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Efficiency, quality & sustainability through PPI

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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

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

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

Making the world a better place one procurement at time

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