What can be learned from the private sector and should housing become more commercial? What are your strategic goals over the coming years and what are your concerns for reaching them? A panel of industry experts will gather to answer your questions and debate how we can reduce costs and innovate sourcing methods to better develop procurement and meet strategic targets. Panelists: John Wallace, Head of Procurement & Purchasing at Anchor Trust Leisa Hewitt, Procurement Director at PfH Mike Doyle, Assistant Director at NHS North West Procurement Development John Durrell, Director for Private Sector at Inprova Group

1. PANEL SESSION: Innovative sourcing
and reducing cost for better
outcomes
John Wallace, Head of Procurement & Purchasing at Anchor Trust
Leisa Hewitt, Procurement Director at PfH
Mike Doyle, Assistant Director at NHS North West Procurement
Development
John Durrell, Director for Private Sector at Inprova Group

2. Value Adding
Procurement at
Anchor
John Wallace
Head of Procurement

3. Anchor Business Plan – 2015 to 2020
Business Objectives
• Best Customer Service
• Best Place to Work
• Best Run Company
• Offer Anchor Services to More Older People
“Improve customer satisfaction across all services…….”
“Ensuring value for money in all procurement decisions”
“A culture of continuous improvement and innovation”

4. Anchor Business Plan – 2015 to 2020
Financials
• Growth Plans
• Acquisitions
• Increasing EBITDA
• Cost Management
• Operating costs as proportion of t/o reducing (5%)
• Support costs as proportion of t/o reducing (24%)
Procurement supporting cost management delivery
Procurement supporting M&A activity

5. Annual Expenditure
Category Sub Cat I&E Capital SC Total
Property 37 £32m £36m £4m £72.0m
Corporate
Services
37 £19m £20.7m £0.3m £40.0m
IT / Telecoms 4 £14.5m £0m £2.5m £17.0m
Facilities
Management
35 £9.3m £1.1m £3.9m £14.3m
Catering and
Cleaning
29 £4.3m £0m £5.9m £10.2m
Utilities 6 £8m £1m £12.5 £21.5m
Total £87.1m £58.8m £29.1m £175m

6. The Challenges Were Clear
Tender not
Procurement
Expertise
Business and
Customer Alignment
Limited
Demonstration
of Value for Money
Required
Access to required
Goods and Services
Difficult
Blocking
not Enabling

7. The Procurement Cornerstones
Resource
Management
Leadership,
Strategy and Policy
Performance
Measurement
& Management
Procurement
Processes
Stakeholder
Engagement

8. Organisation Specific
Organisation
Specific
Charitable Organisation
Public Sector
Competitive Market
Customer Led
Property Asset Base
Procurement will respond
to the organisation’s
specific requirements

9. Enabling our Customers
Stakeholder
Engagement
Business Partnering
Aligned Objectives
Category Groups
Easier Buying
Procurement will meet the
needs of our customers
Communication

10. A Tangible Improvement in Service
Performance
Measurement
& Management
Signed Off Cost Savings
Supplier Performance
Benchmarking
Customer Satisfaction
Operational Standards
Procurement will deliver
measurable improvements
in cost and quality

11. Supporting Delivery of Business
Priorities
Leadership,
Strategy and Policy
Across all of Anchor
Vision, Culture, Values
National, Regional, Local
Legal, Risk, Continuity
Innovation, Environment,
Diversity
Procurement will provide
commercial leadership

12. Consistent and Focused on Delivery
Procurement
Processes
Category Management
Purchase to Pay
Information Sources
Simple Procedures
Consistency
Procurement will be
efficient and consistent

13. The Right People…………
Resource
Management
Culture and Values
Technical Development
Business Competencies
Coaching, Mentoring
Succession Planning
Procurement will have the
right people on the bus

14. Organisation Specific

15. Category Management in Brief (1)
Mobilisation SourcingBaselining
• Stakeholder Identification
& Analysis
• Stakeholder Mapping
• Communications and
Engagement Plan
• Initial Risk Assessment
Undertaken
• Stage Gate Approval
• Spend & Historical
Analysis
• Current Procurement
Practices
• Category Segmentation
• Supplier Preferencing
• Existing Contracts
• Baseline Calculation,
Prices and Volume
• Stage Gate Approval
• Competitor Analysis
• Best Practice Analysis
• Whole Life Costing (TCO)
• Business Needs Analysis
• Cost Benefit Analysis
• Specification Challenge
and Confirmation
• Stage Gate Approval

