Supply Chain Strategy Edition 01-2014
Contents Executive Summary Mutual Benefits of the Supply Chain 01 04 Subcontractor Relations Guidelines 05 Levels of Engagement 07 Introduction Tiered Supply The Chain VINCI Group 01 08 Local Community & Small Business 11 Performance Management 13 Communicating Performance to Supply Chain Partners 15 Selection and Verification Summary 17 19
The purpose of our Supply Chain Strategy is to support the VINCI Facilities vision to exceed the expectations of all our stakeholders, be the preferred construction, facilities and associated services partner for our clients and be the benchmark against which our competitors are measured. Our mission is to create and maintain great places to live and work, listening to what our customers need and provide innovative solutions that add value, delivered by excellent people who care. In order to fulfil our vision and mission a strong supply chain strategy is essential.
Executive Summary Working to build a better busines Integral to our Supply Chain Strategy is our Subcontractor Relations Guidelines that spells out six fundamental commitments made by the VINCI Group. They reflect the importance of developing strong and mutually beneficial relationships with our supply chain based on fairness, trust and reliability. With this in mind we seek to develop collaborative relationships across all service sectors and to work with likeminded organisations of all sizes, to provide a service based on agreed commercial and operational objectives. We have three tiers of supply chain partner: Tier 1 - Strategic Partner Tier 2 - Preferred Partner Tier 3 - Approved Partner The level of engagement is dependent upon spend and level of risk associated with the service being provided. This ensures that resources are efficiently allocated across the supply chain. While continuous improvement is embedded within our culture, we have found that the great challenge has been finding the way to ensure our teams focus on the right things - the things that really add value to our customers and also help us to be a long-term, financially viable, environmental and socially responsible business. 1
FM Project Directory Our VMOST tool (Vision, Mission, Objectives, and Strategies) is a framework we have adopted to ensure we deliver on our commitments. It has two main purposes: It keeps our team focused on our business vision and mission and highlight areas for improvement. It ensures we have clear plans for the future and can measure progress against our improvement plans and tactics this is our Annual Operating Plan (AOP), To exceed the expectations of all our stakeholders, be the preferred construction, facilities and associated services partner for our clients and be the benchmark against which our competitors are measured Create and maintain great places to live and work, listening to what our customers need and providing innovative solutions that add value, delivered by excellent people who care H,S & E: Improve our H, S & E performance by 15% towards zeroharm Profit: Achieve our profit target Cash Balance: Achieve our target cash balance Quality: Improve our right first time performance by 10% People: Improve employee engagement scores by at least 5% Community: Increase our participation in the communities we work in by 10% Supply Chain: Ensure we have value adding supply chain strategies across the business Customer Engagement: Maintain our average customer satisfaction above 85% Growth: Achieve a 10% growth year on year from 2014 A B Deliver a Increase our resilient and success in cost effective winning work quality service to our customers STRATEGIES OBJECTIVES MISSION VISION C Ensure industry leading health, safety and environmental performance D Provide a positive contribution to the wider society SUPPORTING TACTICS E Support and anticipate the needs of our customers & deliver innovative solutions F Create an environment in which our team can maximise their potential 2
Executive Summary Our supply chain partners are key players within this framework, where everyone has a clear line of sight of how the activities they are required to undertake contribute to our customer, community and corporate goals. Part of this framework involves monthly performance reviews of our supply chain against targets, with feedback communicated to them. We have an inclusive approach to supply chain selection and work with all sizes of company, both locally based and nationwide. We take great care in selecting our supply chain partners in order to ensure a cultural alignment with VINCI Facilities and that our customers experience a seamless delivery model from day one. Through working in partnership with our supply chain partners we overcome the common obstacles to collaborative working that include: Short-term focus Concerns over visibility and sharing of sensitive information Appetite for risk sharing Cultural differences. Our approach to supply chain management strikes a balance between robust contractual arrangements to safeguard our customers and internal stakeholders, contributing to the wider community and the creation of an environment that enables our supply chain partners to be successful. 3
FM Project Directory Mutual Benefits of the Supply Chain Supply chain is one of the stakeholder groups that anchor our sustainable business model. There are mutual benefits between our supply chain partners and other stakeholders. Our supply chain plays an integral role in supporting the VINCI Facilities objective to operate successfully in the long term and through the prudent use of resources ensuring that locally and globally we secure economic success. Supply Chain Customer Quality Satefy Service Sustainability Value Growth Profit Safety Sustainability VINCI Group support Fair commercial relations Early engagement and a collabotaive approach Internal Stakeholders ROI Governance (iportal) Relationship Safety Sustianability Quality, Service and Performance Local Business SMEs Environment and Safety Sustainability Community Engagement Activities Community 4
