Transcript Strategic Sourcing A case study from the London 2012

Strategic Sourcing
A case study from the London 2012
Olympic and Paralympic Games
Phil Cholewick
Canberra, 05 July 2012
Phil Cholewick
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Who - 2012 Olympics and Paralympics Head of
Supply Chain Management - On loan from the
Home Office (Deputy Group Commercial Director).
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What - Strategic interface for UK Government with
2012 private sector delivery partner and local
government/Arms length public sector
organisations.
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Why - Supply chain ‘resilience’ now seen as a high
risk across senior stakeholders. Need to gain greater
value.
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When – 18 months +18 more working with Olympic
security. 20 years experience overall
Supply Chain Challenge
• 2012 Games requires biggest supply chain since the Second World
War
• Some six weeks of Games activity requires supply chain activity
spread over several months during 2012 and procurement over
several years.
• The value of the supply chain (excluding construction) is estimated
at around 2 billion $ AUD.
• Not just about directly supplying the Games but also other business
as usual activities during Summer 2012.
• There is ever decreasing time frame.
London 2012
G
A
M
E
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Starts 28 July 2012
26 Olympic sports
20 Paralympic sports
15,000 athletes
29 competition venues across the UK
10.8 million tickets
70,000 volunteers
O
T
H
E
R
The Cultural Olympiad
London and UK wide
Parallel events and festivals
The Torch Relay
Business as Usual activities – 7 million people in the capital alone
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Supply Chain Risk (and Opportunities)
Common/critical
goods and services have an impact on the delivery of a safe
and secure Games.
In the Beginning
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2009 – start of the Olympic Journey
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Multiple Delivery Agencies involved
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Procurement Holistically - No one
knew who’s doing what & when?
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Different level of maturity, skill and
resources (Not too mention priorities)
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Lack of information on total demand and,
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Unknown Supply Chain capability/capacity
The Procurement Players
London Organising Committee for
the Olympic Games - LOCOG
The Government
Olympic
Executive
Nations Security
Greater London
Authority = Mayor of
London
Police forces
nationwide
Supply Chain and Procurement Risks
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Procurement is too late
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Supply can’t meet demand
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Supplier capacity is insufficient
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Pay more than needed
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Suppliers fail
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Olympic Buying Authorities compete against each
other driving up prices unnecessarily
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Supplier price works on ambiguity and buyer ignorance
The Real Risk
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The reputation of the Games as an event.
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Cost of the Games. Value for money called into question.
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That some local / regional events are cancelled.
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Political capital.
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The reputation of the city of London and nation as a whole.
Action - Phase One
Developed a Strategy that established the
Olympics Procurement Group
• Terms of reference based on Information Exchange
• Consider the implications on the supply chain of multiple
organisations procuring the same goods and services for
2012
• Explore opportunities to drive out better value through
collaboration.
• Establish a strategic approach to sourcing
Strategic Sourcing
Used as:
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Integral part of a
wider business
strategy
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Improve
profitability/Service
delivery
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Manage Risk to
business
operations/costs
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Includes Demand and
Supplier Management
Tackling the problem
Engagement with Demand
and Supply Sides
Client Side: Procurement
Group
•Who is buying what?
• What do clients want from
suppliers?
•What contracts are already
held with suppliers?
•Has there been
engagement with suppliers?
Supply Side:
•Supply chain management
•What can suppliers provide
•How much can suppliers
provide, is the market large
enough for Olympic
demand?
•What is the critical path?
•How can we manage
critical paths?
Analysis Output
Data collection and information exchange:
Buying Authorities (CPPG)
Olympic
Holistic Overview of Demand from
Partners
Data Analysis (LECC)
London
Holistic Overview of Demand from
Events Organisers
Industry communication
Overview Market Capacity
Identified a supply/demand imbalance for:
• Key events related goods and services
These common/critical goods and services have an impact on the
delivery of a safe and secure Games.
2nd Phase
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Produced supply chain strategy identifying key
categories and approach to managing risk
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Produced category management plans for
each
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Developed stakeholder communication strategy
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Targeted Industry groups, Key suppliers and
Events to stimulate interest and supply
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Targeted Demand side to limit unnecessary
demand – London Events Coordination
Calendar
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Addressed commissioning groups with
information to better inform decision making
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Collaborated on procurement / contracts to
maximize VFM
2012 Supply Chain Stakeholders
• Recognise that its not just Olympic Partners that have an interest in, and
will contribute, to the successful delivery of 2012.
3 Sided Approach to Managing Risk
Supply Chain Risk Mitigation
•Guidelines issued to all potential 2012 Events Organisers
•Recommendations issued for the attention of licensing personnel
Strategic Sourcing and Risk Management
Having a strategic sourcing approach was critical in:
•Managing supply chain risk – capacity and capability
•Influencing procurement activity across multiple organisations
•Segmenting spend categories to focus efforts on (critical and/or maximum
value)
•Exchanging information between organisations led to better value for money
outcomes both in contracting and managing supply chain
•Enabled spend decisions to be made with the benefit of clear information
•Encouraging organisations to build relationships with suppliers and work
together to mitigate supply chain impacts.
•All of these successes contributed to managing the really Big Risks.
Outcomes
Helped manage Risk to Games
delivery - sufficient capacity
and capability
Established effective
collaboration & Co-operation
across multiple agencies
Engaged and worked with
Industry effectively
Left a legacy across public
sector and private sector
partnerships
Challenged normal thinking –
Let the market decide!!
Got supply chain and
procurement recognised and
placed on Executive top 10
risk register
Leveraged procurement spend
more effectively
Raised profile of procurement
as a strategic value adding
function and not ‘blocker’
Secured better prices for
smaller agencies and better
VFM overall
Ensured that Contract
Management is a viewed as a
key part of procurement tool
set
Established productive and
lasting relationships across
diverse networks
Obtained value opportunities
from nothing
Last Words
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•Identifying that there is a potential
problem and getting others, including
Senior Exec’s, accepting is fundamental.
•Communication of the big Issues and
Risks are key!
But it’s only half of the solution.
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•Developing and then executing the
strategy effectively.
•Bringing your stakeholders with you on
the journey.
•Stakeholder communication and
engagement is critical.
•Strong leadership along with a great
team is a must have.
Thanks For Listening
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Contact Details for Phil Cholewick
Ph: +61 (0)2 6162 1149
Email: [email protected]
www.jakeman.com.au