Factory thinking: a supply chain view

Rethinking procurement could unlock efficiencies and encourage more offsite manufacturing in the water industry says Graham Cleland, offsite general manager for NG Bailey.

Bernadette Ballantyne
30 June 2014

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Water & Waste

We all know the story of the tortoise and the hare and it is to this fable that I turn to illustrate the pace at which the water industry has so far embraced the proven benefits of offsite manufacture. And, more importantly, for highlighting that with a degree of forward-thinking – and a leap of faith – it may yet overtake other sectors in developing a ground-breaking role for offsite, one with untapped potential. 

The benefits of offsite are as far-reaching for utilities as they are for every other sector. Together – in terms of better safety, improved quality, faster work programmes, greater sustainability and less waste – combine to offer a compelling driver for change. Yet while many of the biggest names have been quick off the blocks and are now seizing these advantages in record numbers – we count Network Rail, the NHS, Arla Foods and Heathrow Airport among our offsite customers – the water sector has traditionally adopted a more pedestrian stance.

Yes, there are lessons for the water sector to learn in speeding up the pace of change to bring it upside other sectors, particularly by ensuring it has a greater and earlier opportunity to shape the design and development of a project. But the requirements of end-clients in the water sector in terms of products are not huge compared to suppliers in the automotive sector, which can expect massive volumes over a protracted period. Therefore the demand for products would not necessarily warrant a typical offsite provider to invest in production lines to streamline the process of manufacturing and assembling products in the same way as the automotive sector.

So against this backdrop, how can utilities best unleash the potential of offsite to drive up quality and ensure that every pound of investment goes as far as possible?

We believe that one of the keys to this is rebooting the procurement process and transforming the way partnerships are developed with suppliers – creating an innovative contract model that for the first time brings together the technological capability of offsite with the intellectual property that sits hand-in-glove with it. Moulding these two facets of offsite together equips the water sector with a new way of thinking, a new way of working – and new solution for some of its biggest challenges.

Those savvy end-clients of the future might realise that offsite providers actually want to make their manufacturing capability and capacity available over the long-term, not merely sell one-off or small volumes of multiple-off products. A typical scenario might be an OJEU for 200 sampling kiosks, over the five years of an AMP. The intention of the OJEU would be for the specification of the sampling kiosk to remain constant over the full five years, in order that the offsite provider could benefit from some economies of scale with its own supply chain.

However, a savvy client might appreciate that the ideal scenario for the offsite provider would be to agree a longer-term partnership whereby it commits a fixed annual revenue spend which gives access to both intellectual capital and factory slots. In any one year, the required proportion of sampling kiosks could be manufactured based on designs that have been collaboratively developed to ensure efficiency and cost effectiveness. 

 Intellectual capital is a scarce resource and is often under-utilised or inappropriately applied on matters that are not directed towards helping clients conceive increasingly better solutions. Since there may never be sufficient volume of product required in the water sector for an offsite provider to invest in mass producing capacity (i.e. akin to the automotive sector), the key leverage might be to have flexible manufacturing and assembly space. The ability to innovate product solutions, or identify ways to integrate alternative technologies (from a range of different parties across the supply chain in some form of collaboration), is the core intellectual property that water companies might want to access.

The savvy client might eventually realise that “buying” or “retaining” this available intellectual capital (or at least a portion of it) for a fixed period of time to work on whatever solutions are best suited to the capabilities and capacities of that offsite provider is money well spent. And, in the race for innovative solutions, the tortoise may yet – like Aesop’s famous fable – pip the hare on the finishing line.

Anglian Water case study

Traditionally, to design and build a booster pumping station (known as a DG2) takes several weeks with multiple trades on site. Having heard about NG Bailey’s off-site manufacturing capabilities via buildoffsite, Anglian Water approached the company to develop an innovative way of solving the problem. NG Bailey’s off-site team immediately saw the potential to deliver an off-the-shelf product range of new pumping stations. The total cost saving of delivering this product, including design and engineering time, would be over 20 per cent, compared to traditional methods.

The result is not only a value-engineered design, with all the cost-advantages of standardisation and industrialised production, but also a ‘configurator’ installed on the client’s intranet. This system enables project managers to configure the specific model they need, by pumping capacity (from 5 to 50 lt/sec) and 17 other options.

The assembly process is also refined. A sacrificial template, set into the concrete base on site precisely determines the positions of all pipework coming into the plant room, so that when the unit is delivered it can be fixed and able to pump water in as little as four hours. The solution is now available under licence to other utility companies. “The new product has reduced construction time by 50 per cent, . The use of innovative off-site construction techniques is an excellent example to follow,” says Mark Enzer, technical delivery manager, Anglian Water.