16. Category Management in Brief (2)
Supplier Selection Continuous
Improvement
Implementation
• Supply Market Analysis
and Definition
• Market Conditioning
• Value and Type of
Contract
• Negotiation Plan,
• Actual Savings Calculation
• Supplier Management
• Stage Gate Approval
• Supplier Relationship
Management Approach
• Performance Monitoring
and Reporting
• Supplier performance
Reviews
• Cost Improvement/
• Benchmarking
• Learning’s & Feedback
• Implementation Team
• Risk Assessment &
Contingency Plan
• Core Implementation
Accountabilities with
KPI’s
• Implementation Plan /
Targets
• Stage Gate Approval

17. E Procurement – Purchase to Pay
Ordering
Catalogue
PO Flipping
Invoice Scanning
Amazon experience
Single ordering process
Reduced support costs
Maverick expenditure reduced
Improved data quality
Improved control (PO)
Electronic invoicing and PO matching
Reduced manual input / errors
Electronic invoicing and order matching
Reduced support costs
Improving financial accruals

18. Procurement Value 2014/15
Procurement Target - £3m
• In Year Delivery £4.04m
• I&E £1.65m
• Service Charge £1.64m
• Capital £0.75m

19. Customer Satisfaction
Rented
Performance
Leasehold
Performance

21. Procurement Value 2015 onwards
2015/16 2016/17 2017/18
I&E £4m £3m £1.5m
Service Charge £1m £1m £0.5m
Capital £6m £5m £3m
Total £11m £9m £5m
Cumulative £11m £20m £25m

22. In Summary
Recruit
Procurement
Leaders with
Right Values
Get Influence
at Board Level
Create Meaningful
Relationships with
Suppliers
Embrace
Procurement
Technology
Go Beyond a
“Policing” Role

23. Concerns for
delivering Strategic
goals of Purchasing
Leisa Hewitt
Procurement Director –
Procurement for Housing.

24. Introduction
Over 18 years Procurement Experience
• Housebuilding
• Shop fitting
• Public Sector – NHS, BTP and Railway Infrastructure
MCIPS Qualified
Determined and delivered stringent cost reduction, and savings initiatives to
meet NHS austerity measures
Delivered varied contracts and frameworks over procurement career thus far
My drive is to make procurement easier for others.

25. Public Sector –
Where are the
challenges?

26. Strategic Goals
• Non delivery due to many differing
components
• Departments inability to focus in one area
• Savings and Cost reduction are the
driving factors

27. Value for Money
Lack of benchmarking / market testing
Poor spend visibility
Maverick spend and disaggregation

28. Compliance
Non-compliance with EU directives
Outdated Procurement policies and procedures
No contract register
None or unduly burdened procurement plan

29. Resource & Capabilities
Limited resources
Skills Gap within teams
Training limitations from lack of funding

30. Mike Doyle
Assistant Director
NHS North West Procurement Development
Procurement in the NHS
From ‘back room’ to Boardroom

31. Areas covered
Who we are
Challenges in NHS procurement
The approaches we use

32. NWPD Team
• Established in Spring 2013
• Small team of 4.5 WTE
• 2 ex Heads of Procurement
• 0.75 Director role - ex DoF of Central Manchester FT
• 0.75 Project Support Role
• 1 Finance Date Analyst

33. NHS Procurement Agenda
Link to Procurement Development Programme documents:
www.gov.uk/government/collections/nhs-procurement

34. High Profile
2nd June 2015 – Letter to NHS Chief Execs
“It is important that the NHS acts together to ensure we
achieve the most from our collective bargaining power and
work together to reduce these pressures where we can”.
David Williams
Director General, Finance, Commercial and NHS
Dept. of Health
4th June 2015 – BBC News
In a speech at the NHS Confederation conference, Jeremy
Hunt said the Carter review’s findings would shortly be
announced and they are “absolutely staggering”. The review
by Lord Carter has investigated procurement practices across
trusts.
In September Lord Carter will set out the amount of money
trusts could save by adopting “best practice” procurement
processes.
Jeremy Hunt said “the hard bit starts from January, when
trusts will be expected to make specific savings”

35. Financial Context
*Source: The King’s Fund, Quarterly Monitoring Report of DoFs – March 2015
Latest survey: 40 per cent of
NHS trusts forecasting a deficit
for the end of year (2014/15)
Results of an online survey of NHS
trust finance directors carried out in
March 2015. 257 NHS trust finance
directors to take part and 93
responded (36 per cent response
rate).
In addition 187 clinical commissioning
group (CCG) finance leads were
contacted and 40 responded (21 per
cent response rate).

