United Utilities Group PLC · LSE:UU.
United Utilities — United Utilities Supplier Management Conference 2010
56 slides from United Utilities's conference presentation, Mar 11, 2010
Slide 1: United Utilities Supplier Management Conference: Our Shared Challenge
11th March 2010 United Utilities Supplier Management Conference “Our Shared Challenge”
Slide 2: Housekeeping
Housekeeping Fire Alarm Message Mobile Phones 2
Slide 3: Conference Agenda
Conference Agenda Item Delivered By Welcome and Introduction Colin Davis United Utilities “Our Shared Challenge” Philip Green AMP5 Customer Challenge Steve Fraser AMP5 Capital Delivery Challenge Neil Colman The Must Win Challenge – SHE Maxine Mayhew Supplier Management Framework Kieran Brocklebank I
Slide 4: Why are you here? The United Utilities Top Club
Why are you here? The United Utilities Top 50 Club Top 50 Suppliers by Spend 140 120 100 80 Spend £m 60 40 20 0 50 > £1.8m Suppliers 157 > £0.5m 4
Slide 5: This has been a difficult year: Supplier Cost Challenge
This has been a difficult year. . . Supplier Cost Challenge 5
Slide 6: To be the UK's leading water company by 2013/14
. . . but we know where we are heading; To be the UK’s leading water company by 2013/14 Shareholders Employees Customer Regulators Society 85% Employee 85% Customer Responsibility No1 on relative Engagement Satisfaction Stable As validated by: Index efficiency Serviceability AFR (World Class) SIM We
Slide 7: To be the UK's leading water company by 2013/14
We know where we are heading; To be the UK’s leading water company by 2013/14 Shareholders Employees Customer Regulators Society 85% Employee 85% Customer Responsibility No1 on relative Engagement Satisfaction Stable As validated by: Index efficiency Serviceability AFR (World Class) SIM We will: Cre
Slide 8: Our Shared Challenge, Philip Green
11th March 2010 Supplier Management Conference “Our Shared Challenge” Philip Green CEO United Utilities 8
Slide 9: To be the UK's leading water company by 2013/14
We know where we are heading; To be the UK’s leading water company by 2013/14 Shareholders Employees Customer Regulators Society 85% Employee 85% Customer Responsibility No1 on relative Engagement Satisfaction Stable As validated by: Index efficiency Serviceability AFR (World Class) SIM We will: Cre
Slide 10: To be the UK's leading water company by 2013/14
We know where we are heading; To be the UK’s leading water company by 2013/14 Shareholders Employees Customer Regulators Society 85% Employee 85% Customer Responsibility No1 on relative Engagement Satisfaction Stable As validated by: Index efficiency Serviceability AFR (World Class) SIM We will: Cre
Slide 11: The AMP5 Customer Challenge, Steve Fraser
11th March 2010 Supplier Management Conference The AMP5 Customer Challenge Steve Fraser Managing Director of Operations
Slide 12: We are currently the least efficient water company: Cost to Serve
We are currently the least efficient water company Efficiency – Cost to Serve Average cost to serve reduced from £23.70 in 2007/8 to £18.50 pa today This still places us 10th out of 10 in comparison with our competitors: the best is at £10 The good news is that in overall operational cost we have mo
Slide 13: Least efficient water company (continued): Customer to Cash
We are currently the least efficient water company (continued) Efficiency – Customer to Cash We collect revenues of £1.5 billion per annum 3 million customers Average bad debt charge is currently around 4% of revenue for UUW vs industry average of 2.2% and the best at 1.6% 2013/14 Target: 2.2% bad d
Slide 14: Change is necessary as Ofwat will use a new incentive mechanism (SIM)
