A model to manage the water industry supply chain effectively

Abstract

The water industry is capital intensive and dependent on complex supply networks in the delivery of service characteristics, making procurement a critical activity. This paper rejects ‘the lowest bid’ form of procurement of the past and advocates the total cost and strategic relationship management procurement of the future. The authors develop arguments for more effective procurement leading to real cost reduction and service enhancement on a sustainable basis. This requires a range of strategic activities from the approach to the acquisition of major capital goods and associated services through to the management of relationships with contractors, suppliers and supply chains. The paper considers the differing procurement practices in Europe, Australia and the USA, and how, in comparison, equivalent practices result in higher costs in the UK than elsewhere. From this they propose a model for best practice procurement in the utilities industries and a step-by-step set of actions for improving performance. The proposed model begins with a strategic appraisal of procurement activity across an organisation focusing on overall objectives and desired outcomes leading to an effective operating model including the end-to-end management of the supply chain and the policy, resources and enabling technology required for successful delivery.