United Utilities Drives Value with SAP Sourcing OnDemand
 

United Utilities Drives Value with SAP Sourcing OnDemand

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View this informative presentation from SAP's Annual 2012 SAPPHIRE Conference. These slides were presented by United Utilities, which is an SAP Sourcing OnDemand customer. They were presented in the ...

View this informative presentation from SAP's Annual 2012 SAPPHIRE Conference. These slides were presented by United Utilities, which is an SAP Sourcing OnDemand customer. They were presented in the Cloud Campus theater.

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  • HelloI am Colette Conroy Lead Contract Formulator/Buyer for United Utilities a Water and Waste company in the UKI am here to talk to you about United Utilties and how we have driven value with SAP sourcing On Demand solution.Before this project I had little IT experience. I was a driver rather than a mechanic the onboarding of SaP sourcing has widened my IT experience and introduced a new language to me of IT speak.First I would like to introduce you to United Utilities who we are and what we do
  • United Utilities Group PLC (United Utilities) is engaged in water and Wastewaterbusiness. its subsidiary United Utilities Water PLC (UUW)holds a licence from the UK government to provide water and sewage services to around seven million people in North West of England. The Company business segments include regulated activities and non regulated areas The regulated activities are generally water and wastewater related The non regulated activities include United Utilities Property Services Limited, United Utilities Group PLC, Its shares are listed on the London Stock Exchange and we are a FTSE 100 company.But what do we do
  • In simple terms It’s our job to bring 3.2 million households 7 million customers and 400,000 businesses 2,000 million litres of clean, clear water each day. And we take it all away again, treating it so it’s safe to go back into the rivers too. We do this so our customerscan simply get on with life. They can turn the tap on and clean water comes out and they go to the bathroom and flush and away it goes.We are also a land owner and land lord and this comes with other responsibilities which are social and environmental.As you can see we have 57000 hectares of catchment land 184 reservoirs and 1000s of miles of pipes to manage. To make sure we do this correctly we are regualted
  • Our water business is regulated in terms of both price and performance. The water regulator, Ofwat, reviews our price limits every five years via an Asset Management Plan (AMP). In the period between 2005-2010 (AMP 4) we invested more than £3 billion to improve the water and wastewater infrastructure and the environment across the North West ofEngalnd. AMP 5 2010 to 2015 we plan to invest £3.5 billionBeing regulated means that government bodies have a huge say in our funding and in how we complete our projects. Our key regulators are:DWI (drinking water inspectorate, regulates the quality of the drinking water we produce)Environment Agency (regulates our discharges into rivers and our impact on natural habitats and endangered species)OFWAT (regulates how much we can charge our customers for providing water and wastewater services)The Consumer Council for Water represents customers’ interests relating to price, service and value for money. It also investigates customer complaints about water quality.Special to my heart as I am in procurement We are also regulated under the EU Utilities directive which regulates how we procure goods, works and services and UK european laws ie the Competition Act.So what do we spend all this money on
  • This AMP we will spend £3,572 million from 2010 to 2015 Key elements of the expenditure programme are the upgrading of wastewater treatment works, pumping stations and sewers to reduce the risk of pollution, the development of new groundwater sources, the cleaning and renewal of water pipes across the region, and initiatives to produce power from the methane given off by sewage sludge.We need to procure Major projects for this AMP 5: Completion of the 55km West East Link Pipeline (£125 million pounds), which will carry 100,000 metre cubedperday of water between Merseyside Liverpool where the Beatles come from and Greater Manchester where Bee Gees Oasis come from, an £88 million pounds upgrade of water and wastewater systems in Cumbria, and £20 pounds million to improve the wastewater system in Keswick. In the lake district a national park. No famous band from keswick mainly poets Coleridge?We contract with Contructionpartners : Balfour Beatty and Enterprise are construction partners for the period, with BB’s contract worth about £500 million. The KMI Plus venture involving Kier, Murphy, Interserve and Mouchel has a £250 million major projects contract, which includes new sewage tunnels in Preston. Samuel Ryder (1858–1936) — founder of the Ryder Cup Golf CompetitionWe also buy commodities chemicals, goods and services, IT services Energy, telecoms Fuel, Personal protection, ie boots, coats trousers pipes .So you can see we spend big lumps of money and we manage large construction contracts and also small but strategic spend.So with this spend then how did we do it prior to SAP sourcing
