Sellafield

Diligent groundwork is set to help the UK nuclear organisation reduce risk and create greater value from supplier relationship for years to come.

 

Many organisations talk about long-term responsibilities, but Sellafield Limited has to face them. Owned by the UK’s Nuclear Decommissioning Authority, the £2 billion-budget organisation ensures the safe and secure running of the Sellafield site, in north-west England. Its work involves the safe removal of nuclear waste, some of which can remain radioactive for many thousands of years.

As such, Sellafield works on a different time-scale to other organisations. “Our programmes and relationships with key strategic suppliers can span decades,” says Alan Hartley, head of procurement and supply chain delivery. “Even when we have built facilities, they have to remain safe [in the long term]. As a consequence, we are looking for relationships based on the right success factors.”

However, when he started his role, in August 2017, Hartley found the organisation needed to improve its strategic relationships with suppliers.

Relationships were too dictatorial

“Suppliers are vital for Sellafield to deliver against its mission and future success. But historically, many relationships have been based on a master-slave model: us dictating to them without understanding the value and capabilities suppliers can bring. Then the relationship suffers, and we miss out on a lot of that value,” says Hartley.

Although the Sellafield procurement team was measuring the performance of suppliers, it was something of a formal, tick-box exercise performed by professionals without sufficient understanding of the value supplier relationships can bring to the organisation.

“We want to ensure that our people invest in their relationships within the supply chain, treating them as an extension of our own organisation and in doing so maximise the value that can be realised, as they are critical to our success,” Hartley says.

His career includes a six-year spell as CPO of URENCO, a global nuclear fuel enrichment company, during which he worked to develop supplier relationship governance and development policies, as well as building a supplier segmentation model. As such, began work with State of Flux to help explore how supplier relationships could be improved at Sellafield.

Risk awareness drives board backing for SRM

“We were in a unique position in that the Sellafield Limited board wanted insight into our approach towards supplier relationship management and our plan to develop it in order to maximise value through our key strategic relationships. That pull from the board together with the growing concerns of finanacial fagility within the supply chain, grabbed the attention and focus we needed internally,” Hartley says

Sellafield’s first move was to announce its plans for SRM at a forum of 200 supplier representatives. Next, it embarked on a survey of suppliers and internal stakeholders who work with suppliers on a day-to-day basis.

The response was great. Out of the 120 contacted, 86% of supply chain firms have completed the survey, while 88% of internal stakeholders contacted have done so. But the procurement team did not achieve these results without work, Hartley says.

“It takes continuous engagement with suppliers, influencing them through the network, to get them to commit to do the survey and participate in further interviews. This activity cannot and shouldn’t be under estimated. It is a daily, weekly, and multi-pronged approach, from the SRM lead, myself and the people on the ground,” he says. “It starts with a generic invitation, then you coach people who work with suppliers daily to engage them, not just by email, but on the phone and face-to-face. You have to demonstrate that you are committed to SRM, as an individual, a function and as a business.”

The supplier survey showed Sellafield was starting from a strong foundation, relative to its peers in the infrastructure and energy sector. But Hartley is cautious about this view, given these sectors’ limited success in long-term supplier relationships.

“There is a downside: suppliers want to stay on good terms with the business — as well as the procurement team — therefore they could be reluctant to be completely open, while others in the sector may have a limited view what ‘good’ looks like. You can get a view from inside a bubble,” he says.

Internal stakeholders gave a more balanced view, Hartley says. “They offered a more frank and honest response. It was quite apparent people viewed us as not doing SRM well. There was a lack of knowledge about process and procedure, as well a lack of ownership of the relationships at a strategic level.”

Sellafield will segment its supply chain to understand how to build effective SRM for each group of suppliers. Category teams, together with the business will work with the State of Flux segmentation tool to understand the key suppliers in each key area of spend. This collaborative approach to segmentation is critical to ensure the output is balanced across both the operational and commercial needs of the business

Leading with four key relationships

But the organisation did not want to wait for the process to finish before beginning to work with suppliers. It hand-picked four suppliers from its most important areas of supply: capital projects, facilities management, IT, and analytical and laboratory services.

It has already undertaken initial meetings with these key suppliers involving internal operational leaders and their equivalents from each supplier. Next, Sellafield plans to host a two-day workshop focused on each relationship, training the internal team and the supplier’s team together, ensuring commonality of approach. From that, they will develop joint business plans which recognise the value they can bring together, Hartley says.

“Each relationship has a different value proposition. It is about the two parties coming together to explore the art of the possible and how we will develop the relationship together. Then you get real clarity about where the value and innovative opportunities are in each area,” he says.

Following supplier segmentation, Sellafield will take around 20 suppliers into the SRM programme, learning from its experience with the initial tranche of four.

“From each of the Sellafield teams associated with managing the first tranche of four, we will identify someone as an expert, who will share their experiences and learnings as part of a developing SRM community of practice. We will embed that learning into future relationships and continue to invest in the SRM programme and community,” Hartley says.

Sellafield’s SRM programme is still in its early stages, but the groundwork in governance demonstrates it is in for the long haul.