WM Bargain Hunt Energy

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WM Bargain Hunt Energy

• 4th July 2008 Susie Owen

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Energy Challenges for the public sector

• Minimise energy costs and manage risks in a
  volatile energy
• market
• Reduce energy use and carbon emissions
• Leverage our volumes and access different
  levels in the supply chain
• Access new sources of renewable generation
• Assist new sources of generation

3
Energy Markets

• Market is affected by global fundamentals
• Risen and fallen by 100 up and down in 2 years
• Daily prices by up to 20
• Short term and longer term markets disconnected

• Gas and Electricity market most volatile in the
  world
• Requires expertise and volume leverage to manage
  price risk

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How does the public sector buy energy now?
7 of total UK consumption 8 times bigger than
TESCO
3.25billion p.a
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How can we influence energy prices?
By aggregating volumes into approved
contracts Reducing supplier margins and
tendering costs
Demand management All costs reduced with
reduction in energy use
Margin
Cost of proc.
Using approved contracts to access wholesale
markets risk management strategies Reducing
price risk
Increasing Volume and opportunities
Wholesale Energy Price
Using approved contracts with access to advanced
purchasing from generators Reducing long term
price risk increasing security of supply
including new renewables
Regulated charges
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Pan Government Energy Project

• MOD lead the Energy Strategy and Collaborative
  Category Board
• 7 implementation workstreams
• Buying and Risk Management
• Supply chain redevelopment
• Standardisation of terms and conditions
• Sustainability
• Aggregation
• Communications
• Emissions Trading

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What are the recommendations?
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First Step Understand your requirements

• Local Government Energy Procurement Action Plan
• Developed in 2007 by London Centre of Excellence
• Designed to help authorities identify and manage
  the key areas that enable effective and efficient
  energy procurement
• Section B Actions and self assessment
• Data Quality
• Procurement
• Financial Management
• Monitoring Targeting
• Performance Indicators
• Can be downloaded at www.lcpe.gov.uk/energy

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Second step - Review recommended contracts

• Review contracts 9 months prior to start date
• OGC Contracts Database lists all enabled
  contracts
• www.ogc.gov.uk/contractsdatabase
• The following organisation offer collaborative
  contracts
• LASER offering approved solution
• OGCbuying.solutions
• NHS PASA
• ESPO
• YPO
• NEPO
• The Energy Consortium (TEC)
• MOD
• West Mercia

Have all committed to going though approval
process
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Third Step Energy Management

• Reduce Waste
• Turn off
• Turn down
• Repair leaks damages
• Heating/Lighting controls
• Voltage optimisation
• Investment measures, e.g.
• Insulation
• High efficiency lighting
• Sensors
• Building Management System
• Power Factor
• CHP
• On site renewables
• Microgeneration

Free surveys (Carbon trust) Guidance documents FM
contractors/outsource
35 of savings
Salix finance OGC Contracts database
46 of savings
Partnerships for renewables Supply frameworks
18 of savings
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Carbon Trust

• Richard Rugg - 020 7170 7051
• Best practice tool kits
• Carbon Management programmes 22 savings!

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Funding Opportunities

• Salix match funding www.salixfinance.co.uk
• Low carbon building programme
• Partnerships for renewables
• See http//www.ogc.gov.uk/commodities_procurement_
  energy_7109.asp

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IT Power Management Framework

• Why is it useful?
• PCs are only used for 1/3 of the day
• why have them always on
• Power management states
• Standby
• Hibernate
• Off

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IT Power Management
Simple Savings Possible
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1E Public Sector Portal
IT Power management guidance on OGC Contracts
Database
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For more information

• www.ogc.gov.uk/commodities_procurement_energy.asp
  
• OGC Service Desk
• 0845 000 4999
• ServiceDesk_at_ogc.gsi.gov.uk
• Susie Owen
• susie.owen_at_ogc.gsi.gov.uk
• 020 7271 2626

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Thank you

• 4th July 2008 Susie Owen

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Bargain Hunt IITGP Collaboration Fleet
category

• Peter Norman, NHS PASA
• 4 July 2008

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What Ill cover .