Change is necessary as OFWAT will use a new incentive mechanism (SIM) Service Incentive Mechanism replaces OPA for AMP5 Our AMP4 OPA Performance cost us £37 million in FD09 SIM to replace OPA from 2010 2009/10 OPA data will not count at PR14 2010/11 SIM data will not count at PR14 SIM incentivises c
Slide 15: Change is necessary as Ofwat will use a new incentive mechanism (continued)
Change is necessary as OFWAT will use a new incentive mechanism (continued) How is it assessed? PR14 incentives calculated on a comparative basis, ie against the industry average SIM score Qualitative assessment based on survey of resolved complaints • Consumer experience survey carried out by indep
Slide 16: We must make our processes more efficient
We must make our processes more efficient . . . Our End to End Network Processes Source to Tap Collect Transport Distribute Deliver Resolve Treat Water Water Water Water Water Issues Bath to Bay Convey Treat Manage Discharge Discharge Resolve Effluent Effluent Sludge Effluent Water Issues 16 Out of
Slide 17: Processes are clearly broken in water
. . . as they are clearly broken in water Measure Water Current State Water Future State Time taken to complete a job 12 days (Leak) 4 days (Leak) Percentage rework 60% 10% Customer escalated complaints 5% of calls 1% of calls Number of handoffs 14 to 22 4 Customer satisfaction 74% 80% DG3 = 32.56/3
Slide 18: Processes are clearly broken in wastewater
. . . as they are clearly broken in wastewater Measure Ww Current State Ww Future State 32 hrs (Blockage) 4 hrs (Blockage) Time taken to complete a job 35 days (Flood) 1 day (Flood) Percentage rework >90% 20% Customer escalated complaints 20% of calls 3% of calls 8 (Blockage) 4 (Blockage) Number of
Slide 19: In Summary: We need your help to improve
In Summary – We need your help to improve Efficiency Cost to Serve Process Customer To Cash Bath to Bay Source to Tap 19
Slide 20: To be the UK's leading water company by 2013/14
We know where we are heading; To be the UK’s leading water company by 2013/14 Shareholders Employees Customer Regulators Society 85% Employee 85% Customer Responsibility No1 on relative Engagement Satisfaction Stable As validated by: Index efficiency Serviceability AFR (World Class) SIM We will: Cre
Slide 21: To be the UK's leading water company by 2013/14
We know where we are heading; To be the UK’s leading water company by 2013/14 Shareholders Employees Customer Regulators Society 85% Employee 85% Customer Responsibility No1 on relative Engagement Satisfaction Stable As validated by: Index efficiency Serviceability AFR (World Class) SIM We will: Cre
Slide 22: The AMP5 Capital Delivery Challenge, Neil Colman
11th March 2010 Supplier Management Conference The AMP5 Capital Delivery Challenge Neil Colman Director of Capital Delivery
Slide 23: Ofwat have determined a £3.6BN capital programme in AMP5
OFWAT have determined a £3.6BN capital programme in AMP5 . . . 23
Slide 24: Deployed through our Delivery Model
. . . which will be deployed through our Delivery Model Differentiation of Project Type By Delivery Routes Value (£) Allocation of Work Competitive Tender should be 40M used for Special Projects P.P. / N.P. (Competitive Tender) High value specialist work 10M Frameworks with good scope definition Spe
Slide 25: Our lack of efficiency is evident in our AMP4 capex programme
Our lack of efficiency is also evident in our AMP4 CAPEX programme . . . Pound in the ground Cost of achieving £1 of construction comparison of the 10 water PLCs United Utilities 30% difference in performance levels National Average between upper and lower quartile indirect costs & O/H Client and pa
Slide 26: We will act differently to drive efficiency
