Utility Week

Utility Week 20th October 2017

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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20 | 20TH - 26TH OCTOBER 2017 | UTILITY WEEK Policy & Regulation Roundtable Partnerships for Performance 27 September, Covent Garden Hotel, London Views from the speakers: Karen Thompson, head of direct procurement, Anglian Water "There is a real desire to bring the supply chain closer so that we can stop the behaviour that happens when we flex our muscles." Model relationships Utilities are scrutinising their supply chains to try and find further efficiencies. A Utility Week- Unipart roundtable looked at the options. U tilities are increasingly coming under pressure to deliver more for less. Keeping costs down while continu- ing to deliver exceptional service is no mean feat, which is why seeking efficiencies within the supply chain has become a must. At a recent roundtable organised by Utility Week in association with Unipart, represent- atives from some of the UK's leading utility companies explored how different forms of partnership – including collaboration, alli- ance models, and direct procurement – can affect the performance of a business and drive efficiencies. And with new and smarter ways of working offering utilities the poten- tial to realise efficiencies of 30 per cent or more, similar discussions are likely to be had across many a table throughout the sector. Topics considered on the day included how the next round of regulatory cycles will put greater pressure on companies to deliver efficiencies, and the role that technology can play in changing supply chain relationships. The group deliberated about the dif- ferences between collaborating and more formal alliances, including commercially aligned alliances, with some suggesting not all companies are ready for an alliance. A key message from the aernoon was that it's about finding the right fit for your busi- ness and assessing the specific need rather than taking a one-size-fits-all approach. One attendee explained how their com- pany had performed a benchmarking exer- cise to determine where it should sit on the partnership spectrum and concluded that collaboration worked best for them. Others described how they had tested behaviours of potential alliancing partners and behaviours within their own organi- sation to ensure a cultural fit, with every partner working for the benefit of the alli- ance rather than for the benefit of individual companies. A strong focus of the discussion centred on one of the biggest reforms looming on the horizon for the water sector – the introduc- tion of direct procurement as part of the PR19 framework. It will see water companies put Zac Coley, head of procurement and business services, Bristol Water "One major water company said the reason they moved away from an alli- ance model to a more collaborative or intel- ligent client model was because 'under the alliance we knew how much the weekly shop would cost us but we couldn't tell you how much a tin of beans was'." the delivery, financing and possibly the oper- ation of major capital projects out to tender. Participants said they have been working to establish what challenges and opportuni- ties this could present for the sector. They suggested that Ofwat had taken inspiration from the energy sector but they thought that direct procurement for the water industry would be set up "very differently". The notion of utility companies becom- ing "intelligent" and "informed" clients by appropriately using the supply chain and making use of technological advances also made for an interesting discussion. The group argued that while technology has created a wealth of data, it's what you do with the data that is most important. "The customer doesn't care what the sup- ply chain looks like. We should be sharing data as appropriately as possible to ensure the customer doesn't suffer," said one. Towards the end of the day the water companies around the table discussed what direct procurement is likely to mean for them, agreeing that its impact would be profound "It comes back to us having to take a cold, hard look at what we are actually here for. Are we an asset management company or are we a provider? What are we here for?" ques- tioned one.

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