For many years, suppliers and service providers to the utilities have been kept at a distance from having a significant impact on environmental aspects of utilities’ strategies. This was often because of the nature of the trading relationships between the supply chain and the utilities. Over the years, the water utilities have made huge improvements in water quality, beach cleanliness and their internal environmental operating efficiency. But we in the supply chain can help them cut their environmental impact still further.
When Burdens Utilities reviewed the high-level Strategic Direction Statements that OFWAT requested from each of the water utilities and companies – looking ahead at the next 25 years including the AMP 5 period – a number of common themes appeared. They included: change; asset resilience; sustainability; reliability; new legislation; and delivering value for money.
We believe there is a clear opportunity for us to help the water utilities achieve their objectives, starting with aligning our own objectives with theirs. For example, as regards climate change, we have introduced a way of measuring the carbon footprint of the supply chain of Welsh Water. It is still early days but our aim is to reduce the carbon footprint of the supply chain and subsequently its costs.
Aligning business objectives is a two-way street. Water utilities need to engage with suppliers and service providers at a strategic level. Hence, it is important for them to identify the strategic suppliers/service providers, i.e. those that impact significantly on the successful delivery of their objectives.
The most significant improvement that a water utility can introduce is to involve the supply chain as early as possible in design and planning. The strategic involvement of a few selected suppliers/service providers can add considerable value to the asset management programme, particularly at the development stage, since it will encourage issues to be raised early and solutions to be more cost-effective. Benefits will range from manufacturing elements, such as tooling costs, to the establishment of continuous improvement programmes.
Such a strategic relationship will allow the client to understand and become more involved with the cost base of the suppliers/service providers. This will assist in establishing how the two parties can work together in reducing costs without impacting on margins – in other words, what is often described as a win/win scenario. Such reductions in cost will include administration costs, factory overheads, and labour. None should impact on margins or profitability.
Here it is useful to look at some specific examples. Take climate change. I have already mentioned how we are involved with monitoring both our own carbon footprint and that of our clients. Doing this provides added value to them both now and in the future via reduced costs. Equally, with the potential introduction of future legislation – which will penalise poor environmental performance – we can provide useful data and solutions to reduce our clients’ carbon footprint.
Asset resilience is also important. Water utilities require resilient assets. We in the supply chain can respond by providing innovative products that are of good quality with a low ‘whole-life’ cost. This is equally true of the reliability aspect of the Strategic Direction Statements. Products should have low operational cost and a small carbon footprint and deliver added value.
Next, sustainability which, for the water utilities, equates to the ways to facilitate sustainable growth, reduce water demand and leakage, and encourage metering. For the supply chain, this means providing sustainable goods and services to meet future needs, and demonstrating corporate responsibility in our own businesses and supply chains.
Finally, there is the question of delivering value for money, which essentially goes back to the alignment of business objectives and strategic relationships. It is fundamental that we work together to resolve issues and provide proactive, sustainable solutions , while recognising our obligations to the environment. In this way, we will reduce cost, while adding value.
In short, there is a lot of common ground that can be exploited to deliver value and provide benefit to everyone involved. Fundamentally, it boils down to aligning objectives and developing strategic relationships. At Burdens Utilities, we are focussing on developing strategic relationships with clients, understanding what their core objectives are, and subsequently providing innovative, sustainable solutions. For more information please contact us or Tel: 0845 600 3790
