United Utilities sustainable procurement case study

Organisation

United Utilities (UU) is a UK PLC based in North West England, providing operational services related to water and electricity utilities throughout the UK and around the world. The business is diversifying into solid waste management and has been successful in tendering for waste PFI contracts in the UK and overseas.

Description

UU match funded Defra's contribution to deliver a comprehensive development of sustainable procurement across the company. With the UU funded portion, the company developed definitions of its 12 sustainability objectives (9 environmental, 3 social) and developed a 6 year target framework against each of the 12 impacts. These impacts were prioritised against all categories in UUs supply chain. In order to develop category plans effectively, it was necessary to define the 'scope' required for each impact over time. For example, energy consumption always refers to UU consumption only whereas risks related to labour standards will be addressed for high impact categories all the way back to the point of manufacture over time. All 90+ procurement staff have received a day of training on general sustainable procurement principles, a day to communicate the 6 year targets and scope principles and 2 hour 1:1 category surgeries for help to implement sustainability into their category plans. Measures are under development to understand the results related to each of the 12 sustainability impacts.

The specific area of concentration for the Defra programme was to explore implementation through subsequent tiers of the supply chain. In order to do this, the capital programme was selected, where 50% of the company's expenditure is made through 2 major contractors. These contractors were trained and informed of UU prioritised requirements and invited to prioritise their own supply chains. A workshop with equipment suppliers in one of the prioritised categories was arranged and a similar prioritisation exercise was carried out. A working group has been established comprising UU procurement staff, specifiers, first tier contractors and second tier suppliers to address key impacts such as energy consumption in pumping systems. This group is establishing a supply chain response to the relevant sections of the 6 year target matrix.

Benefits
 
Benefits to United Utilities are:

• Reduced whole life cost giving more than £6 million annual saving;
• Enhanced reputation - helping us to win new business;
• Improved talent attraction and retention - employee engagement is expected to rise from 66% to >75%.

Benefits to suppliers and society include:

• Improved Payment on Time performance to key suppliers from 70% to >75%;
• Improved supplier awareness and capacity of our sustainability expectations;
• Reduced waste to landfill, material and energy consumption and air / water emissions.

Lessons learned during implementation

• It is necessary to align sustainability objectives with the business priorities of the organisation, creating a "Golden Thread" back to the core purpose of the business
• If this can be done, senior management support (which is essential), is much easier to obtain
• It is necessary to be very clear about what you are trying to achieve (expressed as specific and medium/long term objectives) before engaging suppliers.
• Most of the real impacts on the environment happen through the supply chain beneath first tier, it is necessary to engage with the supply chain in depth
• Contractual arrangements in the first tier can significantly impede sustainable behaviour in the lower tiers

Future developments

United Utilities will continue to develop their supply chain strategy using the Flexible Framework as a guide. Key objectives for the next 12 months will include implementing measures against the 12 sustainability impacts, replicating the process to drill down the supply chain for other categories within the capital programme and beyond.

For further information about this case study, please contact Shaun McCarthy:
shaun@actionsustainability.com