Transforming the procurement approach in transportation
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Transforming the procurement approach in transportation WRITTEN BY
SEAN GALEA-PACE PRODUCED BY
CHARLOTTE CLARKE
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A R R I VA U K B U S
Ian Jones, Head of Procurement at Arriva UK Bus, discusses his company’s procurement transformation journey in the transport sector
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ith a drive to deliver value-adding innovative procurement and supply chain solutions, Arriva UK Bus harbours clear
procurement transformational goals in the supply chain space. Ian Jones, Head of Procurement at Arriva 04
UK Bus, oversees the company’s procurement strategy and believes that sustainable long-term improvement within procurement and the wider supply chain is fundamental for success. “Over the past five years, we’ve really focused on transformation. When I first joined Arriva, there was a centralised procurement team in its infancy and a regionalised purchasing function,” he explains. He commenced building a synergised category management procurement team with supporting programme management, data extraction and categorisation underpinned with proactive analytics. “All the transactional activity was undertaken in five regions, each with their own purchasing team,” says Jones. “However, we felt we could achieve more leverage, control and compliance by centralising all activity through one location,
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A R R I VA U K B U S
“ Our journey isn’t at an end yet; it’s fix and fly. The plane is in the air and you’re fixing it as you go — we haven’t stopped” 06
— Ian Jones, Head of Procurement, Arriva UK Bus
harnessing the power of strategic procurement in collaboration with purchasing. By implementing that, it enabled us to drive spend to first and second tier suppliers because of the control from the central location.” Prior to Jones’ tenure, Arriva UK Bus operated with five regions all creating Purchase Orders (POs). However, since switching to its centralised purchasing approach, Jones acknowledges its influence and believes it has enhanced efficiency significantly. “Our current approach drives process
CLICK TO WATCH : ‘MAKE YOUR BUS START’ 07 efficiency and we’re consolidating POs, providing greater ability to expedite,” explains Jones. “By communicating with the supply base instead of sending multiple POs at different times of the day, we can drive supply chain efficiencies via defined order cut off times which provides the opportunity for greater organisational alignment and ensuring resource availability at optimal times. The supplier then has the ability to pick for the consolidated order and then sub-pack, rather than pick, pack and dispatch on multiple occasions.” w w w.a rri va bu s . co. u k
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As part of Arriva’s procurement
it’s all about the ‘why’ and ‘how’ strat-
transformation journey, the first step
egy. The first thing we did was develop
was to get the right procurement
a why. We took inspiration from Simon
environment in place. This meant
Sinek, and we aligned our mantra with
a focus on people, data, holistic
his. His reasoning was that organisa-
spend management, process and
tions and people that understand their
policy. Secondly, Arriva looked at the
‘why’ are very successful,” explains
purchasing side of the organisation
Jones. “People in procurement can
before finally considering further
often give you the what, which is the
supply chain optimisation. Jones
delivery. However, they often scratch
believes that establishing these core
their heads on the why and the how.
first steps was essential to laying the
We’ve developed that why and how
groundwork for his company’s trans-
and linked it to the business’s strategic
formation journey to succeed. “To us,
pillars. There’s been lots of work and
E XE CU T I VE PRO FI LE
Ian Jones Ian Jones BA (Hons) MCIPS is Head Of Procurement at Arriva UK Bus. The role assumes responsibility for the management of all the business’ direct and indirect spend. He has more than 20 years’ Procurement experience within the profession after undertaking senior roles in Local Government, Manufacturing, Retail and Transportation. Prior to joining Arriva he was in the Procurement Leadership Team at Home Retail Group. He has an extensive track record of delivering multimillion pound/euro benefits for organisations whilst transforming teams.