  • Prior to SAP sourcing we had data from SAPerp onto Spreadsheets, other information on access data bases, other systems and some information not electronically stored, which would be manually transformed into a report and may be a presentation. Information was gathered and analysed by others our supply chain analyists, finance, business managers. Buyers could not simply access information from a central depository. Different areas of the business did the same thing in different ways. There were areas of good practice and areas of average practice. Buying strategies were developed on paper and wet signature were gathered by walking round various sites, We prepared some Paper Tenders more usually they were electronic but transferred CD via post to tenderers, tenderers sent them back via post, to be opened by two people in a locked room, there was no visibility of tender progress, correspondence was via post and e-mail stored on separate systems, Contracts were awarded and documents archived and stored by a separate outsourced company. Post tender spend was gathered again via SAP, and other various systems but not linked and had to be manually downloaded and manipulated. Different views of spend came from differing sources of information.One of the requirements of being a regulated company is the clarity and accuracy of our accounting and reporting . We can fined by OFWOT millions of pounds if our reporting is found to be unclear.So what has happened since SAP sourcing was introduced.
  • We have a system that is straight out of the box with some customisation (reporting only). We have amended where we have needed to reflect UU language. The upgrades called waves are managed by SAP, we have an upto date system,there is a market place helpdesk which we can turn to in times of trouble.UU has a single IT platform for the Award of ContractsA largely paper based system becomes electronicDeliver lean Tendering to contract award processesRemove multiple data entryIncreased visibility of progress to not only Supply chain but also to other departments, ie finance, engineering audit.Automatically notify users of pending and missed milestonesRemove the use of multiple systemsProvide document management and storageProvides a fully auditable electronic trail of an RFx processthe first step on the way to one version of the truth.These changes have lead to savings and driving value through our processes
  • Soft cost savings have been generated by reducing costs through less labour, more efficiency, productivity increase, more usable information, better compliance, better work environment. One version of the truthThe soft savings UU for the first time will have a central repository for all Agreements (assuming Supply Chain has awarded the contract) we can find this quickly efficiently.A single platform for the measurement of savings – we have clarity of spend, we can plan better,A single view of workload at a category, Head Of or Departmental view, outputs can be managedReporting at a local level rather than from the centre, automated reports – as a buyer I have the power to run my own reports and gain instant information which can influence my buying strategies.The approvals process becomes electronic (can accept electronic signatures) I do not have to walk round the offices waiting for approvals.Everyone follows the same process, best practice is spread through out the department.Everyone uses standard documentation managed centrally.Suppliers can access and update their own information (name, address, contacts,) Suppliers can forward contract amendments but will only be accepted if UU approve such amendmentsEveryone has a workbench with their key data displayed every time the system is entered. There is visibility throughout the department.Hard SavingsGenerated reducing head count, reducing storage costs, but mostly by carrying out auctions The ability to carry out auctions in houseWe have developed an inhouse capability to deliver auctions and develop the system furtherFurther Value will be gained when we implement the second phase of SAP integration
  • Supply Chain are on the journey to operating one system across all procurement activities and processes delivering one version of the truth. The project in happening as I speak and will lead to full intergration.Contracts awarded in SAP Sourcing will automatically update ECC6 as Spend data will be captured against the Framework AgreementWe will have warnings on overheating or under spending contractsCatalogues can be introduced and bring Amazon.com functionality. Catalogues can contain pictures of the goods describedSuppliers self service, where the supplier accesses the system and updates data e.g.Catalogue prices, catalogue items, maintains descriptions, updates SLA matrixes, updates SRM KPI’s, submits variations etc. No amendment would be active unless approved by the appropriate UU employee.You could get reports on delivery performance, accuracy of invoices, payment performance etcSRM data can be issued to and received from suppliers Delivery of a spend analytics tool with all data from a single source and one version of the truth.UU will gain hugely by this project and SAP sourcing was the first step in that journey.
  • We are starting to develop SRM with SAP sourcingRaising the bar on performance (two-way) we want to develop the system so UU and the suppliers can have Joint measurement of performance against agreed KPIs and SLAs can be managed and published via the SAP sourcing systemActive participation in performance assessment will be managedJoint participation in performance reviews and feedbackPromotion and resourcing of performance improvement plansParticipation in supplier collaboration to drive out efficiencies and improved ways of workingFostering joint innovationThose are our short term plans but what do United Utilities really want from SAP sourcing
  • United Utilities in line with most Utility companies in the UK generally do not procure on price alone quality plays a huge part in our decisions. When we carried out our auctions we made huge savings , but out auctions are limited to price alone auctions due to the above clause in the Utilities Contracts Regulations.“shall instantaneously communicate to all economic operators participating in the auction at least sufficient information to enable them to ascertain their relative rankings in the auction at any time;Which means we can’t auction quality weighted tenders. 95% of our spend is procured via quality weighted tendering. Which means there is still a huge potential for untapped savings for United Utilities and huge sales potential for SAP. For if they develop a system that can cope with the clause there is huge selling potential through out Europe.