• Our objectives
• Achievements so far
• Our strategy projects and enablers
• What's in it for you
• What Id like from today ..
• Information

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Our objectives

• Improved public sector procurement - working
  together do things better
• Maximise our potential integrated strategy
• Align policy with commercial delivery
• Be more strategic with supplier base
• Help deliver CSR07 objectives national and
  local

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Achievements so far

• Excellent start (CSR04) pan government
  contracts available vehicle purchase / lease
  (joined up), tyres, glass enabled deals
• 750m throughput
• Process and contract efficiencies savings!
• Grey Fleet policy development
• Category board and strategy team established
• Data collection / market mapping gt
• More pan enabled contracts on the money -
  ww.rce.gov.uk

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Strategy Development

• Three core elements
• Securing compliance aggregate in scope fleet
  expenditure onto best-in-class pan-government
  frameworks.
• Influencing policy i) position the collaborative
  category as a key delivery arm for core policy
  drivers (e.g. reducing CO2 emissions) ii) use
  commercial profile to influence transport policy
  effectively.
• Leverage Scale deploy improved control and
  influence to re-engineer public sector fleet
  supply chain through strategic key supplier
  management.

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Seven key projects

• Uptake gt
• commercial vehicles
• fuel cards
• spot hire
• grey fleet
• standardisation
• fleet management

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Project Support Functions (Enablers)

• Enabling support functions will
• Assist delivery of agreed projects and benefits
• Identify new project opportunities
• The enabling functions have been identified as
• Project Management Office (PMO)
• Marketing Communications
• Market Intelligence
• Supplier Engagement
• Policy
• Strategy Development
• Relationship with other Collaborative Categories

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Whats in it for you?

• Best in class frameworks (now? In the future) /
  contracting solutions
• Fleet forum knowledge sharing , peer support,
  policy review, shared initiatives
• Standardisation best in class specification /
  learning process
• Policy / best practice support Grey Fleet
  www.pasa.nhs.uk

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Your first step..

• Complete a data form builds understanding and
  helps begin shared thinking.
• Identifies quick wins both ways!
• Provides focus and feeds strategy / new
  potential projects

Are people willing to complete the form?
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What Id like from today

• Communicate what we are up to and understand
  what you are up to in fleet
• Join both together understand and feed strategy
• Communicate how to join contracts
• Introduce the uptake team
• Begin to work together

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Information

• TGP generally / collaboration (pilots) OGC
  Website www.ogc.gov.uk
• Fleet frameworks - OGC Helpdesk -
  ServiceDesk_at_ogc.gsi.gov.uk
• Uptake
• peter.norman_at_pasa.nhs.uk (North, WM, SW)
• DavidOlima_at_ogc.gsi.gov.uk (South)
• Barnaby.Wiles_at_ogc.gsi.gov.uk

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Thank you
Peter Norman NHS Purchasing and Supply Agency 80
Lightfoot Street Chester CH2 3AD (T) 0151 427
4653 (M) 07768 357876 (e) peter.norman_at_pasa.nhs.uk
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BARGAINHUNT II4th July 2008

• West Midlands Regional Improvement
• And Efficiency Partnership (WM RIEP)
• BPI / LEAN SYSTEMS THINKING
• FRAMEWORK AGREEMENT
• Ged Bowles
• Jane Daly
• WM RIEP

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Purpose of Session

• To provide
• An overview of the WM RIEP approach to supporting
  business transformation
• A model for delivering BPI/ Lean Systems Thinking
  as an integral part of the wider Improvement and
  Efficiency agenda
• A summary of the WM RIEP Framework Agreement for
  BPI / Lean Systems Thinking
• Some examples of activity to date

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CSR07 Efficiency Challenge

• The 3 Cashable Efficiency Target for West
  Midlands Region over the next three years equates
  to-
• 514m
• on top of balancing the books!
• CLG believe that this figure is likely to be made
  up from
• Procurement 54
• Process Improvement 37
• Asset Management 6
• Other activity 3

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Efficiencies are derived from

• Economies of Scale
• Traditional procurement practices
• Bulk purchasing
• Shared services

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Efficiencies are derived from

• Economies of Scale
• Traditional procurement practices
• Bulk purchasing
• Shared services

• Economies of Flow
• Streamlining the processes
• Getting things done right first time
• Removing waste and blockages

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WMRIEP Programmes
Core Change Support Capacity Supporting
Transformational Change in Work Programmes
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BPI didnt work for us

• Has BPI been successful in your organisation?