36. Financial Context
Source: The King’s Fund, Quarterly Monitoring Report of DoFs – March 2015
Organisation 2014/15 CIP Target as Percentage of Turnover

37. Trusts have been buying
‘together’ for years...
..but the results are not
always great…why?
Silo working still prevails
There are too many routes
to market
Trust autonomy
Procurement Challenges
No mandating of
contracts or
centralised control

38. Procurement Challenges
Competition between hospitals
Lack of willingness to share information
Trust allegiance to different procurement providers/partners
Poor data quality
Multiple P2P systems deployed of varying standards
Lack of appropriate skill sets and capacity

39. • Creating a community & culture of
collective working
• Raising the profile of procurement
and building the case for investment
• Improving transparency & co-
ordination
• Providing robust professional and
organisational development
• Developing supplier relationship
management
• Supporting Trusts to deal with the
increased pressure for savings
NWPDs Role
Collective
Procurement
Data &
Knowledge
Learning &
Development
Our 3 Workstreams

40. Achievements So Far
Established a coaching and
mentoring network + robust
and nationally recognised peer
review/accreditation process
39 out of 39 Trust signed up
and committed to sharing
information
Circa £3 million savings
identified by NWPD and
delivered by Trusts so far 10:1
ROI on funding
Governance
CEO NWC AHSN and 6 DoFs -
2 from each of C&M, GM and
L&C

41. Procurement partners
NHS Supply Chain delivering strong returns through joint
working MOU
Strong relationships with other procurement partner
organisations across UK
‘Fit for Purpose’ strategy
Lancs Acutes first to develop potential cluster approach
NW Excellence in Supply Awards 2015
Our unique approach to supplier engagement and
recognition
Benchmarking
Co-ordinating price benchmarking activity and
departmental structure benchmarking for NW trusts
Future Leaders Programme
Other Highlights

42. – £2.4bn of non-pay spend
– £1.1bn of influencable non-pay spend
– £319m NW CIP target for 2014/15
– 4.74% average CIP as percentage of Trust turnover (consistent with Kings Fund
Survey)
– 0.40% average savings achieved by procurement in 2013/14 as a percentage of
turnover
– 2.6% average savings achieved by procurement in 2013/14 as a percentage of
influenceable non pay spend
– £29m savings achieved by procurement in 2013/14
– £39m savings targeted by procurement for 2014/15
2014 NWPD Survey Results*
Spend & Savings
*Based on 75% response rate

43. 412 total staff in post (equal to approx 500 in total)
Average of 16 per department
For Trusts that submitted data in both years there is an increase from 361 WTE in 2013
to 391 WTE 2014
An increase of 8.3%
250 staff in front line procurement roles
162 staff in stores, materials management, AP and secretarial
The largest team consists of 55 and smallest team of 5
Total departmental budgets range from £172k to £1,489k
33% MCIPS qualified in procurement roles
6 trusts have > 20 staff and 1 trust actively manages/influences a
non pay spend > £100m (see Fit for Purpose)
2014 NWPD Survey Results*
Staffing
*Based on 75% response rate

44. Pressure for savings…
alternative approaches needed!
• Understanding price variation
• SRM
• Maximising use of resources –
joint workplanning and ‘fit for
purpose’ departments
• ‘Value based procurement’
project

45. Pricing Transparency

46. EIS logo
2015?

47. NWPD have conceived the idea of
£1billion turnover CLUSTER
as being the optimum level where
collaboration can work. This is
supported by evidence collated by
NWPD from across the region on
performance against the NHS
Standards of Procurement and
annual savings and procurement
efficiencies achieved.
Lancashire Acute Trusts represent
an approximate £1.3 billion
turnover.
0.2%
0.3%
0.6%
0.8%
Trust
Regional
National
Complexity
of implementation
High
Low
£10bn
£90bn
£1bn
£250m
Approx
Turnover
Cluster
Fit For Purpose Strategy

48. Lancashire
Procurement
Cluster
Joint Working
Shared Contracting
Teams
Single Department
Phase 1 Phase 2 Phase 3
This is big – but not too big
Optimal span of control
Retained ownership by the NHS
Engaged stakeholders
Fit For Purpose Strategy
Phase 1 underway - £7.1m additional savings identified across the 4 organisations for 15/16

49. Value Based Procurement
Focus on pathway costs and innovation and how this can be reflected
in a robust and non challengeable way in procurement exercises E.g.
how supplier claims for reduced length of stay are factored in.

