CASE STUDY / CIT Y OF MELBOURNE
TECHNOLOGY
into six pillars: risk, innovation, contract and commercial management,
different ways, so it looked at its top 120 suppliers, comprising about 80% of spend, and segmented them to determine who they wished to partner with more closely. “We realised some of our most strategic suppliers weren’t always those with the largest spend. Some are critical because of the services they provide to the community – such as child health services and support for people experiencing homelessness.” Once it was clear who the key suppliers were, a four-tier governance arrangement was set up to consider how to manage them on an ongoing basis. That oversight was organised
As part of that, it looked at developing a more targeted SRM programme with strategic suppliers or those that it wanted to establish a strong partnership with. And while it remains new, this programme has already reaped benefits.
performance management, governance, and financial
Just get in there and do it
management. It then built suitable tools, templates and processes for each of the six areas and considered how technology or automation could assist contract managers to maximise these relationships. At the same time, it developed a more holistic supplier management programme for its thousands of other suppliers. “The aim was to ensure the right level of governance, process and rigour was in place for the entire supply chain.” Different levels of time and effort were required across its diverse pool of suppliers – on-boarding everyone from highly sophisticated global players to small providers without experience of requirements, such as business continuity plans. It needed a tailored way of dealing with each type of supplier for the programme to succeed. Once it was established, the City of Melbourne next considered reporting mechanisms. It set up information dashboards so the executive group and stakeholders could understand the value of SRM for both the organisation and the wider community.
Establishing SRM
The first stage was to consider what was already in place. The City of Melbourne had previously only segmented according to spend rather than also considering risk, complexity or other factors. The team wanted to examine the base in a number of
Within months of establishing an SRM programme, the City of Melbourne says it has benefitted from closer working relationships with suppliers.
E very Labour Day weekend since 1955 the City of Melbourne has come together to celebrate Moomba. A four-day long carnival held along the Yarra River that attracts millions of residents and visitors to watch events including live music, parades and the birdman rally. Working with suppliers to stage the annual festival is just one of its responsibilities. In addition to running events such as this and a New Year’s Eve fireworks display, it also partners with providers to help protect some of the community’s most vulnerable people. “Our 3,000 suppliers are a diverse group, covering everything from large capital works programmes and the operations that keep the city functioning, to running childcare and community centres and delivering big events,” says a spokesperson. In addition, it procures technology, business and professional services, so any SRM programme had to cater for all. An SRM professional lead, who works in the Procurement and Contract Management Branch, was brought in at the end of 2018 to develop and deliver this programme – the final piece of the puzzle for its overall procurement transformation. Prior to the SRM programme, the organisation had operated a decentralised contract management approach. It had contracts with suppliers that were managed by one of its 35 branches or business units that report to the executive. “The challenge was to consider how we could holistically manage all suppliers in a way that was scalable, consistent and fit-for-purpose, depending on the relationship with that supplier,” the spokesperson says.
Challenges and progress
Some suppliers were resistant to changes that meant being judged on areas not previously assessed; while others were relieved the City of Melbourne was establishing these measures. “There was some amount of pull and some push back.” One challenge was that suppliers were typically secure in their arrangements. “We have a history of long contracts that are continually renewed, so some suppliers have tended to be quite comfortable, while others have been hungrier for the business,” says the spokesperson. Another challenge was to get key, strategic suppliers set up on the programme within six months without any dedicated in-house resource to do the additional work. This was an extra role for commercial portfolio
Image credit: Premier Events
70 STATE OF FLUX
2020 GLOBAL SRM RESEARCH REPORT
71
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