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A R R I VA U K B U S
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this is ongoing to develop category managers and help them acquire softer skills to aid in the transition towards our strategic contract management programme as it’s linked to our journey through the stages of the procurement maturity curve.” Jones believes that strategic contract management is a core component to optimising the supply chain in order to better understand supply chain performance and manage risk. “The way to do that is by managing contracts in the right way and talking about innovation,” he says. “Our journey isn’t at an end yet; it’s fix and fly. The plane is in the air and you’re fixing it as you go — we haven’t stopped, we continue to deliver value for the organisation.” With technology becoming increasingly influential to operations in the supply chain space, Jones believes that procurement and purchasing teams can’t operate effectively without harnessing data efficiently. “We’ve developed a range of inhouse bespoke solutions in terms of technology,” says Jones. “We have a data scientist who has helped us develop these solutions. We operate w w w.a rri va bu s . co. u k
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a comprehensive project tracking
“ We’ve developed a range of inhouse bespoke solutions in terms of technology” — Ian Jones, Head of Procurement, Arriva UK Bus
tool, running circa 100 projects every year. This supports programme management, business communications, financial reporting and automated MI. It’s a key conduit between finance and procurement portraying the breakdown of the value that’s delivered by region.” Such bespoke equipment includes a sophisticated spend categorisation tool and an engineering parts usage anomaly tracking tool. “The spend categorisation tool is intelligent enough to w w w.a rri va bu s . co. u k
“ The benchmark in the retail industry is set; people want things and they want them now” — Ian Jones, Head of Procurement, Arriva UK Bus
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objective is to examine these positive and negative ‘outliers’ using the various views available to ultimately establish if an efficiency opportunity exists. This enables all the standard questions to be taken out of the equation because fleets vary by volume, variant and specification.” In a bid to provide the company with an added layer of control, procurement has also built a part number extraction tool. The tool provides us with the ability to ensure that parts are purchased from contracted suppliers, thus driving compliance and ensuring extract and categorise spend infor-
the right part and quality are delivered,
mation from free text strings, from this
this is in addition to other tools we
we build automated MI dashboards
utilise.“This tool is vital because safety
that deliver pertinent spend informa-
is essential and this helps to ensure
tion in a range of formats to support
the first tier preferred suppliers
category management and the busi-
secure the volume,” says Jones.
ness. It’s extremely sophisticated,”
Arriva places considerable trust on
explains Jones. “With our parts usage
its supplier relationships as it seeks
anomaly tool, it allows us to identify
to drive continual value, more than
extraordinary usage of engineering
just transactional interactions. “This
spare parts within particular depots,
is the next stage of the transforma-
vehicle types, and events relative to
tion,” says Jones. “We have built a
other depots, across various different
supplier contract management pro-
views using statistical significance
gramme focused on 25 segmented
to three standard deviations. The
suppliers. In order to achieve this, w w w.a rri va bu s . co. u k
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A R R I VA U K B U S
Arriva are working with suppliers such as Cordant Cleaning, PSV Glass and SSE in a bid to drive innovation, continuous improvement, enhanced quality and environmental standards. “We’re looking to work together with our partners on key initiatives,” says Jones. “For example, we have a big waste and recycling agenda and with Cordant being an extension of our business they can support us in further increasing our recycling volumes because lots of our recycling comes 16
from vehicles. It’s about health and safety as well as corporate social responsibility. All of our supplier
“ We were proud to be the first major transport operator in the UK to purchase 100% renewable electricity” — Ian Jones, Head of Procurement, Arriva UK Bus
partnerships are important and we were proud to be the first major transport operator in the UK to purchase 100% renewable electricity from SSE Business energy.” Looking to the future, Jones has a clear idea of what he anticipates the future of the supply chain space to look like. “The future will be about immediacy, with products delivered to locations just-in-time in a cost-effective and efficient manner through sophisticated technology,” he says.
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“The benchmark in the retail industry is
significant area of interest. Over the
set; people want things and they want
next few years, we’re going to be con-
them now. It’s the same for us - if
tinually assessing our fleet as the
we’ve got a vehicle off the road and we
industry moves towards more zero
need a part, we want it sooner rather
or low emission vehicles or zones.”
than later.” With ambitions on becoming the mobility partner of choice, Arriva strives for its customers, passengers, public transport authorities and partners to choose the firm every time because of its trust to deliver high-quality, reliable and sustainable services. “The environment is another w w w.a rri va bu s . co. u k
Arriva UK Bus Admiral Way Doxford International Business Park Sunderland SR3 3XP United Kingdom T +44 191 520 4000 www.arrivabus.co.uk