1. Efficiency, quality & sustainability through PPI
Gaynor Whyles, JERA Consulting DIGITAL INNOVATION FOR REGIONAL GROWTH Thessaloniki April 2014

3. What do we mean by innovation?
Innovation is often confused with research
They are in fact very different processes
Research is a way of turning money into knowledge
Innovation turns knowledge into money
Research is about doing things for the first time
Innovation is about using known things for a new purpose

4. What do we mean by innovation?
You don’t know the results of research in advance
Innovation is always targeted on known outcomes
A key success factor for innovation is an accurate understanding of the unmet need it is targeting
Innovation is the process of translating technology and knowledge into new, usable products and services

5. Innovation procurement?
Buying goods and services in a way that stimulates the supply chain to invest in developing better and more innovative goods and services to meet the unmet needs of an organisation

6. The procurers view of innovation
Sensible procurers worry when they hear the word “new”
New products and services have risks. They might…..
not work as expected
not be delivered on time
cost more ….. and anyway, have no track record
We try to avoid innovation because it is risky
But in some cases (more than we admit) we have no choice – the old solutions don’t fit anymore
Many existing products and services cannot deliver what we need.
If we keep buying them we will fail.
How can we buy new goods and services sensibly?

7. The suppliers view of innovation
Developing new products incurs technical risk and requires investments of time and money
Rational suppliers develop new products only if they have to e.g.
to protect margins
to win business
to retain business
Technical and resource risks are under the control of the supplier and can be managed
The risk that the supplier can’t control is:
Having developed the product will someone buy it?
Is there a genuine and credible demand?

8. Identification Market Engagement Procurement
Forward Commitment Procurement (FCP) A practical innovation procurement (PPI) methodology
Identification
Market Engagement
Procurement
“It is the lack of credible articulated demand that is at the root of the relative failure of innovation in the environmental goods and services sector”.
Dr Jack Frost, OBE

9. Why innovation procurement - the role of demand side measures - the suppliers perspective
It is all about investment risk - not investment costs for a supplier
Many products and companies fail at the demonstration and scale up stage
The gap between development and commercial sales is often referred to as the ‘valley of death’ - in fact it is more a mountain of risk………….
Revenues
Risk to company
Government grant support
more
Decreases as the product approaches market and risks increase
Information that a real market exists reduces the risk and enables a supplier to invest in anticipation of future revenues
Risk is at its highest when a supplier needs to commercialise - the risk is high because demand is not visible
less
Development
Demonstration
Scale up
Commercial sales
Stages in bringing a product to market
EIAG 2006, developed by Whyles, van Meerveld, Nauta 2014

10. FCP thinking drawn from innovation policy, procurement professionals, UK Office of Government Commerce, and critically, suppliers
FCP mirrors the active approach to supply chain management taken by the private sector
Clearly identify and articulate future needs
Search out and engage with potential suppliers
Provide a credible promise of future sales
Provide demand side information and support delivery
(while maintaining competition)
(compliant with the legal framework)

11. The Forward Commitment Procurement Methodology
1. Identification
Recognise problems, unmet needs & opportunities
Consult with stakeholders and set up team
Define an outcome based requirement
Prepare a FCP project outline/business case
Project approval/sign off
2. Market Engagement
Market Sounding
Market sounding review & analysis
Supply chain feedback
Market consultation
Market consultation report
3. Procurement
Develop a pro-innovation procurement strategy
Feedback to the supply chain and stakeholders
Implement procurement strategy
Negotiate Procurement Contract

12. PPI and PCP in action: Peer Learning Workshop Birmingham, UK, Summer Birmingham City Council - JERA - Technology Strategy Board - Contact: (Free)

13. Zero Waste Prison Mattress
MINISTRY OF JUSTICE
Zero Waste Prison Mattress
The problem?
40,000 + mattresses to landfill / year
High and increasing cost of disposal
Sustainability targets not met
Time consuming for staff
Unmet need?
Zero waste mattresses – no cost increase
Outcome FCP?
No mattresses to landfill
Cost saving €5 million
Innovation in fabric, changing recycling process, ‘cradle to grave’ managed service

14. ROTHERHAM NHS FOUNDATION TRUST Future Ward Solution
The opportunity?
Ward refurbishment over 8 years
Vision of CEO – hospital of the future
Unmet need?
A ‘step change in the patient experience’
Ultra efficient lighting, future ready, progressive improvements
Cost effective based on whole life costs

15. IMI - Typical ward versus the IMI ward

16. ROTHERHAM NHS FOUNDATION TRUST Future Ward Solution
Outcome FCP?
New off-site built solution
Future ready for LED / OLED
Same cost as traditional refurbishment
Lower operational cost
Innovation?
New product on the market
Lighting technology: LED, and OLED Lighting design
Off-site build
And……new SME formed

17. RAWICZ HOSPITAL Low Carbon Uniforms
The need and opportunity?
Budget to replace uniforms
Uniforms heavy and costly to launder
User consultation showed uncomfortable, poor quality, not fit for purpose
Unmet need?
Functional, attractive,and user friendly, easy to clean, durable, cost effective and environmentally sustainable.

18. RAWICZ HOSPITAL Low Carbon Uniforms
Outcome FCP?
New uniforms with lower whole life costs (-20%)
Comfortable nursing staff
Carbon reduction
More sustainable
Innovation?
Eucalyptus fibre
Biomaterials
Eco-textile
and….a local company!

19. ERASMUS UNIVERSITY MEDICAL CENTRE Sustainable bed washing facility
The need and opportunity?
New hospital being built
Old bed washer end of life and resource intensive
No longer produced
Unmet need?
Clean beds – 70,000 / year
Resource efficiency
Carbon reduction
Cost effective
Supplier consultation day at Erasmus MC

20. ERASMUS UNIVERSITY MEDICAL CENTRE Sustainable bed washing facility
Outcome?
Auditable bed cleaning
Resource efficiency
Carbon reduction (- 63%)
Lower Total Cost of Ownership (-35%)
Innovation?
Robotic bed washing solution
Steam jets patented
Cross fertilization across supply chains
and….an SME, can be applied to other cleaning needs

24. Innovation procurement v green procurement?
Green/sustainable procurement
Innovation procurement
Efficiency
Quality AND
Sustainability
An energy efficient bed bed lamp
(future ready for Organic LEDS)

25. EcoQUIP Associates Programme
More information……
EcoQUIP Associates Programme

26. Summary
Innovation is needed to enable society to adapt, overcome societal challenges and prepare for the future.
There is a wealth of untapped potential and creativity in the supply chain
Many new and better products that deserve a market
The way we buy things can release or inhibit an innovative response
Procurement as usual will not deliver what is needed.
FCP has proved to be a valuable framework to create new options and manage the risk of innovation.
BUT it means thinking differently and changing the way we approach procurement

27. INNOVATION PROCUREMENT
Making the world a better place one procurement at time