SA Water Procurement. State Procurement Board Forum 28 May 2015 Richard East Senior Manager Procurement
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1 SA Water Procurement State Procurement Board Forum 28 May 2015 Richard East Senior Manager Procurement Thursday, 28 May 2015
2 SA Water Procurement.Topics Structure Strategic Alignment Key Facts Our Journey Capability and Culture Key Initiatives and Priorities Key Strategies and Tools Successes Recap 28/05/2015 Page 2
3 Structure Business Services Procurement IS Finance Regulation Procurement Category Management FM & Fleet Energy Strategy & Service Systems & Governance Operational, Goods, Services & Equipt Capital Works & Services Corporate Services More than just Procurement Part of Business Services Driving role in business performance 28/05/2015 Page 3
4 Strategic Alignment Corporate Vision & Strategic Goals Business Group GM's Group Business Plan Business Unit Action Plan Employee PD & PADP 28/05/2015 Page 4
5 Strategic Alignment 28/05/2015 Page 5
6 Key Facts Moved to category structure in April FTE positions across 6 teams Rolling $500m p.a. spend 80% of spend with 50 suppliers (3000 suppliers) 3 category teams covering 7 master categories Capital Works & Capital Services Operational Goods, Services & Equipment Indirect Services & IS 7 Category plans with savings targets (total $7m target 14/15; forecast $17m) 28/05/2015 Page 6
7 Key Facts Facilities and Fleet Management.. 28/05/2015 Page 7
8 65 Regional & Outer Metro Sites (All sites freehold) Total Occupants 550 FM Service Supplier Brookfield Global Integrated Solutions Current Contract 5 years commenced January
9 11 Waymouth St Adelaide Metro Sites 250 Victoria Square (leased) 11 Waymouth Street (leased) 16a Ashwin Parade, Torrensville (leased) Bolivar AWQC (Freehold) Total Occupants FM Service Supplier DTZ (UGL Services Pty Ltd) Current Contract 5 years commenced February Victoria Square 9
10 Heavy Fleet Truck & trailer assets 173 Minor plant assets 543 Total assets Heavy Fleet Service Supplier: Vehtec Pty Ltd Light Fleet Passenger & Light Commercial assets 495 Light Fleet Service Supplier Fleet SA - Leaseplan Australia 10
11 Key Facts SA Water SA Water is one of Australia s & SA s biggest energy users Energy is one of SA Water s highest operating costs Electricity use is our single largest source of CO 2 emissions Renewable energy producer & user What else are we doing about energy?
12 Energy Portfolio Management (EPM) Prior to 1 July 2013 we procured electricity via standard retail contracts We now pay the wholesale (spot) market price Price risk is managed by: 1. Electricity load management 2. Electricity self generation 3. Progressive forward contracting
13 Energy Management Energy Efficiency Energy Recovery Energy Generation
14 Our Journey..Procurement Transformation Transactional Strategic and Commercially Focused Category Management 28/05/2015 Page 14
15 Our Journey Key Enablers Organisation and Structure Focused team with clearly defined responsibility, authority and accountability for Procurement activity Procurement Processes Best-in-class measurement, approvals, conditioning, negotiation, risk management processes People The right people in the right positions, empowered and motivated by accountability Learning / Skills Procurement team using transparent price methodologies, use of P2P and educated key stakeholders. Upskilling customers commercial acumen Category Management A structure process that embeds the involvement of key stakeholders in the development of comprehensive sourcing strategies Technology Appropriate spend analysis, e-sourcing, e-procurement and e-srm approaches for sourcing and procurement 28/05/2015 Page 15
16 Capability Strong focus on developing our own people High degree of self-sufficiency and empowerment Mixture of experienced professionals and less experienced Moving from a transactional/traditional function to strategic/commercial approach Building a capability framework for required skill sets MCIPS development supported plus in job experience Position descriptions aligned and standardised for rotation Diverse skill set across the team Procurement (MCIPS, long-term and short-term experience) Energy Strategy & Service (accountancy, engineering, market knowledge) Governance, Policy and Procedure (process efficiency, lean, audit etc) Systems and Analytics (systems, accountancy, database creation management and interrogation) Facilities & Fleet Management (engineering, technical) Source: Aberdeen 28/05/2015 Page 16
17 Team Culture A one-team ethos Requisite Organisation principles and tools Guiding behaviours developed by team with open recognition Sense of achievement and pride in being part of successful team Building the Bank of Trust Feedback and learning Flexibility, rotation and resilience Development and retention strategy ( Procurement Brand ) High expectations matched with high empowerment and encouragement A key part of Business Services: aligned plans and behaviours 28/05/2015 Page 17
18 Culture.Procurement Team Behaviours 28/05/2015 Page 18
19 Culture The Teamwork Pyramid RESULTS ACCOUNTABILITY COMMITMENT HEALTHY CONFLICT TRUST VULNERABILITY COMPETENT, COHERENT LEADERSHIP Acknowledgment: Patrick Lencioni, The Five Dysfunctions of a Team 19
20 Key Initiatives & Priorities 15/16 Category Management Demand management and visibility Supplier performance measurement Intelligent contracting models Incentivised Target Cost Contracts Early Contractor Involvement Framework Agreements Sustainable benefit delivery Product standardisation Mix of work - BAU & strategic Risk Based Procurement Accredited Officers and Business Unit Delegates Customer empowerment Audit controls Targeted solutions and training Reduction in low value transactions in Procurement 28/05/2015 ecatalogue User experience Shopping basket Online shopping Contract leakage Efficient processes Aligned to contracts People 15/16 Business plan refresh 2020 Business plan and line of sight Behaviours and recognition Development and retention strategy Capability framework Commercial acumen Essential business partners Systems and analytics Stakeholder management and planning Page 20
21 Key Strategies and Tools Incentivised Target Cost Contracting Early Contractor Involvement (ECI) Benefits Methodology and Capture Energy Price Management (EPM) Programme Delivery Kit Framework Agreements Supplier Performance Management Risk, Opportunity and Innovation Capture Collaborative Planning with Customers Project Framework Agreements Agile and Flexible Working Work Allocation for Good Performance 28/05/2015 Page 21
22 Successes All Recent Vacancies Filled Via Internal Promotions Playing Pivotal Role in Reducing SAW Energy Costs Exceeding 14/15 Benefits Target by 12.5% YTD Playing Integral Role in Other SAW Transformation Initiatives Incentivised Contracting is Changing Contractor Behaviours Programme of Framework Agreement Opportunities Agreed Using Category Management Intelligence to inform Procurement Strategies Customers Coming to Procurement for Help Procurement Team Collaborated to Develop Team Behaviours Upskilling SAW Internal Customers Commercial Acumen Dashboard Reporting for Customers 28/05/2015 Page 22
23 SA Water Procurement.Recap Structure Strategic Alignment Key Facts Our Journey Capability and Culture Key Initiatives & Priorities bedding in new structure and skills aligning plans to SAW priorities diverse team and functions focusing on commerciality developing our people.behaviours high expectations much to do Key Strategies and Tools intelligence and collaboration Successes great progress.transformation continues 28/05/2015 Page 23
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