Procurement Innovation

Andrew CrostonFujitsu Services UK+I

A Neapolitan Procurement Talk

2 Version Jan2011 FUJITSU CONFIDENTIAL

3 Version Jan2011 FUJITSU CONFIDENTIAL

Agenda

Infrastructure Programme Delivery Assurance/Risk Management Brand New Supply Chain Creating Opportunity

Central Government Procurement Procurement Transformation Lean e-Sourcing

Global Technology Company Supply Engagement Global Alignment R2P

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Big Budget and Challenges No procurement team No established supply chain No policy, procedures, processes or systems

Innovation Delivery assurance: CLM NEC3 Contract Schedule Swift adoption of proven e-Tools

Challenges of Procuring London 2012

Aquatics Centre

Swimming Pool

Bricklaying Subcontractor

Brick Merchant

Distribution Company

Brick Manufacturer

Quarry

Olympic Park

Tier 1

Tier 2

Tier 7

Tier 3

Tier 4

Tier 5

Tier 6

Typical Supply Chain

5,000 contractsleading to 75,000 subcontract opportunities

• Payment Terms• Regional Reporting• Compliance

Over 150,000 suppliers currently registered

250 buying organisationsplacing contract opportunities

Opportunity Portal

People

Proce

ss

Technology

2009 2010 2011

68% Temps

Outdated Practices

Paper Based Processes

Pe

rfo

rma

nc

e

MS Outlook

Tenders Electronic Daily

Reactive

Fire Fighting

Long term Interims

Tender Event Schedule

eTendering

eEvaluation

eAuction Paperless Office

Permanent Staff Focused

45% Temps

CIPS Gold

Sustainable Policy

Sustainability Embedded

£20M/PM£25M/PM

<15% Temps

£30M/PM

OpportunityPortal

Procurement Strategy

World Class - Hackett

CIPS Gold Network

Procurement & Contracts Division (PCD) Transformation Map

Lean Processes

Efficiency from within Defra

ORACLE

e-Tenderinge-Auctions

e-Evaluation

e-Contract Management

Requisition toPayment

Operating Model Options

Five operating options identified and considered for a consolidated procurement and commercial function across the Network, each option has its own relative merits, these are outlined below.

Common Features and Benefits (present in each option)

- Single Network Commercial Director across the Procurement/Commercial profession- Lower operating costs- Common processes and procedures- Reduced number of procurement functions- Reduce Headcount

Option 2

1 Centre

Option 5

Delivery Unit

Option 3

Outsource

Option 4

Hybrid

Option 1

2 Centres

2 - Procurement Centre Model

KEW MMO AH

Core EA

KEW MMO AH Core RPA

RPA

Network Commercial Director

Existing Client Organisations

ICT

Relationship Management

London Centre Bristol Centre

Centralisationof Common Commodities

to ERG

Common: People

ProcessesTechnologies

EADPTs

Relationship Management

Network CIO’s EA Distributed

Existing Client Organisations

EA

Organisations currentlyprovided with a procurementshared service from London

Organisations currentlybeing adopted into the London shared service

Option 1

2 Centres

Supplier Assurance Programme

CSR PortalCSR

Portal

Annual Review Annual Review

Site Visits(100% pa)Site Visits(100% pa)

Quarterly Review

Quarterly Review

CSR PortalCSR

PortalCSR

PortalCSR

Portal

Premier Suppliers

(Top 50 >£2M PA)

Preferred Suppliers

(Top 150 >£500K PA)

All Approved Suppliers

(c1600 > £5K PA)

Organisation Assurance

Level

• Environmental Credentials• Health and Safety• Labour• Anti-Bribery & Corruption• Industry Accreditations• SME status

Scope

• F2F Meeting (#) per annum• Relationship Management• Performance Measurement• Scorecards• Extract Relationship Value

• 4 F2F Meetings per annum• 1 Visit @ Supplier Premises• Promote Innovation• Extract Relationship value• Joint opportunities to …

+ +

+

A Framework for Supply Chain: Visibility, Compliance and Governance

Site Visits (5% pa)Site Visits (5% pa)

Site Visits(1% sample pa)

Site Visits(1% sample pa)

+

+

UK+I Supplier Chain

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700

1600 LIVE Fujitsu UK+I Suppliers

Tail

Rump Premier

500 50

Preferred

100

Why does this Dinosaur exist? - Decentralised procurement - CFS/SLS Purchase 2 Pay processes - Poor governance - Poor use of P-Cards

QuestionMarks?

250

Up to 15 New Suppliers Added each Month!

(6,000 historical, many remain on database)

Chop off the tail?

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Challenges of Procuring the Games

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Big Budget and Challenges No procurement team No established supply chain No policy, procedures, processes or systems

Green field Operation Build a strong team 3 to 120 Pragmatic and workable procedures Adopt proven e-Tools and mandate