50. +

51. Supplier Relationship Management
(SRM) Process and Scoring
Supplier Performance
John Durrell
Director, Director - Private Sector
June 2015

52. • Setting the scene; Overview of objectives and deliverables
• Why Supplier Relationship Management (SRM)? What are the benefits?
• What’s in it for me?
• What is Supplier Segmentation?
• Buyer & sellers behaviours
• Supplier Relationship Management Policy, Supplier Scoring, Continuous
Improvement Initiatives and Reporting
• AOB
Agenda

53. Strategy & Process
• Business, category and supplier strategies
• Policy / Process
• Controls & Approvals
Sourcing & Category Mgmt
• Contract Negotiation
• Preferred Supplier Lists
• Market Intelligence
Supplier Relationship Mgmt
• Manage Suppliers
• Supplier Service Delivery/ VIP
P2P
• Purchase Orders
• Contract Renewals
• Invoice Queries
• Manage Contracts
Performance Management
• Spend Analysis
• Savings Tracking
• Deal Tracking / Issue resolution
• Procurement / Supplier Scorecard & KPI’s
• Compliance
• Management Reporting and Programme Management
The Procurement function’s service offering is wide-ranging.
The Inprova Group deliver and support in all areas.
The Procurement Shop Window

54. Private sector procurement often applies a classic, proven
category management process.
Stage 1.
Establish
Business
Requirements
Stage 2.
Analyse &
Plan
Stage 3.
Source
Stage 4.
Negotiate
Stage 5.
Contract &
Implement
Stage 6.
Supplier
Relationship
Management
Define roles &
responsibilities
Request existing
spend data
Define high level
requirements
Note potential /
preferred
suppliers
Open risk log &
define any
known risks
Business
Requirements
Research the
market/ RFI
Perform spend
analysis
Update risk &
issues log
Create list of
suppliers
Analysis
RFP
Scoring
Shortlist
suppliers
Final
recommendation
Negotiate
Examine
business impact
of sourcing
options
Award Contract
Finalise contract
& exit strategy
Handover to
business service
owner
Supplier
Selection
Final
Recommendation
Signed
Contract
Handover
Agree sourcing
strategy & plan
Plan
Task
Output /
Documentation
Approval
Required
Key:
Develop
Negotiation
Strategy
Supplier
Segmentation
Supplier
Scorecard
Quarterly
Performance
Review

55. Supplier
Relationship
Management
Policy
S
R
M
SRM focuses on areas of development to capture and maximise potential value in the supplier
relationship and ensure continued commitment from both parties to a first class service
What is SRM?
ProcurementThe Business
The Supplier

56. Why care about SRM?
• Helping to gain competitive advantage through improving the customer
experience and reaching new markets
• Minimising supplier underperformance by creating real accountability and
incentives suppliers to deliver business values that meet our corporate
objectives.
• Value engineering by bringing together different advantages and core
competencies of the supplier/buyer relationship.
• Improving supply chain efficiency
• Reducing business risk
• Reducing management overhead by streamlining supplier relationships,
reducing customer complaints and the work associated with rectifying issue
• Collaborating on cost reduction
57

57. What’s in it for you?
• Fewer complaints from customers to deal with
• Less ‘fire fighting’; Moves companies from re-active to pro-active
• You can directly influence supplier behaviours through scoring and
feedback of their performance
• Being part of a cross functional team gives others a greater
understanding and appreciation of your role
• A fast growing business gives rise to opportunities to develop your own
career
Allows managers more time to concentrate on their
day job
58

58. Segmenting suppliers is a good first step
59
Critical
Operational
High
Spend
Low
High
Strategic
Business Criticality
Low

