Procurement refresh boosts Thames Water capability
Procurement refresh boosts Thames Water capability
Efficio helped Thames Water create a new operating model, a hybrid of classic consulting and outsourcing delivering outstanding ROI and enabling the client to significantly exceed its business targets.
The project delivered savings which were over four times the original internal Thames Water plan (worth additional $100m) and ROI of 6:1 comparing incremental costs versus benefits.
Thames Water is the UK’s largest waste and water provider, delivering the sector’s largest capital infrastructure renewal program and serving over 13 million customers in London and across the Thames valley, pumping five billion liters daily, through a 140,000 kilometers underground network and over 2,000 plants.
As a regulated utility, the client’s revenue is set every five years by the regulator Ofwat – making cost efficiency mission-critical. A risk review of the five year business plan identified procurement as an area with significant risks:
Increased demand for procurement resources, with increasingly complex work mix requiring higher skill level
Function lacked flexibility to react to new business requirements
Recruitment frustrated by budget pressure on resources and disappointing recruitment success
Systemic retention risks in the existing team with high pressure to deliver, and limited career development in flat structures
Therefore, the COO and CFO sponsored a project to deliver an Accelerated Procurement Transformation with the following aims:
De-risk and outperform procurement savings in the business plan
Make an immediate step change of Procurement’s agility, capability and capacity
Deliver excellent service to stakeholders – flexibility to meet their business needs
Create a sustainable solution preserving business knowledge and stakeholder intimacy
Efficio proposed a commercial/delivery model, wrapping flexible consultancy resource around the core client team, with staff, line management and delivery risk transferred to Efficio in a five year contract. Key steps to achieve program success included:
Transferring 22 client staff into a single integrated team supported by 19 consultants, within a month of award. This enabled accelerated delivery of the business plan
Completing a full Opportunity Assessment and redevelop the business plan to accommodate all client requirements and ensure savings commitment made in the bid were achieved
Working in buddy teams with the transferred staff during the first six months to accelerate project delivery, challenge established thinking and ensure a sustained hands-on learning experience to augment the training plans
Implementing a new organization structure and hiring permanent resources to boost the core team’s capability
Implemented new stakeholder engagement processes to ensure Procurement get involved early in business strategy development, enabling client to proactively challenge and influence business thinking
Efficio’s ‘turbo’ model has transformed service for our stakeholders and opened up new areas to Procurement. I now have less direct reports and more time to focus on stakeholder engagement – confident that my sourcing team have the capacity and capability to deliver on any commitments I make to the business.
Efficio’s engagement helped deliver a number of significant benefits for the client, including:
Full flexibility – resources doubled within five weeks with 19 consultants deployed, meeting all business demands for support
Savings – running well above contractual targets, which were over four times the original TW plan (worth additional $100m), achieved by rescheduling projects, applying additional consultant resources, enhanced sourcing and analysis processes and tools
ROI of 6:1 - comparing incremental costs versus benefits and 29% headcount reduction
Quality – excellent client satisfaction averaging 4.2 of 5 (5 = outstanding) on the 230 completed project scorecards
Sustainable solution – we have invested in hiring 14 new high-quality permanent staff. Morale in the transferred client staff is excellent, with individual training plans and full resource support and tools to deliver on targets
Increased pull for procurement services and early involvement – with access to high quality consulting resources, Procurement's scope is increasing, pulled by stakeholder demand. Procurement is now engaged earlier in strategic projects and business planning, ensuring that commercial issues are considered early
Stakeholder focus – freed from extensive line management responsibilities, the remaining TW Procurement leadership has increased time spent with internal stakeholders
Investment in new technology, including spend analytics, sourcing, contract management and eLearning cloud-based solutions to increase efficiency within the team
The project created a new operating model, a hybrid of classic consulting and outsourcing. It provides the client with complete resource flexibility – with unlimited access to quality assured consulting resources all paid out of the results they deliver. By taking management control over the client staff, we are able to drive change faster and develop their skills for long-term sustainability. The new model has also been a positive experience for the transferred staff with an excellent training program utilizing Efficio’s extensive training suite.