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BPI didnt work for us

• Has BPI been successful in your organisation?
• to an extent.

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BPI didnt work for us

• Has BPI been successful in your organisation?
• to an extent.
• Why didnt it work?

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BPI didnt work for us

• Has BPI been successful in your organisation?
• to an extent.
• Why didnt it work?

Not enough buy-in
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BPI didnt work for us

• Has BPI been successful in your organisation?
• to an extent.
• Why didnt it work?

Not enough buy-in
Not enough investment
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BPI didnt work for us

• Has BPI been successful in your organisation?
• to an extent.
• Why didnt it work?

Not enough buy-in
Not enough investment
Too expensive and didnt deliver a lot
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BPI didnt work for us

• Has BPI been successful in your organisation?
• to an extent.
• Why didnt it work?

Not enough buy-in
Not enough investment
It wasnt sustainable
Too expensive and didnt deliver a lot
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BPI didnt work for us

• Has BPI been successful in your organisation?
• to an extent.
• Why didnt it work?

Not enough buy-in
Not enough investment
It wasnt sustainable
It was done to us and we werent really involved
Too expensive and didnt deliver a lot
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BPI didnt work for us

• Has BPI been successful in your organisation?
• to an extent.
• Why didnt it work?

Not enough buy-in
People were worried about their jobs
Not enough investment
It wasnt sustainable
It was done to us and we werent really involved
Too expensive and didnt deliver a lot
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BPI didnt work for us

• Has BPI been successful in your organisation?
• to an extent.
• Why didnt it work?

Not enough buy-in
People were worried about their jobs
It worked in one area but hasnt caught on
elsewhere
Not enough investment
It wasnt sustainable
It was done to us and we werent really involved
Too expensive and didnt deliver a lot
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BPI didnt work for us

• Has BPI been successful in your organisation?
• to an extent.
• Why didnt it work?

It worked for a while but weve gone back to our
old ways
Not enough buy-in
People were worried about their jobs
It worked in one area but hasnt caught on
elsewhere
Not enough investment
It wasnt sustainable
It was done to us and we werent really involved
Too expensive and didnt deliver a lot
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BPI didnt work for us

• Has BPI been successful in your organisation?
• to an extent.
• Why didnt it work?

It worked for a while but weve gone back to our
old ways
Not enough buy-in
People were worried about their jobs
It worked in one area but hasnt caught on
elsewhere
Not enough investment
It wasnt sustainable
It was done to us and we werent really involved
Etc.
Too expensive and didnt deliver a lot
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What needs to change?

• In order to make it work we must
• Carry out the process improvement work,
• but recognise that BPI is just a tool.

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What needs to change?

• In order to make it work we must
• Carry out the process improvement work,
• but recognise that BPI is just a tool.
• Most importantly, we must

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What needs to change?

• In order to make it work we must
• Carry out the process improvement work,
• but recognise that BPI is just a tool.
• Most importantly, we must
• Change the way we think!

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The WM RIEP Approach

• BPI / Lean Systems Thinking

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The WM RIEP Approach

• BPI / Lean Systems Thinking
• Clarity of purpose

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The WM RIEP Approach

• BPI / Lean Systems Thinking
• Clarity of purpose
• Design processes from customer perspective

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The WM RIEP Approach

• BPI / Lean Systems Thinking
• Clarity of purpose
• Design processes from customer perspective
• Respond to demand and work to understand and
  eliminate failure demand

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The WM RIEP Approach

• BPI / Lean Systems Thinking
• Clarity of purpose
• Design processes from customer perspective
• Respond to demand and work to understand and
  eliminate failure demand
• Adopt a whole system / end to end approach

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The WM RIEP Approach

• BPI / Lean Systems Thinking
• Clarity of purpose
• Design processes from customer perspective
• Respond to demand and work to understand and
  eliminate failure demand
• Adopt a whole system / end to end approach
• Only do the value work