59. SRM starts with Supplier Segmentation and understanding how
critical a suppliers service is to UKDN Waterflow
60
Strategic
Critical
OperationalOperational
High
Low
Spend
Low
High
Business Criticality
Strategic
Effective segmentation is based on level of spend and business criticality
Strategic Suppliers: Working collaboratively to build each others businesses rather then just reducing costs and increasing sale
If managed correctly would share innovation and ideas to drive mutual success in becoming market leaders. Strategic Suppliers h
significant impact on UKDN Waterflow’s business.
Critical Suppliers: Niche market or products. Manage risk and ensure continued supply. Have a critical effect on UKDN Waterflo
business.
Operational Suppliers: Providing standard goods/ services available from many other sources. Supplier failure may cause some
inconvenience but not of a serious nature.
60

60. Working collaboratively to build each others businesses rather then just reducing costs and increasing sales targets. If
managed correctly would share innovation and ideas to drive mutual success in becoming market leaders. Have a
significant impact on Virgin’s business.
Strategic Suppliers
Key to Managing Strategic Relationships Sourcing Activities Strategies
• Senior management buy-in & total
commitment on both sides
• Long term agreements and business
continuity plans
• Optimise specifications
• Sharing intelligence: products, service, cost
drivers & market
• Joint product/ process design • Restructure relationships
• Continuity of supply. • On-site representation • Optimise total supply chain costs
• Collaboration on joint cost reduction,
performance & innovative initiatives
• Monthly supplier relationship and
performance management
• Reduce lifecycle TCO costs
• Integrate supply chain processes between
companies
• Reduce transactions

61. Critical Suppliers
Niche market or products. Manage risk and ensure continued supply. Have a critical effect on Virgin’s business.
Key to Managing
Critical Suppliers
Sourcing Activities Strategies
• Research opportunities alternatives and
substitutes
• Long Term Agreements • Reduce consumption
• Reduce lifecycle including maintenance
and operating costs
• Expand relationship & provide supplier
incentives to be preferred customer
• Optimise specification
• Build robust service level agreements
into the relationships
• Manage risk within the end-to-end
supply chain
• Optimise supply chain costs
• Alignment with proactive suppliers
• Understand market exposure and
develop new suppliers
• Reduce transactions
• Explore ‘Strategic Relationship’ options • Restructure relationship
62

62. Operational Suppliers
Providing fairly standard goods and services available from many other sources. May cause some inconvenience but not
of a serious nature.
Key to Managing Operational Suppliers Sourcing Activities Strategies
• Total cost reduction/ value
enhancement
• Agreements competitively tendered
regularly
• Consolidate Spend
• Speed of implementation
• Pursue value add services that reduce
costs
• Increase competition
• Consolidate requirements to increase
buying power
• Test the market regularly and provide
rapid response changes
• Eliminate / reduce transactions
• Increase competition • Consider outsourcing arrangements • Reduce consumption

63. Does it involve a
key component to
UKDN’s delivery to
our customer?
Does it involve
direct contact with
UKDN’s customers
(other than
providing
logistics)?
Involves
processing or
having access to
customer data?
Likely to be high
risk in any other
way?
OPERATIONAL
SUPPLIER
No
No
Are less than 3 suppliers in
the market providing this
product/ service and where
switching supplier would
cause severe operating
issues/ delay?
Yes
Yes
Yes
Yes
Does it involve a
material process
where supplier
failure would cause
UKDN severe
operating issues/
failure?
CRITICAL
SUPPLIER
STRATEGIC
SUPPLIER
Would partnering have the
potential to deliver supply
chain efficiency, value
engineering & strategic
value? (i.e. Have a positive
impact on: competitive
position , brand awareness,
speed to market)
No No No No
Yes Yes Yes
No
Screening Questions for Supplier Segmentation
Are there multiple suppliers
where products can be
easily substituted at low
cost within a minimal time
frame?
Yes
No
Note: This flow diagram should be used as a guide to segmenting your supply base, there will be ‘exceptions
to the rule’ where you should use the other available tools and definitions to apply best judgement..

64. Understanding risk and applying the right level of supplier
management
Relationship
Management
Performance
Management
Contract Management Management by
Exception (E.g. Issue
or risk arising/ likely to
arise)
Strategic Suppliers X X X X
Critical Suppliers X X X
Operational Suppliers X X
Supplier segmentation ensures resources and time invested in suppliers is allocated appropriately based on their
criticality to the business
Risk Assessment Yes/No
Is the sourcing project likely to involve joint venture, joint alliance, joint branding or outsourcing?
Will suppliers will be in direct contact with UKDN Waterflow’s customers?
Does the supplier operate, either fully or in part, a process or a product critical to UKDN Waterflow’s
business?
Does the supplier processes data on behalf of UKDN Waterflow?
Might they retain this data or records after the processing is completed?
Does the supplier provide a storage service for data records?
Is this sourcing project likely to be high risk to UKDN Waterflow in any way not covered by the above?
If the answer to any of the above questions is ‘Yes’ suppliers should be ‘Management by Exception’ (see below).
Supplier segmentation should be completed in conjunction with an assessment of underlying risk.

