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Procurement professionals will soon be presented with a real opportunity to drive further value into their organisations. The Water Bill, currently making its way through Westminster, is going to present them with the opportunity to make significant savings on both water consumption and costs.
The Bill is expected to receive royal assent in May and will introduce competition to the non-domestic water market in England in full from April 2017.
While competition has existed for a while in England, the current market structures only allow individual sites using more than five megalitres (that’s five million litres) of water per year to switch provider. That’s just 27,000 sites out of an estimated 1.1 million. It’s safe to assume that for the vast majority of England’s businesses and public sector organisations, this represents a significant new opportunity.
Procurement professionals could do worse than look north of the border to see what this is likely to mean for them. Scotland’s non-domestic competitive water market was the first of its kind in the world and has delivered significant benefits for customers.
Opened up to competition in April 2008, the first five years saw 16 billion litres of water taken out of use and 28,000 tonnes of carbon saved. In monetary terms, customers have reduced their bills by more than £35m, while £30m of discounts have been made available.
Importantly, it has also put customers in control. They are now in a position to demand more from the services they need, which has led to new, innovative offerings.
Procurement professionals have played an important role in Scotland’s story. They have been instrumental in identifying the needs of their organisations and driving the potential value of the market into their own organisations by procuring the right services and increasing efficiency.
For some, this has been achieved by bargaining collectively. This has driven economies of scale, increased purchasing power and resulted in greater efficiency. A good example is Scotland’s public sector which, through Procurement Scotland, collectively negotiated a framework agreement for all its member organisations and is now on target to realise more than £36m in savings.
The Water Bill will bring all of this potential to England, where the size of the market should mean even more can be achieved. Customers will be in control of their water and waste water service supplies and will be free to choose which company provides these services. That will give them the power to cut costs and consumption in their organisations.
That requires the procurement community to think about what their organisations need. 2017 might seem a long time away, but it’s a good idea to start thinking now about which services are working for your business, which aren’t and what you can do now to access savings.
Mark Powles is chief executive of Business Stream, a wholly-owned subsidiary of Scottish Water.