Sydney Water Corporation, Australia’s largest water service provider, had a procurement model that was not fit for purpose. Its 120 tenders a year required extensive leadership involvement, cycles ranged from four to 12 months and under delivery was 20% a year.
There were 17 difficult-to-measure, highly subjective and punitive key performance indicators (KPIs). Feedback was bad, with a poor 10% satisfaction score from internal stakeholders. Cue a new performance partnering framework, Supplier Relationship Management for Success, comprising an embedded procurement team, regionalised contracting and delivery structure, and a dynamic, transparent, reward-based system. Now there are just seven KPIs enabling continual improvement, improved supplier performance has translated into 15% cost efficiency, staff engagement is up to 82%, efficiencies have tripled and capital employed has exceeded target for the first time in history.
No wonder several external organisations have now sought advice from the corporation on KPIs and contracting models.