Subcontractor Relations Guidelines Our VINCI Manifesto makes a commitment to being exemplary in all aspects of business. A VINCI working group launched Subcontractor Relations Guidelines as part of that commitment. The guidelines set out core values and commitments behind how the business should engage with our supply chain. The guidelines recognise the importance of the relationships we hold with our supply chain and the impact they have on the successful delivery of our projects. These guidelines act as a framework that we at VINCI can use to influence our long term supply chain strategy as well as how we engage with our supply chain on a day to day basis. The launch of these guidelines complements our supply chain strategy and enhances and underpins the aspirations of our own business in this regard. Our reputation with our customers is extremely important and is influenced through the performance of VINCI Facilities operations. Our performance is intrinsically linked to our supply chain performance; we therefore take great care in their selection and appointment. Through our reporting mechanisms we maintain an ongoing process to ensure that we agree a mutual set of objectives for all services and we review each other s performance in terms of meeting and exceeding objectives, using the following criteria: Quality Safety Service Sustainability Value We select and maintain a supply chain that operates in a nonconfrontational environment, where equal voice is given between VINCI and our supply chain to encourage an honest exchange of ideas and solutions. 5
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Levels of Engagement Tier 1 Strategic Supply Chain Small number of partners providing collaborative high end solutions. Tier 2 Preferred Supply Chain Core supply chain providing repeat high quality services. Regular meetings and workshops. Tier 3 Approved Supply Chain Base level qualified businesses, often only used occasionally. 7
Tiered Supply Chain Our supply chain is tiered to reflect levels of annual expenditure with the supply chain partner, complexity of the service category and levels of risk involved in the delivery of services or works. A tiered approach ensures an efficient allocation of supply chain and procurement resources, which ultimately delivers best value internally and to our customers. Increasing Risk & Engagement Tier 2 & 3 Local Relationships and SMEs Delivery Driven Approved Supply Chain Partners Tier 3 Minimise admin Cost and Buying Initiatives Approved Supply Chain Partners Tier 1 & 2 Closely Manage Relationship Framework Agreements Strategic and Preferred Partners Tier 2 & 3 Price Driven Bulk Purchase Approved Supply Chain Partners Total Cost / Value Increasing 8
Tiered Supply Chain Tier 1 Strategic Partners This tier is where there is a high level of expenditure and or where the service is critical to VINCI Facilities and our delivery model. Here, a high level of collaborative working and planning at solution design stage is particularly beneficial. An example is where VINCI Facilities decides before the commencement of a tender process to partner exclusively with a particular subcontractor or small number of selected partners. Such early engagement brings innovation and co-design opportunities and facilitates the development of a robust, long term working relationship. It is also a very effective way of combining expertise, realising synergies and complementing our organisation s resources in order to make each other s business stronger. Strategic Partners have developed from being Preferred Partners in order to form a more integrated delivery solution for our customers. Strategic Partners have committed people, resources and processes to support collaborative working. We have Framework Agreements in place with this tier to include standard terms, conditions and pricing structures governing future projects with us. 9
FM Project Directory Tier 2 Preferred Partners These are partners with whom we spend moderately high values and work with to deliver our key trades that are less complex and more dynamic in nature. As a Preferred Partner, we work closely with them and provide the opportunity to tender for and extend their service delivery across our portfolio. Our collaborative relationship involves regular review meetings and workshops to encourage innovation through continual improvement, exchange of best practice and cooperation. Typically Framework Agreements are in place with this tier of supply chain partner. Our partners have confidence that VINCI Facilities treat their business with due respect, giving positive feedback during review meetings and respecting the agreed payment schedules. VINCI Facilities operate a comprehensive Health, Safety & Environmental training programme, which preferred contractors can use to supplement and extend their own training initiatives. Strategic Partners S St ra r tegic Partnership Preferred Partners For particularly large and/or complex projects we have strategic partnerships with our Preferred Partners. Tier 3 Approved Partners A database of subcontractors for trades that might not be required on a long-term basis or represent low risk, but are necessary to enable us to deliver the complete range of services to our customers; such as one-off services. These services are often low value and provide an excellent opportunity to deploy local SMEs to assist us in contributing to the local economy by investing in the local pound. VINCI hold regular supply chain events by invitation, which is designed to be a platform to update our supply chain on Health, Safety and Environmental matters and our continued endeavours to bring a fully integrated service to our customer s contracts. 10