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The WM RIEP Approach

• BPI / Lean Systems Thinking
• Clarity of purpose
• Design processes from customer perspective
• Respond to demand and work to understand and
  eliminate failure demand
• Adopt a whole system / end to end approach
• Only do the value work
• Engage staff at all levels and get involved in
  the work

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The WM RIEP Approach

• BPI / Lean Systems Thinking
• Relate activity to Purpose
• Design processes from the customers perspective
• Respond to demand and work to understand and
  eliminate failure demand
• Adopt a whole system / end to end approach
• Only do the value work
• Engage staff at all levels and get involved in
  the work
• Managers act as leaders

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The WM RIEP Approach

• BPI / Lean Systems Thinking Principles
• Clarity of purpose
• Design processes from customer perspective
• Respond to demand and work to understand and
  eliminate failure demand
• Adopt a whole system / end to end approach
• Only do the value work
• Engage staff at all levels and get involved in
  the work
• Managers act as leaders
• Focus on service improvement

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WM RIEP Lean Systems Thinking Model
WM RIEP as a Systems Model
Learn And Modify
Customers
Set Up Improvement Activity

• Demand
• Generation

Do Activity
Outcomes and Learning
RESULTS IN Improved Performance And leads
to Efficiency Gains
Develop Expertise
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WM RIEP BPI/Lean Systems Thinking Team and Offer

• Promotion of BPI / Lean Systems Thinking as a
  means of achieving improvements and efficiencies
  (of flow)
• Hands on support to develop and implement
  activity in authorities
• Provide training to create appetite and
  highlight opportunities
• Build sustainable capacity through experiential
  learning and skills transfer
• Share knowledge and learning Knowledge
  Portal/Resource Pool
• Help to embed BPI and Lean Systems Thinking in
  authorities
• Targeted funding to assist transformational
  activity

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WM RIEP BPI/Lean Systems Thinking Framework
Agreement

• Nationally available to all regional and local
  public sector bodies in the UK access via
  www.wmcoe
• Range of suppliers in BPI/Lean Systems Thinking
  and Leadership/Change and Project/Programme
  Management
• Supports WM RIEP objective of building capacity
  through skills transfer into public sector
• Range of methodologies available to suit
  differing approaches, cultures, etc.

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WMRIEP Activity

• CURRENT ACTIVITY
• Staffordshire Connects Street-scene Shared
  Service
• Staffordshire County Adult Social Care and HR
  Shared Service
• Walsall MBC Business Improvement Techniques (BIT)
  NVQ2

• EMERGING ACTIVITY
• A range of proposals are emerging from across the
  West Midlands region covering
• Fire Services
• Corporate Shared Services
• Legal, HR, ICT
• Adult and Childrens Services
• Highways
• LAAs

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WM RIEP Example

• Staffordshire Connects Street-scene Shared
  Service
• Involvement of 10 local authorities across
  Staffordshire including the county council, Stoke
  on Trent City Council unitary and 8 district
  councils
• To identify the scope/opportunities to improve
  the Street-scene system and to do so along with
  partner organisations

DEMAND Value Failure (average) 55 Value
45 Failure Most frequently demanded
services District/Borough (Amenity) County
(Functionality) - Fly Tipping - Potholes -
Litter - Emptying drains - Dog Fouling -
Street Lighting
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WMRIEP Example

• Staffordshire Connects Street-scene Shared Service

The two-tier (county-district) arrangements in
England remain open to the criticisms that they
are confusing for citizens and represent a
potential duplication of resources however
effective their individual services may
be Delivering Public Service Transformation
2008 (p.26)
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WMRIEP Examples

• Staffordshire Connects Street-scene Shared Service

• Levers for Change
• To develop constancy of purpose which is agreed
  by all Partners across Staffordshire to improve
  customer experience
• To reduce/remove failure demand
• To provide measures relating to work (leading and
  lagging) to drive learning and service
  improvement
• To reduce/eliminate waste steps, e.g.
  duplication, rework, multiple hand-offs
• To collectively work to remove the system
  conditions that sub-optimise performance across
  the two-tier and other agencies in the
  street-scene system
• To take the opportunity to embed systems thinking
  as a way to manage street scene services (and
  roll out to other areas)