65. It is a comprehensive task to attempt to change a culture founded on suspicion,
confrontation, and inflexible attitudes, to one which favours and seeks:
• Openness, co-operation, understanding and trust;
• Equitable apportionment of risk and reward; and
• Continuous improvement.
It also requires a process that provides:
Identification - of clear, mutually accepted objectives, which are stable and which encompass the key drivers of business. The achievement of
objectives must be demonstrable and capable of measurement.
Partnering Forums - to initiate the partnering process. Goals and objectives for the project and for the parties will be aligned, and the ground rules
of the arrangement established.
An Integrated Stakeholder Team made up of representatives from all partners.
Monitoring - to ensure that relationships achieve the objectives. Performance indicators will be formulated and an appropriate procedure agreed in the
forum.
Partnering Principles (PPs) - that state the expectations of all partners, and the relationships they hope to achieve. It does not replace the
contract, but is the forerunner to it and concentrates on working relationships.
A Framework Agreement - that takes the aspirations of the PPs and expands them into a comprehensive, legally-binding working document of
the relationship, containing terms and conditions and all other contractual requirements.
Communication - between UKDN Waterflow and its partner(s) on a frank and open basis. The structure of communications and relationships at all
levels will be agreed in the Partnering Forum and recorded in the Partnering Agreement.
Risk Management - which identifies and allocates all known and expected risks to the parties best able to manage them. This means that the
parties agree to avoid surprises, to communicate problems to each other immediately, and to work together as a single team to manage risk successfully.
Continuous Improvement - through seeking opportunities to improve performance.
Dispute Resolution - applying a jointly-agreed procedure for the resolution of contentious issues. The objective is to have an issue resolved at the
earliest possible opportunity at the lowest level of authority.
PARTNERING ETHOS
Such cultural change requires:
Commitment - Openness - Fairness -
Trust
Principles of partnering with strategic supplier
66

66. W o r l d
C l a s s
S t r a t e g i c
C o m m e r c i a l
T r a n s a c t i o n a l
Buyers & sellers exhibit certain behaviours seen in the
Relationship Pyramid
6767

67. Transactional Relationship
68
Buyer’s Behaviour Seller’s Behaviour
Late payers Does not allocate any significant amount of
resources to the account
Unimaginative Not bothered about quality of service delivery
Last minute panics Concentrates on price and uses time pressures to
increase price
Adversarial Would be too bothered if they lost the account
Focus on price or discount Little understanding of the buyer’s requirements
Suppliers kept at a distance

68. Commercial Relationship
69
Buyer’s Behaviour Seller’s Behaviour
More collaborative negotiations Welcomes approach but slightly complacent
Supplier suggestions listened to Feels that their contributions are valued
Care about service delivery arrangements Concentrates on service delivery
Limited pre-assessment of capabilities Takes advantage of lack of understanding
Seeks different solutions Looks to provide alternative services with large
profit margins

69. Buyer’s Behaviour Seller’s Behaviour
Emphasis on relationship management Dedicated account team and considers the buyer as
an important customer
Spends time with the supplier On site regularly
Designs costs out Looks to deliver added value
Regular supplier performance monitoring Greater commitment to analysing and fixing service
failures
Supplier suggestions warmly received Shares research and development costs
A Strategic Relationship

70. Very few world class relationships exist outside the motor industry
Buyer’s Behaviour Seller’s Behaviour
Dedicated relationship team with board level
commitment
Dedicated account team with board level
commitment
Very close links with strategic hauliers Economies of scale levered for buyer’s benefit
Active supplier development programme Service delivery and added value benefits delivered
above and beyond the contract
Continual performance assessment Synergy
Hauliers encouraged to take the initiative Thought leadership
World
Class
A World Class Relationship
7171

71. It’s important to remember how UKDN Waterflow view our
suppliers and how suppliers view UKDN Waterflow
72

72. • Understand why SRM is important to UKDN Waterflow
• Establish roles and responsibilities for SRM
• Segment key suppliers
• Subcontractors performance baseline
Objectives for today
73

