Switched on to supplier management
Outsourced delivery WE works on an outsourced model. It runs a core team who carry out design and planning work supported by four key contracts that are delivered by suppliers and subcontractors, which WE sees as its “arms and legs in the field”. These contractors have been managed centrally with simple procurement processes but without any formal oversight from WE. The covid pandemic has negatively affected the price and delivery of network equipment. This has caused WE to reflect on its current processes and think ahead to counter problems. This fresh approach will ensure that supply chain is a critical part of successful project delivery. Three out of four of WE’s key partners deliver capital projects; while the fourth works to ensure lines remain clear of vegetation. A primary contract for field services covers the response to faults and network maintenance requirements needed for WE to operate a safe, secure, affordable and reliable network. The regulator sets expected goals for how often the network is interrupted and for how long these occur. Meeting reliability targets is not only a key metric, it reveals important information that is used to plan future capital and maintenance expenditure. It also helps to identify assets that may need replacing. This all makes the fault information supplied by contractors a key input for the business. CEO Greg Skelton, who has 30 years’ experience in the fields of production engineering, electrical engineering and business management, has headed up WE since April 2009. In 2019, as Wellington Electricity neared
the first 18 months of the second of two five-year deals with its field services provider, it realised it needed to consider getting the rules of engagement more formally understood. This, he says, was to achieve clarity of requirements between the field service provider and asset manager; and the “close-out of timely information” when a task or project was completed in the field. Room for improvement For the most part, the partnership with its field services provider has served WE well. The contractor has performed strongly at keeping the power supply flowing, placing the organisation third in the country at reliability. It also has an excellent health and safety track record, which means WE is leading the rest of the country on key indicators. However, Skelton feared that WE’s management of the supplier was starting to drift into a comfort zone rather than helping them to maintain expected performance levels. There was also concern it could start to impact reliability and health and safety, which are strongly linked to a positive culture and consistent behaviour. Balanced scorecards were indicating some drift in performance that showed formal structures had become somewhat eroded over time. There was positive intention to deliver, however the relationships needed to have ‘developing gaps’ highlighted at the end of each job, instead of quarterly when it was too late to apply them to the next job. “We were only getting a 60-70% success rate from KPI targets and wanted to understand how to make performance more effective or consider if it was time to set new goals,” says Skelton.
WE says while plans and work schedules were clear, it was seeing shifts in the targets met or the depth of information provided from completed work. Some gaps resulted from staff changes and the lack of formal processes and systems to make new recruits aware of what was required, which needed addressing. KPIs and oversight were initially set to encourage the contractor to think logically and laterally about the best use of time and resources at each stage of the work to help maximise efficiency and boost its own opportunity to gain revenue. “Getting the lights back on works really well but sometimes correcting the actual defect was taking two or three site visits.” This often involved leaving reactive processes open for longer than desired, which was increasing costs and adding to confusion when it came to invoicing, which eventually began to test the relationship. “Addressing delays and inefficiency should be a win-win, but we had reached a position where the delays starting to occur between parties responsible for decisions, signing off costs and information, had become accepted practice.” →
New Zealand business Wellington Electricity is looking to bring back the requirements of excellence in service delivery through the adoption of SRM
Wellington Electricity (WE) is one of 29 power distribution companies in New Zealand, the nation’s fourth largest, delivering electricity to 172,000 homes, factories and businesses. Its core business is to manage the poles, wires and equipment that safely deliver electricity to homes and businesses in the Wellington region. In addition to residential customers, it counts some major organisations among its business clients. This includes the New Zealand Parliament, Wellington Airport, the Department
of Corrections, hospitals, universities, streetlights, water and waste water treatment and pumping stations and the city’s central business district. These customers rely on the power provided via WE’s network, which in turn relies upon key partners to make this happen. With continuous improvement in WE’s DNA, it is now on a supplier relationship management (SRM) journey to refresh contract relationships and reestablish where it wants and needs its results to be.
“Our approach to supplier management did not reflect our tenet of continuous improvement.”
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