Harnessing the supply chain
Anglian Water's more proactive approach to supply chain engagement is being watched by other water utilities. Natasha Wiseman reports on how innovation is being leveraged
It might seem like water industry suppliers have a long list of complaints when it comes to working with the water companies. However, even without the regulatory pressures that bring about periodic fluxes in the workload, suppliers believe there are still fundamental gains to be made if water companies improve their terms of engagement.
The main complaint is that they can be cumbersome and difficult to engage with. Clive Patten, managing director of pump manufacturer ABS, believes this is because they are so big and complicated.
“You’ve got buyers and maintenance and end-users and to try and co-ordinate between the different parties is difficult,” he says, explaining that the supplier ends up having to do the connecting, lining up people from the same company to talk to each other.
But the need to harness efficiencies both in terms of costs and carbon is causing some companies to re-examine their relationships with the supply chain.
“It’s about making sure they’re more aligned,” Patten says. “From their perspective it could save them a lot of money.”
Patten says that Anglian Water (AW) is one company that is leading in this area. Steve Kaye, Anglian’s manager of innovation, says that the company had felt for some time that its supply chain processes were very robust. It had achieved a core competence in supply chain sourcing and had a strong track record, with quality check systems like Verify and Achilles in place.
However, the company noticed that something was missing too – smaller companies were failing to get on the list. Typically, Kaye told WWT, companies dealt with the innovation team on an informal basis. AW made a conscious decision to change the way it worked with suppliers, which kicked off with the launch of its Love Every Drop campaign in February.
While informing the supply chain of its policies on waste, health and safety, customer satisfaction, carbon and climate change, Anglian also promised to open up to its suppliers. It has put this into practice with a series of workshops for both water and wastewater, drilling down to more specific topics, such as carbon reduction, and including practical advice for companies seeking competitive advantage.
The workshops are an opportunity for smaller companies to get face-to-face contact with the utilities. Having hosted the workshop on innovation himself, Kaye said he managed to capture some good ideas, but this is not simply a talking shop. Workshop participants are asked to write down their solutions to the problems facing Anglian and these are then passed to a newly created Steering Group.
To help harness innovation, Anglian has engaged the expertise of the UK Centre for Economic & Environmental Development (UK CEED) and set up the Water Innovation Network. An online innovation portal went live in May, and member companies (there is a subscription fee) are invited to submit a form about their product for review by the Steering Group, which meets every month.
Based on Anglian’s Strategic Direction Statement (SDS), the utility has set out strategy maps to help companies identify its technology needs going forward. Ideas for data management, bio-augmentation of wastewater, repair techniques for existing assets, wastewater technology and network management have already been pushed out to the AW teams working in those areas for further assessment.
Kaye says it is the responsibility of the teams to decide how best to develop the ideas, and the Steering Group’s job to follow up on the progress of the ideas so that they are not lost.
Sarah Weaving, network development manager at UK CEED says that Anglian’s aspiration is “fantastic”, showing a real commitment to a transparent and open engagement with the supply chain.
The not-for-profit organisation is now talking to other water companies in other regions with a view to rolling out the process.
“It should benefit the entire water industry,” she told WWT.
Kaye says other water companies, like United Utilities, Northumbrian Water and Severn Trent, are watching Anglian closely to see what they can learn. South West Water (SWW) too is aware of Anglian’s approch. Head of procurement, Mike Davies, says SWW company is “evolving” in terms of how it engages with the supply chain.
In June 2010 South West launched a new scheme for supplier innovation. Suppliers can fill in a form on the procurement page of its website and each month one is invited to give a presentation at a meeting of a Steering Group tasked with progressing innovative ideas.
Davies is keen to stress that the concept of innovation “is pretty broad-based”. It can be focussed on a product or business process as well as technology, he told WWT.
Carbon is a key area for innovation and Davies says, “There are opportunities across the whole piece – on-going efficiency targets, the need to find new ways of doing things, we’re looking for positive changes.”
He says the company is not focussing on research and development, but solutions that have been proven elsewhere in the industry. He sees being one of the smaller companies as an advantage in terms of internal alignment of procurement and supply chain engagement because the heads of department are all on one site.
SWW joined Achilles and Cemars in 2010 and is working with Achilles to engage 50 key suppliers, to find out what actions they are taking to measure and manage their carbon emissions, whether they are working towards a standard and whether their footprint is independently verified and publicly disclosed.
“We’re seeking data from suppliers,” he said, pointing out that while larger suppliers are positioning for this requirement, smaller ones need guidance on what is required in terms of carbon data analysis. The company has also sent out a new code of conduct to suppliers at the end of July, covering issues like sustainability, human rights, health & safety and governance.
At the start of AMP5, it also introduced a new model of working with contractor May Gurney, a key framework supplier for engineering services. SWW previously bought and stored its own materials, such as pipes and fittings, which were then accessed by the contractor.
From April 2010, this changed so that responsibility for stock ownership and reconciliation fell to the contractor. Davies says SWW is already reaping the efficiencies of this new way of working.
The last regulatory review threw down a challenge to water utilities and it is now prerequisite to put efficiencies on carbon and cost at the heart of all operations. But the message from the supply chain seems to be that there are big wins to be had, and they are the reward for openness and coherent and strategic engagement.