73. It is important to have a central UKDN Waterflow SRM policy
governing the management of Strategic Suppliers
SRM policy
• Owner [to be agreed – generally sits within Operations]
• Supports a consistent UKDN Waterflow approach to SRM driving continuous operational
improvement and harnessing talent and ideas from key supply partners.
• SRM policy incorporates various activities;
- Supplier Segmentation
- Roles & Responsibilities
- Balanced Scorecard
- Supplier Meetings
- Document Retention
Balanced Scorecard & Supplier Dashboard
• Owned [to be agreed – generally sits within Operations]
• Measures the performance of Strategic Suppliers
• The scorecard & dashboard incorporate;
- A mix of quantitative and qualitative measures to develop two-way mutually beneficial
relationships with UKDN Waterflows strategic carrier partners
- 360 view, scored by UKDN Waterflow, Supplier and Customer
- Jointly reviewed with supplier
- Action plan signed off by both parties
UKDN Waterflow Guidelines for Supplier Meetings are required to provide structure to meetings and
support SRM Policy

74. Review and approval of Supplier Scorecard
Supplier Name: [XXX]
Review 1st
Qtr Date of Supplier Review [xxxx]
ID Scorecard UKDN Waterflow Cross-Functional Group Score
Total Score
Possible
Primeline
Metrics Purpose Measures (TO BE UPDATED)
Evidence
provided by:
Owning Team Weighting Score
Weighted
Score
Supplier Comments Score
Weighted
Score
Score
Weighted
Score
Supplier
Comments
1Strategic Value
1.1
Contributes effectively to business
process innovation
Drive ideas and innovation to support 3-5 year
business goals
Track evidence of sharing ideas Operations 3 2 6 5 15 2 6
1.2
Activly works to reduce supply
continuety risk
Appropriate continuety plans in place to ensure
customers receive orders on time in-full when
an unexpected event occurs
BCM/DR Plans in place,
regularly updated and tested
Operations 5 1 5 5 25 2 0
1.3
Supports and contriutes COMPANY's
bid to enter into new markets
Ensure geographic coverage or growth plans
support and develop COMPANY's 3-5 yr business
plans
Both parties regularly share
and develop long term plans
Operations 3 3 9 5 15 2 6
1.4
Makes a positive contribution to
brand equity
Positive driver experiences increase customer
satisfaction and perception of COMPANY supply
chain
Completed and track customer
satisfaction surveys/ No.
customer complaints
Sales 5 3 15 5 25 5 0
2Financial Value
2.1
Freight cost per kilo shipped (and/or
no. cartons shipped)
Ensures savings initiatives and new tariffs
deliver the anticipated savings,
Track Invoice values match
agreed pricing contracted
Finance 5 4 20 5 25 5 25
2.2
Not more than 1 credit/ debit notes
per 400 orders
Tracks losses and damages and ensures pricing
accuracy to agreed tariffs
Track No. of credit/ debit notes
does not exceed 0.25/ 100
Finance 3 4 12 5 15 5 15
2.3
Price stability and commitment to
on-going price reductions
Commitment to COMPANY partnership
Evidence of proactively sharing
ideas to reduce costs
Operations 3 3 9 5 15 5 15
2.4Asset Utilisation
Reviews opportunities to benefit from any joint
utilisation of assets
Evidence of proactively sharing
ideas to better utilise assets
Operations 1 2 2 5 5 3 3
2.5
COMPANY Incremental Revenue
generated through implementation
of new carrier strategy
Tracks supplier performance to change in
revenue
Increase in volume orders / no.
customers outside of
COMPANY promotions/
marketing activity
Finance 1 N/A 0 0 4 4
3Operational Performance
3.1Timely delivery of linehaul trailers
Ensures the daily load planning processes are
adhered to
Track aginst contracted lead
times
Operations 5 1 5 5 25 3 15
3.2Timely collection of linehaul trailers
Ensures the daily load planning processes are
adhered to
Track aginst contracted lead
times
Operations 5 1 5 5 25 3 15
3.3
On-time in full delivery to agreed
lead times
Tracks the service provided in delivering orders
to customers at the agreed time
Track aginst contracted lead
times and no. credit notes for
short orders
Operations 5 4 20 5 25 5 25
3.4
Not more than 1 customer
complaint relating to supplier
performance issues per 400 orders
Provides qualitative score of driver performance
and customer perception of COMPANY supply
chain
No. customer complaints per
100 orders
Sales 5 N/A 5 25 5 25
3.5
Not more than 1 late outstanding
PODs per 100 orders
Ensures invoice accuracy and adherance to
timelines
No.POD's per 100 orders Sales 5 1 5 5 25 5 25
4Relationship Quality
4.1
Carrier Communication is
meaningful, accurate and timely
Ensures carriers deliver meaningful accurate MI
and other key information on time and in the
specified format
MI is provided on time and in
the specified format
Operations 3 2 6 5 15 4 12
4.2Degree of mutual understanding
COMPANY and the carrier understand each
others objectives
Regularly reviewing each
others long and short term
goals
Operations 3 2 6 5 15 2 6
4.3
Stratgic alignement continues to
support objectives
Both parties objectives are aligned and support
strategic goals
Regularly reviewing strategic
objectives and aims of the
strategic relationship
Operations 5 3 15 5 25 3 15
4.4
Effective in solving problems/ issues
when they arrise
Can recognise the need for improvement and
drive change within their organisation
Timely resolution to issues and
responsivness to suggestions/
complaints
Operations 3 2 6 5 15 4 12
Total: 31 119 85 280 67 191
36% 43% 100% 100% 79% 68%

