 - 72 function - with flexible
categories tendered with resources on demand
98% OPEX addressed in 3
over 1000 suppliers
sourcing waves Control over £500 M pa of
New delivery & procure direct and indirect spend
Integrated teams with TW
strategy main T1 contract
staff Total integration of
Detail bid analysis on resources with TUPE of
Coaching and up-skilling
1000s of bid variables TW staff to Efficio
in best practice strategic
sourcing tool kit Embed HUB concept Co-location with key
stakeholders at TW HQ
Category expertise Embed / train new skills
and processes
2007 2009 2011
8
9. We have focussed hard on being an “organised client”
ensuring active formal sponsorship to clear road blocks &
make quick decisions
COO Sourcing Steering
Group BU Mgt Teams
¼ ly Monthly
Using project disciplines to drive pace
Weekly
Cross-functional Teams 9
10. Both parties have benefited from the success of the
transformation – a real strategic fit is important so you are
not just “another client”
2010 CIPS Senior Management
WINNER Professional of the year
Finalist
FINALIST 2010 CIPS “Step change” Award
FINALIST 2010 Utility Week Supply Chain
Excellence award
5 Categories – Best procurement
FINALIST Team; Best X-functional project;
Overall Excellence; Innovation &
Partnership.
10
11. Excellent Results at each stage gave the business
confidence to repeatedly invest and eventually partner
long-term
• Business critical savings over £1 Billion delivered to helping stretch
limited funding and offset unavoidable and unplanned adverse costs
• 320 sourcing projects over 98% spend re-tendered
• OPEX - 23% average cost reduction worth over £100 Million
• CAPEX - 20%+ cost reduction vs AMP4 supply cost-base
• TW Control of the extended supply chain increased from 15% to 53%, and on
target for 85%
• Full transparency of actual cost
• Co-ordinated continuous improvement of Service levels, Quality and Innovation
ROI of 5:1 on OPEX and over 30:1 on CAPEX demonstrated the real
value for money delivered by engaging top professionals
11
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13. 3 main lessons learned
1. Pick best of breed consultants – “horses for courses” – be suspicious of “jack of all trades”
– Focus on “end to end” excellence – the strategy and the delivery - only pay for results not abstract ideas and reports
– Try an identify the best strategic fit – don’t be just another account
– Focus on long-term value creation not just short-term rates & costs (NPV, ROI)
– They must have “Skin in the game” – fees at risk linked to the what (deliverables) & the how (style)
– Crystal clear scope, objectives and deliverables
2. Real teamwork – “success has many parents, failure is an orphan”
– Be a good “Client” – consultants aren’t magicians & time really is money so get the whole client organised
– One-team – assign your best people & work as co-located & fully integrated teams
– cultural fit is crucial – they are representing your “brand” in the business and in the market
– Don’t be a spectator – this is a contact sport – management must “own it” & be actively involved
– Leave a lasting legacy - long-term process change, tools, techniques and up-skilling of staff
3. Company-wide transformation is like a battle – having trusted partners allows you to really lead from the
front without worrying about the delivery.
– baseline is critical to drive fact – based influencing & decision making
– Get finance to sign-off baseline and deliverables – only the P+L counts, procurement savings are a distraction
– Business unit sponsorship & wide x-functional engagement & governance
– Don’t delegate the Stakeholder engagement…. especially the difficult ones
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