Local Community & Small Business Engaging with local community and SMEs Our supply chain strategy is designed to encourage local suppliers and SMEs. We are fully aware of and embrace our responsibilities to support the local economy and our duty to create jobs and improve people s lives. We have an excellent track record for employing locally based labour. We engage early and often with local communities in which we work to develop mutually beneficial relationships. We make sure we identify and undertake initiatives that draw upon the skills and resources of our organisation to provide a sustainable contribution to the communities in which we work. Our strategy to ensure a cohesive, tangible commitment to social responsibility in the community requires us to work closely with our supply chain. The full potential of what can be achieved will only be realised through a collaborative approach with all key stakeholders working together for the benefit of the community. Our commitment to the local economy and SMEs is demonstrated in a number of ways, for example: We host regular Open Days for SMEs to provide guidance on how to best use Constructionline. We arrange regular Meet the Buyer meetings in various locations across the UK, where we meet local suppliers and provide them with a platform to showcase their capabilities. VINCI Facilities are members of East London Business Place and have invested into the find it in the black country initiative. VINCI Facilities are ready to invest in similar schemes, in other regions. We actively support SME s training needs and systems set up (for example regarding health and safety, development of method statements and risk assessments) so that they flourish when selected to work with us. This is very helpful to small organisations with limited resources, as it provides them with an opportunity to tender for and work on new business with VINCI Facilities, despite the administrative challenges. 11
FM Project Directory Enterprise Category Headcount Annual Turnover (Euros) Medium < 250 < 50 million Small < 50 < 10 million Micro < 10 < 2 million Annual Balance Sheet Value or < 50 million or < 10 million or < 2 million Sourcing new products, Green Dragon Day To help introduce innovative green technology to the business, VINCI Facilities has developed a supplier event known as Green Dragon Day. Inspired by a TV programme in which entrepreneurs present business ideas to a panel of dragons, Green Dragon Day brings together green technology start-up companies and suppliers, allowing them to pitch ideas to a panel of experts, demonstrating what their solutions could contribute to VINCI Facilities. At the moment we have an established supply chain, said Head of Sustainability, Victoria Hughes. However an established supply chain can sometimes inhibit innovation and sourcing of new technologies. We really wanted to work with small, local suppliers to stimulate innovation and set us apart in the market. The events have proved a success, with contacts made far in excess of what can be achieved through traditional procurement approaches. Case Study Championing Local procurement At operation level, we always champion local procurement where possible, as this supports the local economy and minimises transport emissions. Our procurement policy commits us to be proactive in terms of environmental, societal and ethical issues, including purchasing of certified goods, local procurement and energy efficiency of plant. Our procurement policy identifies additional steps when procuring goods such as stationery, cleaning products, paints and equipment and identifies, where possible, closed loop recycling opportunities and life cycle impacts. These requirements are cascaded to the supply chain and are addressed in our contractual terms with specific suppliers. 12
Performance Management Our supply chain partners performance is measured and managed throughout the term of their contracts with us. This ensures that, in partnership with our supply chain, a service of consistent quality and value for money is delivered to our customers and our VINCI Facilities operations team. Our performance management techniques include the following: Key Performance Indicators (KPIs) Communication of operational performance to supply chain Regular performance benchmarking to ensure value for money is consistently delivered during the term of the contract. 13
FM Project Directory Performance Reporting and KPIs When developing KPIs we consider head contract customer requirements and adopt an holistic balanced scorecard approach in order to consider both financial and non-financial aspects of performance. All our subcontractors work closely with our local operations teams to ensure a seamless delivery model. We expect the same standards from our supply chain as we expect from our directly employed staff. Project specific KPIs reflect our customer s head contract and are weighted in accordance with criticality. In addition to project specific KPIs, through iportal we have in place a structured approach to undertaking performance reviews, through which our supply chain is scored periodically throughout the year against criteria including: Safety Sustainability Timeliness Budgets/ Value for Money Quality Customer Satisfaction Recommendation for future use 14