. . . and we will act differently to drive efficiency. Actions moving forward - How we deliver National Client average Upper and Quartile Partner Indirect £1.05 £1.00 How? Costs & O/H £0.85 £0.73 • Lean Processes £0.56 SOM • Cost Focused Culture • Benchmarked data Partner • Visibility of cost Direct
Slide 27: Focus areas for AMP5
When considering the whole programme (direct & indirect) together we must focus on a few key areas Focus areas for AMP5 How we deliver £3.6M Purchasing (buying cheaper) Usage (optimising how we use suppliers to our advantage) £2.9M Integrated AMD organisation £2.6M 9% efficiency Leaner, smarter AMD
Slide 28: We must ensure all our assets deliver to expectations
We must ensure that all our Assets deliver to expectations . . . What is serviceability? Serviceability is a measure of the ability of our assets to deliver the service our customers expect • E.g. turn the tap on and water comes out…not whether mains are new or old Ofwat assess serviceability by usi
Slide 29: Ofwat will judge us and penalise us: serviceability example
. . . as OFWAT will judge us and penalise us Serviceability Example - Ww Infrastructure DG5 - Properties Flooded Due To Other Causes DG5 - Properties flooded due to other causes 2.5 reprofiled S203 Target Performance in this range Ratio To Ave Of Actuals 2.0 Reference Level 1.5 1.0 Upper Control Lim
Slide 30: To be the UK's leading water company by 2013/14
We know where we are heading; To be the UK’s leading water company by 2013/14 Shareholders Employees Customer Regulators Society 85% Employee 85% Customer Responsibility No1 on relative Engagement Satisfaction Stable As validated by: Index efficiency Serviceability AFR (World Class) SIM We will: Cre
Slide 31: To be the UK's leading water company by 2013/14
We know where we are heading; To be the UK’s leading water company by 2013/14 Shareholders Employees Customer Regulators Society 85% Employee 85% Customer Responsibility No1 on relative Engagement Satisfaction Stable As validated by: Index efficiency Serviceability AFR (World Class) SIM We will: Cre
Slide 32: Our Health & Safety Challenge, Maxine Mayhew
11th March 2010 Supplier Management Conference Our Health & Safety Challenge Maxine Mayhew Director of Health, Safety, Risk & Security
Slide 33: UUW accident performance
UUW accident performance 25 0.6 0.55 20 0.5 0.45 number of accidents 15 0.4 AFR 0.35 10 0.3 Riddor - Reportable 0.25 5 LTA 0.2 RIDDOR AFR 0 0.15 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 (10 month) 33
Slide 34: UU capital programme accident frequency rate
UU capital programme accident frequency rate 1995 - 2010 UU Capital Programme Rolling AFR 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 Apr-95 Apr-00 Apr-05 Apr-10 34
Slide 35: What drives great safety performance?
What drives great safety performance? The right policy / procedures and processes and The ‘mechanics’ – the assets, equipment and tools we provide and The people and their behaviour 35
Slide 36: What is great H&S performance for UU?
What is great H&S performance for UU? We are aiming for a ‘zero accident performance’ Underpinned by clear targets for AMP5 – 0.1 RIDDOR AFR by 2014/15 Balance of leading measures Holistic inclusion of health, environment and overall risk approach 36
Slide 37: How can we drive great safety performance together?
How can we drive great safety performance together? The right policy / procedures and processes • improved our supplier approval process • embedded our H&S management framework – continuous improvement • We will work collaboratively with you – share good practice The ‘mechanics’ – the assets, equipm
Slide 38: Get animated and do something about it!