75. On target
Required attention
Below expectation – required immediate action
KEY
Service improvement since last period
Service decline since last period
Service static since last period
Example Supplier Dashboard - For discussion
Overall [RAG]
Performance during period
Relationship during period
Quarterly Operational Performance
Quarterly Returns:
Quarterly Regional Spend/ Volumes
YTD Spend & Forecast per Quarter
Spend (YTD) £____ Forecast 2014 £____ Total No.Shipments (YTD) __
Key Messages & Opportunities for Improvement/ Innovation
Upcoming Dates for Diary
Quarterly performance review meeting dd/mm/yy
Quarterly relationship review meeting dd/mm/yy
0
1000
2000
3000
4000
5000
0
1000
2000
3000
4000
5000
Q1 Q2 Q3 Q4
Spend
Forecast
Spend Vs forecast to date
‘000
0
100
200
300
400
500
UK DE FR IT
Q2
Q1
UK
56%
DE
22%
FR
17%
IT
5%
Regional spend to date
% Volume shipments by region
0
500
1000
1500
2000
2500
3000
3500
4000
No. shipments
Q4
Q3
Q2
Q1
Total No. shipments
£’000
Carrier: Period: Q1 February 2014
Actual Target Status
1. On-time delivery of linehaul trailers % TBA 97%
2. On-time collection of linehaul trailers % TBA 97%
3. On time in full (OTIF) delivery to agreed lead-times TBA 97%
4. No. customer complaints/ 400 orders TBA 1
5. No. late POD’s/ 100 orders TBA 1
6. Volume orders lost /damaged in transit / 400
orders
TBA 1
7. No. credit Notes / 400 orders TBA 1
Reason
Code
Reason Description Volume Volume (%)
Cost of return
shipment (£)
LIT Lost in transit TBA TBA TBA
DIT Damaged in transit TBA TBA TBA
PPYC Poor Packaging TBA TBA TBA
NCOD No COD TBA TBA TBA
NAP No access to premises TBA TBA TBA
IP Incorrect products TBA TBA TBA

76. Today we need to agree ownership and target delivery
dates to support SRM activity
Documentation
Accountable
Team
Action Timing Task Owner
Supplier
Segmentation
Cross Functional
Team
1. Segment Key UKDN
Waterflow Suppliers
Today Contract Owners - To be
agreed today / UKDN
Procurement
SRM Policy Operations 1. Agree Ownership
2. Draft SRM Policy
for review & feedback
Today
End May
To be agreed today
UKDN procurement
Scorecard Operations 1. Agree Ownership
2. Draft Scorecard for
Key UKDN Waterflow
Services
Annually (or by exception) Contract Owners
To be agreed today
Dashboard Operations Create Draft
Dashboard for Key
UKDN Waterflow
Services
Mid June UKDN Procurement/
Contract Owners - To be
agreed today
Meeting Guidelines Operations Draft Supplier Meeting
Guidelines for review &
feedback
End May UKDN procurement

77. Questions