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WMRIEP Examples

• Walsall MBC Business Improvement Techniques NVQ2
• LSC funded via FE Colleges and NA-consultants
• 12 week work based course requiring 7 days
  release time leading to NVQ2
• Underpins Walsalls transformation programme
• 20 service teams planned to undertake training, 4
  completed to date (200 individuals across the
  region have gained BIT NVQ2)

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WMRIEP Examples

• Walsall MBC Business Improvement Techniques NVQ2
• Whats involved?
• Service based teams apply lean principles to
  analyse processes in the workplace and identify
  opportunities for improvement
• Develop solutions, apply change and create
  sustainable improvement
• Encourage a climate of challenge where staff feel
  empowered to introduce change
• Embed a culture of continuous change

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Learning So Far (1)

• Adopt whole systems end to end approach - very
  different results compared to only looking at
  part of a process
• Gain senior leader commitment - critical to the
  success of this type of activity, but also
  involve people at all levels of the organisation
• Get the change team right - and ensure they are
  freed from the day job
• Expect tensions with the wider organisation be
  sensitive to where the organisation currently is
  and aware of what else is going on/planned
• Implement parallel OD programme roles and
  structures will inevitably change as a result of
  activity dont leave it until the end

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Learning So Far (2)

• Accept that all processes have waste and failure
  demand in them typically half the demands into
  a service are failure and most processes
  include significant waste
• When staff are empowered performance increases
  the freedom to act on the system leads to
  increased motivation and productivity
• Lean Systems Thinking is not a one off exercise -
  it is a different way of thinking and a journey
  of continuous improvement
• Lean Systems Thinking is about culture change
  an improved process/financial savings are the
  short term gains, changing the way an
  organisation thinks and operates is the ultimate
  goal

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BARGAINHUNT II4th July 2008

• West Midlands Regional Improvement
• And Efficiency Partnership
• BPI / LEAN SYSTEMS THINKING
• FRAMEWORK AGREEMENT
• Thank you
• Ged Bowles email gbowles_at_wmcoe.gov.uk
• Assistant Director website www.wmcoe.gov.uk
• WM RIEP Tel. [phone]

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Category Management at Essex CCA Three Year
Programme

• West Midlands REIP
• 4th July 2008

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Our Starting Point
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Summary of our involvement
A summary of Procurement Services involvement in
key areas based on individual responses for all
open projects in June
Maintenance and support activities
Value creation activities
Advice and support
5
4
Contracting/tendering
Relationship management
3
2
1
Full involvement
0
Actual
Admin
Supply chain re-engineering
Savings / value add
Market / supplier development
1 no involvement at all 2 this happens but I
have no direct involvement 3 this happens and I
am consulted by the person who does it 4 this
happens and I am involved in some way but others
lead 5 this happens and I lead on the task
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What is Category Management?

• Category management is a process that focuses on
  the performance optimisation of a group of
  related products or services.
• It raises the performance of a category by tuning
  into the needs of the customer and reduces
  inefficiencies / waste in the value chain.
• Its components are-
• Price and cost management
• Supply market monitoring
• Continuous improvement
• Supplier performance management

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How it all fits together
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HOW CATEGORY / ACCOUNT / CONTRACT MANAGERS
INTERACT

• Category Managers are responsible for collating
  the view of demand by Category actual and
  forecast
• Account Managers work with Category Managers and
  Suppliers on the account plan i.e. the share of
  the total demand for a category each supplier can
  expect
• Category Managers are responsible for call-off so
  that each supplier receives work that supports
  the agreed account plan
• Contract Managers are responsible for the
  delivery of individual contracts

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Category Strategy Roadmap
A sourcing strategy must have enough information
for the reader to understand what strategy has
been chosen, why it has been chosen and how it
will be implemented. As a guide, 10 to 15 pages
tend to provide the right level of detail. If the
following questions are satisfied, your strategy
is complete

• Strategy Summary
• Is there a crisp, persuasive and comprehensive
  summary of the future sourcing strategy?

