Utility Week Awards winner case study: Supply Chain Excellence

An Innovation Lab helped United Utilities and L Marks connect with suppliers – and earned them a Supply Chain Excellence Award.

The traditional procurement process for regulated water companies is lengthy, prescriptive and stifling. Clients tell their suppliers what they want and expect them to come up with a complete solution, often sourcing from their own country and sector.  This, says United Utilities, is why it partnered with L Marks in June 2018 to create its Innovation Lab.

The company wanted to access a global supply chain, find and evaluate innovative ideas and quickly award contracts to whose which made the grade – all while maintaining full legal compliance.

The lab, which ran for 12 months, focused on suppliers from outside the water sector with a “start-up attitude”. United Utilities invited these companies to work alongside the company to help solve their most pressing problems. It offered them shared space at its Innovation Centre, along with technical business mentoring, access to expertise, a live testing environment and product validation.

Its partner for the project was chosen on similar grounds. L Marks had expertise in running lab programmes in other fields but had no experience working with the water sector or even with regulated companies.

Together, they promoted the lab to 1,500 suppliers around the world through idea scouts, local enterprise partnerships, water sector supplier groups and the small business community.

Proposals were submitted by 80 suppliers, of which 55 were new to United Utilities. Around half came from outside the UK and a third from outside the water sector. Over a third came from the Northern Powerhouse region, which the company serves.

United Utilities chose to work with seven suppliers from six different countries to help make their ideas a reality. Those that failed to meet the company’s standards for business ethics and sustainability were rejected.

Six new concepts were successfully trialled in a period of less than eight weeks – half the normal time. The company enlisted 150 customers to give their feedback on the ideas.

From this work emerged four long-term contracts worth more than a £1 million over five years, with three of them going to start-ups. One of the suppliers has taken on three new employees to meet the new demand.

According to United Utilities, it will save more than £5 million and deliver a high return on investment. It also has revenue-sharing agreements in place, meaning it will receive an additional return when the suppliers sell to other water companies.

The three suppliers that failed to secure contracts have been given additional feedback and a route by which to return with an improved offer.

United Utilities says the initiative has had an enduring impact on both its supply chain and its own workforce. Many of the 65 employees involved have been earmarked for promotion and leadership opportunities and all have been given “new energy” by the project. The scheme has created a new community of innovators in which relationships form faster and last longer.

The lab was so successful United Unities launched the second iteration of the programme in May 2019.

Winner’s comments

Kieran Brocklebank, United Utilities Head of Innovation

“It was a real honour to receive the award – it was the culmination of a lot of hard work from many people in our company and our partner, L Marks. The entire team got a real buzz from being externally recognised; the trophy is on display in our Innovation Centre and reminds us every day that when we remove barriers to innovation, it pays off.”

The Utility Week Awards are held in association with CGI, Capgemini and Microsoft

The 2019 Utility Week Awards are open now. Sponsorship opportunities are available – contact Utility Week business development manager Ben Hammond on benhammond@fav-house.com or 01342 332116 for more information.