Communicating Performance to Supply Chain Partners We provide constructive feedback to our supply chain (both positive and where areas of improvement have been identified). We request remedial action plans from them for areas that requires improvement. We afford our supply chain partners a reasonable length of time to address weaker areas in their service provision. Our methods of subcontractor communication include: Review meetings, workshops and feedback in order maintain a strong relationship. It also facilitates shared best practice in areas such as sustainability and continuous improvement initiatives. Performance trends, communicated via weekly VMOST dashboards. Regular performance reports are produced through V-Nexus (our computer aided facilities management system). Monthly KPI reports. Request for action plans and monitoring thereof within an agreed time frame. Provision of additional training and guidance, where necessary, from our operations managers and central support team. 15
FM Project Directory Continuous Improvement As we strive for continuous improvement we use VMOST as the platform to work with supply chain partners during the term of the contract. Through a hierarchy of structured team meetings and workshops, with representatives from our supply chain partners and VINCI Facilities, ideas for improvement opportunities to the service and delivery model are discussed and shared. This approach shapes the tactics we use to make improvements. We are driven by a relentless pursuit of the elimination of waste and continuous improvement so that we can do more of the things that really matter to our stakeholders. Additionally, in collaboration with our supply chain partners, we undertake periodic benchmarking of the service and continually challenge the delivery model to ensure that together we are operating smartly, efficiently and flexibly, with LEAN methods of working. In the interests of transparency we share our benchmarking findings with our supply chain partners. To remain consistent with our holistic sustainable business model our benchmarking approach considers service levels and environmental and social performance, in addition to price. While we have access to substantial internal benchmark data, this is augmented externally, through relationships with organisations including The Royal Institute of Chartered Surveyors (RICS), PML Group (who have in excess of 15 years experience of working with a number of market leaders in FM service delivery and numerous blue chip organisations) and Bernard Williams Associates (BWA), a private Chartered Surveyor and expert in facilities economics able to provide advice on procurement and value engineering. We have an excellent track record of improving efficiency through effective supply chain partnerships in both the public and private sectors. 16
Selection and Verification To be considered for addition to our supply chain it is a requirement for all potential partners to register on iportal (www.coinsiportal.com/ supplier/). For stage 1 approval we require that our supply chain is registered with Constructionline (www.constructionline.co.uk). Constructionline is the UK s largest register for pre-qualified contractors and consultants. It has been proven to deliver an excellent service for public and private sector organisations and has been recommended by the OGC Common Minimum Standards and The Local Government Task Force. We have a requirement that our supply chain is accredited under the SSiP (Safety Schemes in Procurement) accrediting authority for their service sector, for example CHaS, Exor, Achilles, SafeContractor, NICEIC, Gas Safe. A full list of accrediting organisations is available at www.ssip.org.uk. This process ensures that we can give our customers the confidence that the supply chain we use are prequalified and approved to a robust standard and meet legislative requirements. 17
FM Project Directory Vendor Registration PQQ & Vetting Customised Forms Supports PAS91 Supports SSIP Relationship Management Records Vendor Selection Categories Messaging Project Assessments Performance Assessment Relationship Assessment Seamlessly integrates Constructionline while allowing direct input by Vendor Constant view on relationships These two registrations provide benefits to the supply chain in terms of visibility to other potential customers and guarantee that our supply chain conform to our exacting requirements of holding appropriate insurances, technical qualification, health and safety accreditations, plus an indication of their capability in terms of value of subcontracts that they can undertake competently. Once registered through iportal, companies are then referred to as an Approved VINCI Facilities Supply Chain Member. Our vetting process means that subcontractors only need to submit their Constructionline and SSiP registration numbers and any project specific details to prequalify for new business with VINCI Facilities. 18
Summary Where we work with a supply chain partner to deliver services, we adopt a structured approach to their engagement, selection, evaluation and on-going performance management. Our inclusive Supply Chain Strategy ensures the delivery of a sustainable, integrated and efficient service to our customers at a consistently high standard. Through our VMOST framework we maintain a culture and environment focused on continuous improvement which enables our supply chain partners to flourish. 19
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Des Pitter Head of Supply Chain, VINCI Facilities des.pitter@vincifacilities.com 07816 515494 Lee Robert Procurement Manager, VINCI Facilities lee.robert@vincifacilities.com 07816 517262 www.vincifacilities.com