United Utilities Drives Value with SAP Sourcing OnDemand United Utilities Drives Value with SAP Sourcing OnDemand Presentation Transcript

  • United Utilities Drives Value withSAP Sourcing OnDemandColette Conroy, Lead Contract Formulator, United UtilitiesMark Ellis, SVP of OnDemand LoB Sourcing, SAP
  • Legal Disclaimer The information in this presentation is confidential and proprietary to SAP and may not be disclosed without the permission of SAP. This presentation is not subject to your license agreement or any other service or subscription agreement with SAP. SAP has no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation and SAPs strategy and possible future developments, products and or platforms directions and functionality are all subject to change and may be changed by SAP at any time for any reason without notice. The information in this document is not a commitment, promise or legal obligation to deliver any material, code or functionality. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. This document is for informational purposes and may not be incorporated into a contract. SAP assumes no responsibility for errors or omissions in this document, except if such damages were caused by SAP s willful misconduct or gross negligence. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions.© 2012 SAP AG. All rights reserved. 2
  • Procurement’s top priority Cost savings is the top priority for procurement over the next three years. Source: CPO Rising 2011, Ardent Partners LLC© 2012 SAP AG. All rights reserved. 3
  • Strategic sourcing Generate cost Drive sourcing savings through best practices RFx and auctions through projects Gain insight into Save time with activities through sourcing process user-friendly dashboards automation© 2012 SAP AG. All rights reserved. 4
  • Contract lifecycle management Gain control Gain full over your visibility into contract contracts management via a repositoryProvide security Standardizewith electronic legal contractsignatures creation© 2012 SAP AG. All rights reserved. 5
  • Supplier management Empower suppliers Help ensure top with self-service supplier capabilities performance with scorecardsFoster close supplier Gain visibility intorelationships through suppliers via acollaboration repository© 2012 SAP AG. All rights reserved. 6
  • United Utilities 2012/13United Utilities Drives Value with SAP SourcingOnDemand Colette Conroy Lead Contract Formulator
  • United Utilities in the UnitedKingdom North West of England London
  • What do United Utilities do
  • Regulators
  • How do we do it
  • Prior to SAP SourcingOnDemand
  • Present UU
  • Present Savings Soft cost savings have been generated by reducing costs through less labour, more efficiency, productivity increase, more usable information, better compliance, better work environment. One version of the truth Hard Savings Generated reducing head count, reducing storage costs, but mostly by carrying out auctions
  • Future - Benefits from –Integration with ECC6 (P2P) E Tendering E Auction Work Flow Inventory Spend Management Analytics Front End Contract Award Contract Portal Management Management Additional Contract Management Functionality Supply Chain Phase 1 Good search engines for Requisitioners to find Automatic loading of contracts suppliers and items Catalogues conformed contracts Amazon Dot Com type of order generation New Instance OCR read Supplier Workflow for Payment By Management of SAP ―Req invoices Self Service mismatches BACS Reporting to BACS‖
  • Supplier Relationship Management withinSAP Sourcing OnDemand <- -> --- --- What will we do together? Su --- Joint pp c- ly Relationship tri Ch en Management End to end process reviews rC ain (JRM) lie Ma p up na -S ge Risk reduction Supplier d- --- Relationship --- --- Management (SRM) -> <- Supplier innovation --> Contract Management --- Shared incentives c- AM&D & OPS owned for contractors on agreed ri list (£10m+). Budget owner / Supply Chain nt Ce operated for suppliers of goods and services ct ra nt Co Contract Administration and Service -- Management --- <- Common Model Owned by Supply Chain 16
  • Future plans - what UU want• Auctions enhancements• United Utilities in line with most Utility companies in the UK generally do not procure on price alone, quality plays a huge part in our decisions. Utilities Contracts Regulations 2006, Article 56• (13) During each phase of an electronic auction, the utility—• (a) shall instantaneously communicate to all economic operators participating in the auction at least sufficient information to enable them to ascertain their relative rankings in the auction at any time;
  • Summary• We have a fair, transparent and consistent way to procure goods, services and works• We have reduced our cost to serve• We have greater visibility of our savings• Our reporting facilities gives greater transparency and can be accessed easily• SAP Sourcing OnDemand is one step nearer to one version of the truth 18
  • Thank You!Visit SAP Sourcing OnDemand at http://sourcing.ondemand.com/