British Energy has a very close relationship with its supply market and a significant dependency upon external support services for the maintenance and refurbishment of its power stations and supporting infrastructure. As with many organisations, it fully recognises that supply market support is integral to efficient operation.
The company's approach to supplier relationships depends upon the particular market and ranges from the traditional "arms length" trading to close partnership and alliancing. The depth of involvement with the supply chain depends upon the sensitivity of individual products and services to the business. In those areas where a partnering approach is adopted, it may well move through the first tier supplier into second or third levels, depending upon the degree of confidence and visibility being sought. The company supply base has been gradually reduced from some 25000 to 5000 suppliers and further consolidation is being pursued in order to optimise both market leverage and resource effort.
As a safety and quality-focussed company with a wide skill base and long experience of safe, environmentally-sensitive plant operation, British Energy is stringent in its vetting of suppliers. The actual degree of vetting depends upon the complexity and market sensitivity of each particular supply chain sector, and is carried out in-house and includes a requirement for quality and safety accreditation.
Supply market agreements vary in length and complexity depending upon the market segment and support requirements. The company does fully integrates the concepts of partnership and alliancing into its key market support areas when it is clear that the early and proactive involvement of suppliers can lead to tangible benefits to both parties. However, experience has shown that it is only by openly recognising commercial reality, and developing cultural synergies that such arrangements can succeed. Partnering and alliancing cannot be developed overnight and relatively few suppliers are either ready or prepared to break out of the traditional adversarial way of doing business. However it remains clear that the early involvement of suppliers on specific projects does deliver significant advantages both in cost optimisation and the quality and delivery of products and services.
For the immediate future, the primary driver for the company Procurement Function is to remain a strategic player in the development of future business strategy.
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