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SA Water Procurement State Procurement Board Forum 28 May 2015 Richard East – Senior Manager Procurement

Thursday, 28 May 2015

SA Water Procurement….Topics

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• Structure • Strategic Alignment • Key Facts • Our Journey • Capability and Culture • Key Initiatives and Priorities • Key Strategies and Tools • Successes • Recap

Structure

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Operational, Goods,

Services & Equipt

Capital Works & Services

Corporate Services

Systems & Governance

Energy Strategy &

Service FM & Fleet

Category Management

Procurement Regulation Finance IS

Business Services

Procurement

• More than just “Procurement” • Part of “Business Services” • Driving role in business performance

Strategic Alignment

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Corporate Vision &

Strategic Goals

Business Group

GM's Group Business Plan

Business Unit

Action Plan

Employee

PD & PADP

Strategic Alignment

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Key Facts

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• Moved to “category” structure in April 2014 • 35 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)

Key Facts

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Facilities and Fleet Management…..

65 Regional & Outer Metro Sites

(All sites freehold)

Total Occupants – 550

FM Service Supplier

Brookfield Global Integrated

Solutions

Current Contract

5 years commenced January 2011

8

9

250 Victoria

Square

Adelaide Metro Sites

250 Victoria Square (leased)

11 Waymouth Street (leased)

16a Ashwin Parade, Torrensville

(leased)

Bolivar AWQC (Freehold)

Total Occupants - 1061

FM Service Supplier

DTZ (UGL Services Pty Ltd)

Current Contract

5 years commenced February 2011

11 Waymouth St

10

Heavy Fleet Truck & trailer assets – 173 Minor plant assets – 543 Total assets - 716 Heavy Fleet Service Supplier: Vehtec Pty Ltd

Light Fleet Passenger & Light Commercial assets – 495 Light Fleet Service Supplier Fleet SA - Leaseplan Australia

Energy @ 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 CO2 emissions

Renewable energy producer & user What else are we doing about energy?

Key Facts

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

Energy Management

Energy Recovery Energy Generation

Energy Efficiency

Our Journey…..Procurement Transformation

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Category Management

Transactional

Strategic and Commercially Focused

Our Journey……Key Enablers

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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

Capability

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• 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)

Team Culture

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• 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

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Culture…….Procurement Team Behaviours

Culture “The Teamwork Pyramid”

19 Acknowledgment: Patrick Lencioni, The Five Dysfunctions of a Team

RESULTS

ACCOUNTABILITY

COMMITMENT

HEALTHY CONFLICT

TRUST

VULNERABILITY COMPETENT, COHERENT LEADERSHIP

Key Initiatives & Priorities – 15/16

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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

eCatalogue • User experience

• “Shopping basket” • Online shopping

• Contract leakage • Efficient processes • Aligned to contracts

Risk Based Procurement • Accredited Officers and Business Unit

Delegates • Customer empowerment • Audit controls • Targeted solutions and training • Reduction in low value transactions in

Procurement

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

Key Strategies and Tools

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Incentivised Target Cost Contracting

Early Contractor Involvement (ECI)

Energy Price Management (EPM)

Programme Delivery

Kit Framework Agreements

Supplier Performance Management

Work Allocation for Good

Performance

Project Framework Agreements

Collaborative Planning

with Customers

Benefits Methodology and Capture

Risk, Opportunity

and Innovation

Capture

Agile and Flexible Working

Successes

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Exceeding 14/15

Benefits Target by

12.5% YTD All Recent

Vacancies Filled Via Internal Promotions

Playing Integral Role in Other SAW

Transformation Initiatives

Incentivised Contracting is Changing Contractor Behaviours

Programme of Framework Agreement Opportunities Agreed

Playing Pivotal Role in Reducing SAW Energy

Costs

Procurement Team Collaborated to Develop

Team Behaviours

Customers Coming to

Procurement for Help

Using Category Management Intelligence to inform

Procurement Strategies

Upskilling SAW Internal Customers’

Commercial Acumen

Dashboard Reporting for Customers

SA Water Procurement….Recap

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• Structure • Strategic Alignment • Key Facts • Our Journey • Capability and Culture • Key Initiatives & Priorities • Key Strategies and Tools • Successes

…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 …intelligence and collaboration

…great progress….transformation continues