Get animated and do something about it! 38
Slide 39: To be the UK's leading water company by 2013/14
We know where we are heading; To be the UK’s leading water company by 2013/14 Shareholders Employees Customer Regulators Society 85% Employee 85% Customer Responsibility No1 on relative Engagement Satisfaction Stable As validated by: Index efficiency Serviceability AFR (World Class) SIM We will: Cre
Slide 40: Conference Agenda
Conference Agenda Item Delivered By Welcome and Introduction Colin Davis United Utilities “Our Shared Challenge” Philip Green AMP5 Customer Challenge Steven Fraser AMP5 Capital Delivery Challenge Neil Colman The Must Win Challenge – SHE Maxine Mayhew Supplier Management Framework Kieran Brocklebank
Slide 41: Kieran Brocklebank, UU Supply Chain
11th March 2010 United Utilities Supplier Management Conference Kieran Brocklebank UU Supply Chain Head of Strategy & Performance
Slide 42: Process Feedback Results
If I was a top 50 supplier…… Process Feedback Best Results supplier 42
Slide 43: Process: What and who to measure
Process – What and who to measure Category teams work with their customers to agree what is relevant to measure Many people complete standard feedback forms These are collated and processed to produce the results 43
Slide 44: Meetings, Joint action plans
Feedback Meetings Joint action plans 44
Slide 45: Supplier Associations: Key parts
Supplier Associations The Supplier Association may be defined as a Key parts mutually benefiting group of a company’s most important suppliersSelected suppliers brought together on a Regular interaction regular basis for the purpose of strategic Are we joined up? alignment, planning and operational
Slide 46: Supplier Associations: Examples
Supplier Associations Examples Society Work with your suppliers Early involvement Moving from silo performance to collaboration. 46
Slide 47: Joint Relationship Management
Joint Relationship Management Who qualifies? Most strategic only High performers only Very close relationship What will we do together? End to end process reviews Risk reduction Supplier innovation 47 Shared incentives
Slide 48: Summary
Summary We have a fair and consistent way to measure suppliers We want you to hear our feedback and to tell us yours We want to work with you to improve your performance There are consequences to the results We can get better by working together = Supplier Associations 48 Our best suppliers get real
Slide 49: Conference Agenda
Conference Agenda Item Delivered By Welcome and Introduction Colin Davis United Utilities “Our Shared Challenge” Philip Green AMP5 Customer Challenge Steven Fraser AMP5 Capital Delivery Challenge Neil Colman The Must Win Challenge – SHE Maxine Mayhew Supplier Management Framework Kieran Brocklebank
Slide 50: Interactive Session
Interactive Session Is England going to win the World Cup? Do you have access to the right people in Supply Chain? Do you have access to the right people in United Utilities? Have you heard all this before? Are you encouraged by what you have heard today? Supplier Award Schemes – Are they a good thi
Slide 51: Our Biggest Wish For The Next 12 Months
Our Biggest Wish For The Next 12 Months 1. Accurate short / long term forecasts 2. Early involvement in design decisions 3. Opportunities to share New Product Development 4. A chance to collaborate with other suppliers / contractors 5. The removal of waste and duplication from our shared processes (
Slide 52: Conference Agenda
Conference Agenda Item Delivered By Welcome and Introduction Colin Davis United Utilities “Our Shared Challenge” Philip Green AMP5 Customer Challenge Steven Fraser AMP5 Capital Delivery Challenge Neil Colman The Must Win Challenge – SHE Maxine Mayhew Supplier Management Framework Kieran Brocklebank
Slide 53: Prince's May Day Network registered suppliers
We encourage you to register with the Prince’s May Day Network These suppliers have registered with the Prince’s May Day Network Kemira ABB MWH UK Accenture UK SBT Engineering Services Balfour Beatty Utilities Scottish & Southern BOC Energy Tha Cable and Wireless Enterprise Managed Services Serco nk
Slide 54: Summary and Conclusions
Summary and Conclusions We are 10th out of 10 We will be the leading water company by 2013/14 Shareholders Employees Customer Regulators Society 85% Employee 85% Customer Responsibility No1 on relative Engagement Satisfaction Stable As validated by: Index efficiency Serviceability AFR (World Class)
Slide 55: Supplier Management Commitment
Supplier Management Commitment United Utilities Commitment 1. At Least 15 Suppliers will be GREEN by end of 2010/11 2. At Least 1 JRM Supplier 3. At least 1 Supplier Association established 4. Demand Planning will be implemented 5. Supplier Conference in March 2011 to share progress in year 1 Your C
Slide 56: Thank you
Thank you 56
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