10. Vulnerability Analysis Is there evidence of
an analysis of potential vulnerability, together
with plans to minimise risk to acceptable levels?
12. Linkage Does the sourcing strategy flow from
the systematic review of 2-11 above?
11. Sourcing Objectives Are sourcing objectives
in both cost and value terms, detailed in a
comprehensive and balanced manner?
13. Cost Reduction Programme Are the
opportunities for improvement quantified in cost
reduction and cost containment terms?
15. Competitive Advantage What competitive
advantage will the implementation of this plan
bring to the organisation?
IMPLEMENT
14. Implementation Plan Are accountabilities,
responsibilities, tasks and milestone dates fully
detailed?
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Category Sourcing Strategy Content
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Improving CapabilitySupplier Relationship
Management
ARE WE CAPABLE OF GOOD PERFORMANCE?

• Are our strategic suppliers capable and do they
  deliver value for money?
• Do we currently experience losses in value
  through the supply chain?
• How do we know?

ARE WE DELIVERING GOOD PERFORMANCE?
HOW CAN WE IMPROVE OUR CAPABILITY?
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Our Process for SRM
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SRM Toolkit
PRE-WORK
WORKSHOP2
WORKSHOP1
PROJECTS
GOVERNANCE
Set objectives
EFQM analysis
Prioritise outline Mandates
Projects close-out
Buyers View
Set targets
Suppliers View
Mandates approval Board
Reporting
TfL goals
Performance metrics
Category Portfolio
PID finalisation
Account Plans
Identify process improvements -stabilise/improve
Supplier goals
Communications plan
Marketing Collateral - Brief Sponsors - Brief
Suppliers
Deliver Projects
Quarterly Sponsor reviews
Inventive thinking process innovation /
non-process goals
Goal alignment
Links with CM/PM to collect issues
Stakeholder map
Risks / issues management
Outline business case
Mission statement
Benefits tracking
Outline Mandates
Governance Toolbox
PROJECTS Toolbox
PRE-WORK Toolbox
WORKSHOP 1 Toolbox
WORKSHOP 1 Toolbox
Read this first
Overview background of SRM process
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Self-Service Procurement
Basic Approach - for requirements under 50,000
for the life of the contract Minor Approach - for
requirements between 50,000 and the EU service
threshold (currently 139,893) Medium Approach -
for requirements between the EU service threshold
(currently 139,893) and 500,000 Major Approach
- for requirements above 500,000
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Supply Market Analysis
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Technology To Underpin The Strategy
To support the Procurement Strategy and its
operation, Procurement needs to invest in
enabling technologies. The diagram represents the
tools for inclusion and deployment.




Key Orange deployment of tools within 12
months (high priorities) Yellow deployment of
tools within 24 months tools already
operational but opportunities exist to support in
their development
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The issues and benefits

• Contracts are tighter that the previous set but
  can stifle innovation
• Budget management cycle makes planning difficult
• Suppliers want to use target costing and ECI we
  do not seem inclined to follow.
• We want control. Suppliers feel to be subservient
  and arms-length contractor rather than partner.
  Win/Lose.
• We do not understand risk
• Lack of forward programme is a bottleneck.
• Suppliers want turnover certainty and we want
  budget spend certaintybut we do not appear to
  have goal alignment

unstructured relationship management driving
win/lose relationships
TARGET IS 15 TO 20 CASH SAVINGS IN CATEGORIES
IN SCOPE OVER THE NEXT 3 YEARS 40M IDENTIFIED
SO FAR, 10M ON 70M SPEND
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Critical first steps

• Begin to share the Vision and Strategy with key
  members in each Directorate to get their buy-in
• Start the process of briefing suppliers on the
  requirements of Category Management and SRM
• Start collecting market intelligence on major
  markets and key suppliers
• Draft Category Sourcing Strategies and develop
  options for delivering more value
• Source and implement enabling technology such as
  e-tendering to free up more time to devote to
  Category Management and SRM
• Implement a short term method of handling
  Tactical Acquisition items and activities until a
  longer term solution is developed again to free
  up time
• Develop and deliver a communication strategy and
  plan for engaging with key stakeholders.

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Crest Business Services Ltd 1711 High
Street Knowle Solihull West Midlands B93
0LN Telephone [phone] E-mail
steve.carter_at_crestbsl.com Website www.crestbsl.com
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